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IssueExamples of how to handle Federal Tax Calculations with different pay period frequencies.ResolutionKatherine Banks has a Federal Filing Status of Married and claims one Exemption.She has no tax-sheltered Deductions.The following pay transactions are included in the pay run:A Biweekly Hourly Pay Code for $600A Biweekly Bonus Pay Code for $201.94A Monthly Commission Pay Code for $214.80This example uses the Payroll Tax Update for March 2001. 1. All wages are annualized, based on the pay period frequency.$600 * 26 = $15,600$201.94 * 26 = $5,250.44$214.80 * 12 = $2,577.60Total annualized wages:$23,428.042. Subtract the Exemption amount.$23,428.04 - $2,900 = $20,528.04 This is the amount applied to the Tax tables.3. Subtract according to the Tax tables then multiply by the Tax Rate.$20,528.04 - $6,450 = $14,078.04 * 15% = $2,111.71Total Taxes4.Calculate the withholdingfor each pay frequency.Biweekly - Divide the total annualized amount for the frequency by the total annualized wages.($15,600 + $5,250.44) / $23,428.04 = .8899779Multiply by the total Taxes then divide by the pay period frequency..8899779 * $2,111.71 = $1,879.37 / 26 = $72.28Monthly - Divide the total annualized amount for the frequency by the total annualized wages.$2,577.60 / $23,428.04 = .110022Multiply by the total Taxes then divide by the pay period frequency..110022 * $2,111.71 = $232.33 / 12 = $19.365.Add together the federal withholding for each frequency.$72.28 + $19.36 = $91.64This article was TechKnowledge Document ID:22213
