WhyNot
November 4, 2015, 12:26am
21
sbunny8:
So, here’s my trying-to-be-helpful answer. First, you get the number of allowances from the employee’s W4, and look at their filing status (single, married, etc.). Then you find the appropriate tables in IRS Publication 15 (which is updated every year), depending on whether the paychecks are monthly, weekly, whatever. My company does monthly paychecks, so the process goes like this: First, multiply the number of allowances by $333.30 and subtract that from their gross pay. If the result is less than that $192, then the tax is $0. If it’s between $192 and $960, then you withhold 10% of the amount which is over $192. If it’s between $960 and $3,313, then you withhold $76.80 plus the 15% of the amount which is over $960. So, for example, if a single employee has two allowances and makes $1,645 in a month, you take 2x333.30=666.60 and subtract is from 1,645 which leaves 978.40, which is more than 960, so you take 978.40-960=18.40, calculate 15% of that, which is 2.76, and add 76.80+2.76= $79.56 and that’s the amount you withhold this month.
whimper
I’ve always wondered about this. I will, apparently, continue to wonder about this, because holy cats, that’s a lot of ifthens. :eek:
amarone
November 4, 2015, 1:17am
22
sbunny8:
I don’t think he meant that it the increased withholding spills over into the other pay periods. He just said that if increased your withholding THIS month, as if you were going to make that much money in all the other months, but then NEXT month when your pay goes back to normal the withholding also goes back to normal. The result is that you slightly overpaid that one month, which is no big deal in the big scheme of things.
You are right - that is what I meant.
It could very well be since that would result in over-witholding 99% of the time and the Gov can use your money.
Note that your actual tax liability is based on AGI less itemeized or standard deductions… less exemptions for you and each dependant…less various credits (the most significant being for children and college expenses).