Percentage Method
The percentage method is used when an employee's wages exceedthe Publication 15 tables provided. The process for this method isto take the earnings, subtract the allowances the employee declaredon their W-4 which results in the wages upon which taxes will becomputed.
| Table of Allowance Values for2019 |
| Weekly | 80.80 | | Biweekly | 161.50 | | Semimonthly | 175.00 | | Monthly | 350.00 | |
| Quarterly | 1,050.00 | | Semiannual | 2,100.00 | | Annual | 4,200.00 | | Daily/Misc. | 16.20 | |
Wage Example's sister-in-lawPerfect is married and claims 3 allowances. Sheearns $4,140.75 biweekly.
| Description | | | Calculation |
| 1. | Determine the amount of gross wages. $4,140.75, rounded to thenearest dollar. | | | $4,141.00 |
| 2. | Determine the allowancea amount based on the payrollperiod. | $161.50 | | |
| 3. | Multiply the allowance value by the employee allowancesclaimed. | × 3 | | (484.50) |
| 4. | Subtract allowances from gross pay, referred to as excesswages. | | | $3,656.50 |
| 5. | Using the percentage_table, identify the correct bracket.
Wages starting at $3,490 but not over $6,931. | $3,656.50
(3,490.00) | | |
| 6. | Compute the excess wage over the starting wage for thisbracket. | $166.50 | | |
| 7. | Multiply the excess by the tax rate in the table (22%) | x .22 | | $36.63 |
| 8. | Add the bracket minimum tax, $349.40 | | | 349.40 |
| 9. | Add the two amounts together which equals Perfect's totalwithholding. | | | $386.03 |
| a Refer to the Table of Allowance Valuesfor 2019. Perfect is paid biweekly
which corresponds to a biweekly allowance of $161.50 perallowance claimed. | |
? Medal Points: Complete the following. ThePercentage Method must be used for a single employee, paidweekly, whose wages exceeds $fill in the blank 6c347c0edfc1fbb_1 onthe Wage-Bracket Tables .
? Tackle It
Serena Williams is married, claims 4 allowances, and is paid$11,990.25 on a monthly basis.
Note: Enter ALL values as positive numbers andround amounts to two decimal places unless instructedotherwise.
| Description | | | Calculation |
| 1. | Determine the amount of gross wages. $11,990.25, rounded to thenearest dollar. | | | $fill in the blank6c347c0edfc1fbb_3 |
| 2. | Enter the value of the allowances based on the payrollperiod. | $fill in the blank6c347c0edfc1fbb_4 | | |
| 3. | Multiply the allowance value by the employee allowancesclaimed. | × 4 | | (fill in the blank6c347c0edfc1fbb_5) |
| 4. | Subtract allowances from gross pay, referred to as excesswages. | | | $fill in the blank6c347c0edfc1fbb_6 |
| 5. | Identify the correct bracket.
Wages starting at $fill in the blank 6c347c0edfc1fbb_7 but not over$fill in the blank 6c347c0edfc1fbb_8. | $fill in the blank6c347c0edfc1fbb_9
(fill in the blank 6c347c0edfc1fbb_10) | | |
| 6. | Determine the value over the starting wage for thisbracket. | $fill in the blank6c347c0edfc1fbb_11 | | |
| 7. | Multiply the overage by the tax rate in the table (enter as adecimal). | x fill in the blank6c347c0edfc1fbb_12 | | $fill in the blank6c347c0edfc1fbb_13 |
| 8. | Add the bracket minimum tax. | | | fill in the blank6c347c0edfc1fbb_14 |
| 9. | Add the two amounts together = Total withholding for SerenaWilliams. | | | $fill in the blank6c347c0edfc1fbb_15 |
