Accounting and Finance Foundations

(Chris Devlin) #1

Unit 8


Accounting and Finance Foundations Unit 8: Payroll 657

Payroll


Chapter 19


The trick is knowing which table to use, though. To determine which table is the correct one, an employer
must know an employee’s marital status and the business’s pay schedule (weekly, semimonthly, bi-
weekly). In Wes’s case, we know that he gets paid on a weekly basis and that his filing status is single with
one exemption. So, the wage bracket table that Wes’s employer should use is the Single Persons-Weekly
Payroll Period. Simply find the appropriate pay range ($260-270), and follow across to the correct number
of allowances for Wes (which is one). The dollar amount that you find at that intersection is the amount of
federal tax that Wes’s employer should withhold: $15.

From the Internal Revenue Service’s Publication 15 (Circular E), Employer’s Tax Guide (p. 37), found at
http://www.irs.gov/pub/irs-pdf/p15.pdf.

Gross Pay - Deductions = Net Pay

So, Wes’s net pay for that pay period is $267 – 15 = $252.

Lesson 19.2 Net Pay (cont’d)


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