# Federal Tax Calculation Example for Different Pay Periods

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Issue

Examples of how to handle Federal Tax Calculations with different pay period frequencies.

Resolution

Katherine 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 \$600
A Biweekly Bonus Pay Code for \$201.94
A Monthly Commission Pay Code for \$214.80

This 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 = \$2,577.60
Total annualized wages: \$23,428.04

2. 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% = \$2,111.71 Total Taxes

4. Calculate the withholding for 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 = .8899779
Multiply by the total Taxes then divide by the pay period frequency.
.8899779 * \$2,111.71 = \$1,879.37 / 26 = \$72.28

Monthly - Divide the total annualized amount for the frequency by the total annualized wages.
\$2,577.60 / \$23,428.04 = .110022
Multiply by the total Taxes then divide by the pay period frequency.
.110022 * \$2,111.71 = \$232.33 / 12 = \$19.36

5. Add together the federal withholding for each frequency.
\$72.28 + \$19.36 = \$91.64