Question

For 2018, John earns $3,000 per month and has three dependent children. He is divorced and claims five allowances on his Form W-4.

Calculate John's withholding using: (1) percentage method and (2) wage bracket method.

Do not round your intermediate computations. Round your final answer to two decimal places.

Click here to access the withholding tables.

Table for Allowances Amount per Circular E.

Pay period	2018 Allowance Amount
Weekly	$ 79.80
Biweekly	159.60
Semimonthly	172.90
Monthly	345.80
Quarterly	1,037.50
Semiannually	2,075.00
Annually	4,150.00

1. The percentage method
$____________

2. The wage bracket method
$_____________

Answer 1

1). Percentage method:

Formula	Total wage payment (W)	3,000
	One allowance (A)	345.80
	Allowances claimed on W-4 (N)	5
(A*N)	Total allowance (T)	1,729.00
(W-T)	Amount for withholding	1,271.00
	Tax to be withheld	99.68

Tax to be withheld is calculated from the %age method tables given in Circular E 2018. Table 4 (single, monthly payroll) is used.

Fixed tax amount is 79.40

Amount in excess is  ((amount for withholding - lower limit of the tax bracket)*tax-slab = (1271-1102)*12% = 20.28

Total tax = 79.40 + 20.28 = $99.68

2). Wage bracket method:

Reading from the wage bracket table (single person, monthly payroll) for number of allowances 5 and monthly wage $3,000, the tax withholding is $98.00