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Calculate federal and state income tax withholding for a number of employees of TCLH Industries, a...

Calculate federal and state income tax withholding for a number of employees of TCLH Industries, a manufacturer of cleaning products. Use the wage-bracket method when it is possible to do so, and use the percentage method in all other instances. Assume the state income tax withholding rate to be 5% of taxable pay (which is the same for federal and state income tax withholding).

Zachary Fox does not make any voluntary deductions that impact earnings subject to federal income tax withholding. He is married, claims two withholding allowances for both federal and state, and his weekly gross pay was $1,162.

Calvin Bell makes a 401(k) retirement plan contribution of 6% of gross pay. He is single, claims two federal withholding allowances and one state withholding allowance, and his weekly gross pay was $417.93.

David Alexander makes a 401(k) retirement plan contribution of 12% of gross pay. He is single, claims one withholding allowance for both federal and state taxes, and his weekly gross pay was $4,050.

Michael Sierra contributes $50 to a flexible spending account each period. He is married, claims four federal withholding allowances and three state withholding allowances, and his weekly gross pay was $2,450.


NOTE: For simplicity, all calculations throughout this exercise, both intermediate and final, should be rounded to two decimal places at each calculation.

1: Zachary Fox

Federal income tax withholding = $
State income tax withholding = $

2: Calvin Bell

Federal income tax withholding = $
State income tax withholding = $

3: David Alexander

Federal income tax withholding = $
State income tax withholding = $

4: Michael Sierra

Federal income tax withholding = $
State income tax withholding = $

Solutions

Expert Solution

We taking base as tax year 2018

As we know from tax allowance chart that weekly one withholding allowance for 2018 is $ 79.80.

By the help of 2018 percentage method table for income tax withholding we answering above parts of Question

1. Zachary Fox (Married)

Federal income tax withholding

$ 1162-(79.80×2) = 1002.4 wich is fall in range of 588-1711

Therefore withholding tax = $ 36+12% of (1002-588) =$ 86.33

State withholding tax = $ 1002.4 × 5% = $ 50.12

2. Calvin Bell (Single)

Federal income tax withholding

$ 417.93 - 6% undru 401(k) =$ 392.86 - (79.80×2) = $ 233.26 which is in range of ($ 71 - $ 254)

Tax = 20% of ($ 233.26 - 71) = $ 16.23

State income tax withholding

$ 392.86 - $ 79.80 = $ 313.06 × 5% = $ 15.65

3. David Alexander (Single)

Federal income tax withholding

$ 4050 - 12% = $ 3564 - 79.80 = $ 3484.2 which is fall in range of ($ 3100 - $ 3917)

Tax = $ 617.16 + 32% of ($ 3484.2 - $ 3100) = $ 740.10

State income tax withholding

$ 3564 -$ 79.80 = $ 3484.2× 5% = $ 174.21

4. Michael Sierra (Married)

Federal income tax withholding

$ 2450 -$ 50 = $ 2400 -($ 79.8×4) = $ 2080.80 which is fall in range of ($ 1711 - $ 3395)

Tax = $171.36 + 22% of ($ 2080.80 -$ 1711) = $ 252.72

State income tax withholding

$ 2400 - ($ 79.80×3) = $ 2160.6 × 5% = $ 108.03

ekkarill92 answered 1 year ago
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