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 $ on the Form W-4 .
? Tackle It
Serena Williams is married, claims 4 allowances, and is paid$11,640.25 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. $11,640.25, rounded to thenearest dollar. | | | $ |
| 2. | Enter the value of the allowances based on the payrollperiod. | $ | | |
| 3. | Multiply the allowance value by the employee allowancesclaimed. | × 4 | | () |
| 4. | Subtract allowances from gross pay, referred to as excesswages. | | | $ |
| 5. | Identify the correct bracket.
Wages starting at $ but not over $. | $
() | | |
| 6. | Determine the value over the starting wage for thisbracket. | $ | | |
| 7. | Multiply the overage by the tax rate in the table (enter as adecimal). | x | | $ |
| 8. | Add the bracket minimum tax. | | | |
| 9. | Add the two amounts together = Total withholding for SerenaWilliams. | | | $ |
