Payroll deductions

What is a tax?
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What is a tax?

Slide 1 - Tekstslide

Chapter 12
Section 2: Payroll deductions
Pages  318-322

Slide 2 - Tekstslide

Describe deductions and witholding allowances.
Analyze the form W-4 and its importance
Discuss the calculation of federal income tax

Slide 3 - Tekstslide

Withholding Allowances

Slide 4 - Tekstslide

What is an amount that reduces income tax to be withheld?
Withholding allowances

Slide 5 - Quizvraag

What is an amount deducted from gross earnings?
Withholding allowances

Slide 6 - Quizvraag

An amount subtracted from gross earnings is a deduction. Deductions include those required by law and those an
employee wishes to have withheld from earnings.
A withholding allowance reduces the amount of income tax to be withheld. The more allowances a taxpayer claims, the lower the amount of income tax withheld from earnings

Slide 7 - Tekstslide

Form W-4
The federal income tax amount withheld depends on three
factors: (1) the employee’s marital status, (2) the number of allowances the employee claims, and (3) the employee’s gross earnings.
Each employee fills out a Form W-4 when starting a job and files a revised
Form W-4 if the marital status or number of allowances changes. Employers  keep a current Form W-4 on file for each employee

Slide 8 - Tekstslide

What are the factors on which the Form W-4 depends?

Slide 9 - Woordweb

Why are some employees exempt from tax withholdings

Slide 10 - Open vraag

Slide 11 - Tekstslide

Federal Income tax
The employer acts as a collection agent and sends the
money withheld to the federal government.
The amount of income tax withheld is based on the estimated income tax the employee will actually owe. The exact income tax amount is determined when the employee prepares an income tax return

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Emily Kardos
is single and claims no allowances. For the week ending June 30, she earned
$229.40.What is her Federal income tax ?

Slide 13 - Woordweb


Slide 14 - Tekstslide

Percentage method
Allowance Amount = Number of Allowances × $63.46
Taxable Wage = Gross Pay − Allowance Amount
Amount withheld for FIT = Use the Taxable Wage and the table below to compute.

Slide 15 - Tekstslide

Slide 16 - Tekstslide

Lance Hart’s gross pay for this week is $393.23. He is a carpenter’s
apprentice, is single, and claims 2 allowances. Using the percentage
method of withholding, what amount will Lance’s employer withhold
from his pay for federal income tax?

Slide 17 - Woordweb

Step 1: Find the allowance amount.
Allowance Amount = Number of Allowances × $63.46
$126.92 = 2 × $63.46
Step 2: Find the taxable wage.
Taxable Wage = Gross Pay − Allowance Amount
$266.31 = $393.23 − $126.92

Slide 18 - Tekstslide

Step 3: Find the amount withheld for FIT using the table.
a. Find the taxable wage in the row over $195 but not over $645.00.
b. Find the amount of income tax withheld by:
Tax Withheld for FIT = $14.40 plus 15% of the excess over $195.00
= $14.40 + [0.15 × ($266.31 − $195.00)]
= $14.40 + (0.15 × $71.31)
$25.10 = $14.40 + $10.70

Slide 19 - Tekstslide

Use a sentence to describe the importance of your lesson

Slide 20 - Woordweb