Question

Edward Dorsey is a part-time employee, and during the biweekly pay period he earned $395. In addition, he is being paid a bonus of $300 along with his regular pay. If Dorsey is single and claims two withholding allowances, how much would be deducted from his pay for FIT?(2019 tax year)

Hint: There are two ways to determine his deduction—do not use tables for percentage method.

a.	Wage-bracket table	$
b.	Percentage method	$

Answer 1

1. Wage Bracket Table

In wage bracket method, find the proper table for your payroll period and the employee's marital status. Then, based on the number of withholding allowances claimed and the amount of wages, find the amount of income tax to be withheld.

Payroll period is biweekly and Dorsey is single and no of allowances are 2

In biweekly table for 2 allowance and wages amount of $395 first slab will be applied where subtract amount is $398.54 and rate is 10%

Accordingly $395-$398.54 = 0

Since subtract amount is > wages amount there will be 0 withholding tax.

2. Percentage Method

Step 1 - For bi weekly payroll system one withhold allowance- $155

Step 2 - Total wages payment $395

2 allowances ($155*2) = $310

Step 3 Amount subject to withholding $395-$310=$85

Step 4 Tax to be withheld as per table 1 10% over $43

Hence $85-$43=$42*10%= $4.2

Tax to be withheld $4.2