Question

In: Accounting

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

Next > < Previous

Related Solutions

Ernesto Enterprises uses the wage-bracket method to determine federal income tax withholding on its employees. Find...

Ernesto Enterprises uses the wage-bracket method to determine federal income tax withholding on its employees. Find the amount to withhold from the wages paid each employee. If an amount is zero, enter "0". Enter all amounts as positive numbers. Click here to access the Wage-Bracket Method Tables. Employee Marital Status No. of Withholding Allowances Payroll Period W=Weekly S=Semimonthly M=Monthly D=Daily Wage Amount to Be Withheld Ed Boone M 1 W $1,250 $ Ray Ortega S 1 W 695 Carl Lopez...

Federal Withholding Taxes versus Estimated Tax Payments 1. Summarize the difference between federal income tax withheld...

Federal Withholding Taxes versus Estimated Tax Payments 1. Summarize the difference between federal income tax withheld and federal estimated tax payments. 2. Summarize the general rule for federal estimated tax payments. You may use the following sources to research the answers: (1) learning objectives 9.1 and 9.2 of your text book, or IRS Publication 505 “Tax Withholding and Estimated Tax” for use in 2017 at https://www.irs.gov/pub

For each employee listed, use the wage-bracket method to calculate federal income tax withholding. 1:Phil McGlynn...

For each employee listed, use the wage-bracket method to calculate federal income tax withholding. 1:Phil McGlynn (Married; 3 federal withholding allowances) earned weekly gross pay of $750. Federal income tax withholding = $ 2:Gary Williams (single; 1 federal withholding allowance) earned biweekly gross pay of $1,920. He participates in a flexible spending account, to which he contributes $50 during the period. Federal income tax withholding = $ 3:Lila Downing (single; 2 federal withholding allowances) earned monthly gross pay of $1,285....

Based on the wage-bracket method, what is the federal income tax withholding for an employee who...

Based on the wage-bracket method, what is the federal income tax withholding for an employee who is married, paid on a bi-weekly basis, has two federal withholding allowances, and earns $1,317? $63 $120 $67 Which of the following groups may not be paid less than the federal minimum wage? 1.Full-time students 2.Tipped employees 3.State government workers Which must a company have before hiring employees? 1.Employer Identification Notice 2.Employer Identification Number 3.All the above An employer designates any 7-day period as...

True or false 1.The required withholding of federal income taxes and FlCA taxes from employees' wages...

True or false 1.The required withholding of federal income taxes and FlCA taxes from employees' wages results in a direct reduction of operating expenses for the employer firm. 2.If an investment is made that pays 8% annual interest for a 5-year period with quarterly compounding, the number of periods is 60. 3.The chart of accounts is also known as the book of original entry. 4.R&D expense is treated as an operating expense and is not capitalized. 5.Preferred stockholders compose the...

Tatun Inc. pays state income tax at a 5% rate and federal income tax at a...

Tatun Inc. pays state income tax at a 5% rate and federal income tax at a 21% rate. Tatun recently engaged in a transaction in Mexico, which levied a $25,200 income tax on the transaction. Tatun's pretax net income for the current year is $1,913,900. Compute Tatun's total income tax burden assuming that: The Mexican tax is nondeductible for state and federal tax purposes. The Mexican tax is deductible for state and federal tax purposes.

Federal income tax allows a deduction for any state income tax paid during the year. In...

Federal income tax allows a deduction for any state income tax paid during the year. In addition, the state of Alabama allows a deduction from its state income tax for any federal income tax paid during the year. The federal corporate income tax is equivalent to a flat rate of 34% of the taxable federal income and the Alabama rate is 5% of the taxable state income. Both the federal and Alabama taxable income for a certain corporation are $1,000,000...

13. Employers who have less than $2,500 due in federal income tax withholding and Social Security...

13. Employers who have less than $2,500 due in federal income tax withholding and Social Security and Medicare taxes at the end of the quarter should journalize the debt and pay at the end of the a. next banking day. b. year. c. quarter. d. month following the end of the quarter. 14. An Employer Identification Number (EIN) is obtained by the employer from the a. nearest local federally insured bank. b. CIA. c. nearest Federal Reserve Bank. d. Internal...

Federal Income Tax Withholding Bob Avery's weekly gross earnings for the present week were $2,740. Avery...

Federal Income Tax Withholding Bob Avery's weekly gross earnings for the present week were $2,740. Avery has three exemptions. Using the wage bracket withholding table in Exhibit 2 with a $75 standard withholding allowance for each exemption, what is Avery's federal income tax withholding? Round your answer to two decimal places.

1. Is financial aid for college subject to federal income tax? 2. Can federal and state...

1. Is financial aid for college subject to federal income tax? 2. Can federal and state education grants be taxed as income? 3. Are student loans taxable? 4. When is a scholarship tax exempt? 5. Do you have to be in a degree program to qualify for tax exemption? 6. When can the cost of textbooks be deducted from gross income for tax reporting purposes? 7. Can the amount of a scholarship used for tuition be deducted? 8. Can living...

Subjects