Example 1: 123 Inc - Payroll University
Example 1: 123 Inc. requests its Payroll Dept to give employee Ryan a $5,000 net check in 2017. To ensure that Ryan receives $5,000, 123 Inc. agrees to pay her federal and state income and social security and Medicare taxes on the bonus, which is treated as supplemental wages. Here is how the employer would calculate the gross payment to Ryan and the amounts that must be withheld, assuming Ryan will not reach the social security wage limit with the bonus payment and that the state supplemental wage withholding rate is 6%:
Step 1 Add up all tax % using Supplemental rates
25% FIT + 6% SIT + 6.2% SS + 1.45% Med.
Total tax % = 38.65%
Step 2 Subtract Total tax % from 100%
Gross-up rate = 100% - 38.65% = 61.35%
Step 3 Divide Gross-up rate into net amount
Gross earnings = $5,000 ÷ 61.35% = $8,149.96
Step 4 Multiple each of the taxes out
FITW = 25% x $8,149.96 = $2,037.49
SITW = 6% x $8,149.96 = $489.00
SS = 6.2% x $8,149.96 = $505.30
Med. = 1.45% x $8,149.96 = $118.17
Step 5 Verify
$8,149.96 - $2,037.49 - $489.00 - $505.30 - $118.17 = $5,000
Example 1: 123 Inc. request its Payroll Dept to give employee Ryan a $5,000 net check in 2017. To ensure that Ryan receives $5,000, 123 Inc. agrees to pay her federal and state income and social security and Medicare taxes on the bonus, which is treated as supplemental wages. Here is how the employer would calculate the gross payment to Ryan and the amounts that must be withheld, assuming Ryan will not reach the social security wage limit with the bonus payment and that the state supplemental wage withholding rate is 4%:
Example 2: Assume the same facts as in Example 1, except that, at the time the bonus is paid, Ryan has already been paid $123,200.00 during 2017. State tax rate of 4%. Due to Ryan going to max out on Social Security the employer would calculate the gross payment to Ryan and the amounts that must be withheld as the following:
Step 1 Figure the max that Ryan can have deducted for Social Security
Social security wage base for 2017 = $114,500 Tax rate = 6.2%
Amount subject to SS tax = $127,200 - $123,200.00 =$4,000.00
SS tax on $4,000.00 = $4,000.00 x .062 = $248.00
Step 2 Add SS tax amount to net amount
Amount for gross-up cal = $5,000 + $248 = $5,248
Step 3 Add up all tax % using leaving out SS %
25% FITW + 4% SIT + 1.45% Med.
Total tax % = 30.45%
Step 4 Subtract Total tax % from 100%
Gross-up rate = 100% - 30.45% = 69.55%
Step 5 Divide Gross-up rate into net amount + SS amount
Gross earnings on $5248 ÷ 69.55% = $7,545.65
FITW = 25% x $7,545.65 = $1,886.41
SITW = 4% x $7,545.65 = $301.83
SS = 6.2% x $4,000.00 = $248.00
Med. = 1.45% x $7,545.65 = $109.41
$7,545.65 - $1,886.41 - $301.83 - $248.00 - $109.41 = $5,000
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related download
- adjusted gross income worksheet hud
- simplified supervisory formula approach ssfa and the
- example 1 123 inc payroll university
- chapter overview svsd
- chapter 11 payroll accounting gadoe
- home augusta independent school district board of
- gross income to calculate your family s annual gross
- final exam cpp fpc 2014 starchapter
Related searches
- university of michigan payroll office
- 2166 8 1 example bullets
- example of 1 page summary
- payroll solutions inc lexington ky
- duke university health system inc leadership
- 3 1 what are the hexadecimal bytes for the following instructions a inc dptr
- example payroll deduction authorization form
- example of 1 gram weight
- 1 or 2 912 912 1 0 0 0 1 example of present tense
- 1 or 2 577 577 1 0 0 0 1 example of epic story
- 1 or 3 912 912 1 0 0 0 1 example of present tense
- 1 or 3 2 0 5 912 912 example of present tense