Oakton Community College s2

Oakton Community College Accounting 170 – Payroll Accounting Robert Bruebach Homework - Week #2 SOLUTIONS

Problem #1

Use the percentage method to compute the federal income taxes to withhold for each employee.

No. of Amount Employee Employee Marital Withholding Pay to Be No. Name Status Allowances Salary Frequency Withheld 1 Amorosa, A. M 4 $1,610 weekly $151.91a

2 Finley, R. S 0 825 biweekly 92.60b

3 Gluck, E. S 5 9,630 monthly 1,585.35c

4 Quinn, S. M 8 925 semimonthly 0.00d

5 Treave, Y. M 2 1,975 monthly 57.90e a $1,610.00 – 4($77.90) = $1,298.40 $1,298.40 – $525.00 = $773.40 × 0.15 = $116.01 + $35.90 = $151.91 b $825.00 – 0 = $825.00 $825.00 – $447.00 = $378.00 × 0.15 = $56.70 + $35.90 = $92.60 c $9,630.00 – 5($337.50) = $7,942.50 $7,942.50 – $7,850.00 = $92.50 × 0.28 = $25.90 + $1,559.45 = $1,585.35 d $925.00 – 8($168.80) = $0 = $0 e $1,975.00 – 2($337.50) = $1,300.00 $1,300.00 – $721.00 = $579.00 × 0.10 = $57.90

Problem #2

Use the percentage method and wage bracket method to compute the federal income taxes to withhold for each employee.

Amount to Be Withheld No. of Gross Wage- Marital Withholding Wage Pay Percentage Bracket Employee Status Allowances or Salary Frequency Method Method Corn, A. S 2 $ 675 weekly $62.28 $62.00 Fogge, P. S 1 1,960 weekly 379.63 N/A

Felps, S. M 6 1,775 biweekly 50.72 50.00

Carson, W. M 4 2,480 semimonthly 177.82 179.00

Helm, M. M 9 5,380 semimonthly 520.00 N/A

Problem #3

Following is a payroll register for the Royster Company located in Illinois. Employees have been paid the same amount on a weekly basis for all year. Complete the payroll register for the pay period ending December 18th, the 51st pay period of the year. Complete the payroll register. Use the wage bracket method, when able, when calculating federal income tax (FIT) and calculate state income tax (SIT) using the Weekly Illinois Tax Table provided on the class website.

For Period Ending December 19th No. of No. of Illinois Deductions (e) Marital Fed. W/H (Line 1) W/H Weekly (a) FICA (b) (c) Net Employee Name Status Allowances Allowances Earnings OASDI HI FIT SIT Pay Green, Tom M 3 3 $2,550.00 $ 0.00* $36.98 $373.63** $120.02 $2,019.37 Morris, Maive S 1 1 400.00 24.80 5.80 33.00 17.78 $318.62 Schmidt, Beth M 0 0 490.00 30.38 7.11 33.00 24.30 $395.21 Carr, Herman S 2 3 1,000.00 62.00 14.50 119.00 43.29 $761.21 Wilson, Ronda S 1 1 470.50 29.17 6.82 44.00 21.24 $369.27 Gleason, Wendy M 3 2 880.00 54.56 12.76 55.00 39.42 $718.26 Totals $5,790.50 $200.91 $83.97 $657.63 $266.05 $4,581.94

Compute the employer’s FICA taxes for the pay period ending December 19.

OASDI Taxes HI Taxes OASDI taxable earnings $3,240 .50 HI taxable earnings $5,790 .50 OASDI taxes $ 200 .91 HI taxes $ 83 .96

* Passed FICA–OASDI limit: December 19th  51st pay period of the year.

Tom Green: FICA-OASDI  No tax due. Why? $2,550 * 51 pay periods = $130,050  exceeds $127,200 Cumulative pay prior to 51st  $2,375 * 50 pay periods = $127,500 …so, he reached the $127,200 maximum prior to the 51st pay period)

** Must use percentage method Tom Green: FIT  must use percentage method to calculate  $2,550 – (3 x $77.90) = $2,316.30. $2,316.30 - 1,626 = $690.30 x 25% = $172.58 + $201.05 = $373.63

Question #1

T / F On August 3rd, Jason filed an amended Form W-4 with his employer. Jason’s employer is required put the new withholding allowance certificate into effect before the next weekly payday, which is on August 4th.

Answer: False – the employer has 30 days to implement the new W-4. Also, the payroll for August 4th was probably calculated/entered prior to August 3rd, so even the best intentioned employer wouldn’t be able to implement the W-4 until the next payroll after August 4th.

Question #2

T / F The employer is required to forward all Form W-4’s to the IRS on a quarterly basis.

Answer: False – the employer retains the W-4 in the employee’s records. The IRS will notify the employer if they need a copy of the employee’s W-4.

Question #3

T / F If an employer is filing ten (10) Form W-2’s, the employer must use magnetic media or electronic filing rather than paper Forms W-2.

Answer: False – the employer is require to use magnetic media or electronic filing if they are filing in excess of 250 Form W-2’s .