Cazz receives a semimonthly paycheck from a jazz club of $4,500.00. He is married and is entitled to 1 withholding allowance. Using the percentage method, calculate the amount of income tax that should be withheld from his paycheck each pay period.
Well, Cazz, looks like it's time to jazz up your paycheck calculations! Let's get things swinging with some calculations.
Since you mentioned Cazz is married and has 1 withholding allowance, we'll need to factor that in. Now, to calculate the income tax to be withheld, we'll use the percentage method, which involves tax brackets.
But hey, don't fret! I've got your back. Let me take care of the calculations so you can keep tapping your feet:
First, we need to find Cazz's taxable income. Since he receives $4,500.00 semimonthly, let's multiply it by 24 to get the annual income.
$4,500.00 x 24 = $108,000.00
Next, let's determine the tax bracket Cazz falls into. For simplicity, I'll use the 2021 tax brackets:
- For the first $19,900, the tax rate is 10%
- For the amount between $19,901 and $81,050, the tax rate is 12%
- For the amount above $81,051, the tax rate is 22%
Now, let's crunch some numbers.
Cazz's income falls into the 12% tax bracket. So, we'll calculate the tax on that portion first:
$81,050 (upper limit) - $19,900 (lower limit) = $61,150
$61,150 x 12% = $7,374.00
Now, we'll calculate the tax on the remaining income at the next tax bracket:
$108,000 (total income) - $81,050 (upper limit of previous bracket) = $26,950
$26,950 x 22% = $5,928.50
Finally, we'll add both amounts together to get the total income tax:
$7,374.00 + $5,928.50 = $13,302.50
Now, to determine the tax to be withheld per semimonthly paycheck, divide the annual tax by 24 (number of pay periods in a year):
$13,302.50 / 24 = $554.27
So, Cazz should have approximately $554.27 withheld from each semimonthly paycheck for income tax.
Remember, these calculations are an approximation, and actual tax obligations may vary. If you need a more accurate estimate, it's best to consult a tax professional or accountant. Keep on jazzin'!
To calculate the amount of income tax that should be withheld from Cazz's semimonthly paycheck, we need to follow these steps:
Step 1: Determine the taxable income.
The taxable income can be calculated by subtracting the total allowances from the gross income. In this case, Cazz receives $4,500.00 and is entitled to 1 withholding allowance.
Taxable Income = Gross Income - Total Allowances
Taxable Income = $4,500.00 - 1
Taxable Income = $4,499.00
Step 2: Determine the tax withholding based on the tax brackets and rates.
To calculate the tax withholding using the percentage method, we need to refer to the tax brackets and rates provided by the IRS.
Based on the available information, let's assume the following tax brackets and rates:
- For the first $2,000.00, the tax rate is 10%
- For the remaining amount over $2,000.00, the tax rate is 20%
Step 3: Apply the tax rates to calculate the amount of tax to withhold.
We will use the tax brackets to calculate the amount of tax to withhold for each bracket.
For the first $2,000.00:
Tax to withhold = Taxable Income * Tax Rate
Tax to withhold = $2,000.00 * 10% = $200.00
For the remaining amount:
Tax to withhold = (Taxable Income - $2,000.00) * Tax Rate
Tax to withhold = ($4,499.00 - $2,000.00) * 20% = $899.80
Step 4: Calculate the total tax withholding.
The total tax withholding is the sum of the tax withholding for each bracket.
Total tax withholding = Tax to withhold for bracket 1 + Tax to withhold for bracket 2
Total tax withholding = $200.00 + $899.80 = $1,099.80
Therefore, the amount of income tax that should be withheld from Cazz's paycheck each pay period is $1,099.80.
To calculate the amount of income tax that should be withheld from Cazz's paycheck, you will need to follow the steps provided below using the percentage method:
Step 1: Determine the amount of Cazz's income subject to withholding. In this case, as Cazz receives a semimonthly paycheck, you will divide his annual paycheck of $4,500 by 24 (number of semimonthly pay periods), which gives us $187.50 as Cazz's semimonthly income subject to withholding.
Step 2: Find the appropriate percentage bracket. To do this, you will need to refer to the IRS Publication 15 (Circular E) which provides the withholding tax tables. Locate the table that corresponds to the current tax year and marital status. Since Cazz is married, eligible tables might be the "Married Biweekly" or "Married Weekly" tables. For this example, let's assume we are using the "Married Biweekly" table.
Step 3: Find Cazz's income bracket. Within the selected tax table, locate the row that corresponds to Cazz's semimonthly income subject to withholding. In this case, based on Cazz's semimonthly income of $187.50, he would fall into a specific bracket.
Step 4: Determine the percentage of income tax to be withheld. Check the column of the selected tax table that corresponds to Cazz's income bracket and locate the percentage of income tax that should be withheld.
Step 5: Calculate the withholding tax amount. Multiply Cazz's semimonthly income subject to withholding by the percentage of income tax to be withheld. This will give you the amount of income tax that should be withheld from his paycheck each pay period.
Please note that the specific numbers used in this example may vary based on the current tax year and applicable tax tables. Therefore, it is essential to refer to the IRS Publication 15 (Circular E) for the most accurate and up-to-date information.