








Examples of the withholding formulas:




Example 1:





Taxpayer is claiming 1 personal exemption and 2 dependency credits.
Taxpayer is paid $700 weekly (52 pay periods, $36,400 annual salary).






The formula to use in this example is:







W is the withholding tax per pay period.






S is the employee’s salary per pay period for each bracket.






X is the number of personal exemptions; X must be 0 or 1.
(A personal exemption is equal to $4,500.)






Y is the number of dependency credits; Y must be a whole number that
is 0 or greater. (A dependency credit is equal to $1,000.)






N is the number of pay periods.







A = .021 (((X * 4,500) + (Y * 1,000)) ÷ N).







B = .016 ((((X * 4,500) + (Y * 1,000))  12,500) ÷ N).







W = .021 (S) + .0160 (S  (12,500 ÷ N))  (A + B).






The calculation for this example:







S = $700






X = 1






Y = 2






N = 52







A = the effect of the personal exemptions and dependency credits
equal to or less than $25,000;







A = .021 (((1 * 4,500) + (2 * 1,000)) ÷ 52)







A = .021 ((4,500 + 2,000) ÷ 52)







A = .021 (6,500 ÷ 52)







A = .021 (125.00)







A = 2.63







B = the effect of the personal exemptions and dependency credits in
excess of $25,000;







B = .016 ((((1 * 4,500) + (2 * 1,000))  12,500) ÷ 52)







B = .016 (((4,500 + 2,000)  12,500) ÷ 52)







B = .016 ((6,500  12,500) ÷ 52)







B = .016 (0 ÷ 52)







B = .016 (0)







B = 0







Remember, if any of the variables in the formula are negative, the
negative variable should be considered zero.







W = the withholding tax per pay period;







W = .021 (700) + .0160 (700  (12,500 ÷ 52)) – (A + B)







W = 14.70 + .0160 (700  240.38) – (2.63 + 0)







W = 14.70 + .0160 (459.62) – 2.63







W = 14.70 + 7.35 – 2.63







W = $ 19.42




Example 2:





Taxpayer is claiming 2 personal exemptions and 3 dependency credits.
Taxpayer is paid $4,600 biweekly (26 pay periods, $119,600 annual
salary).






The formula to use in this example is:







W is the withholding tax per pay period.






S is the employee’s salary per pay period for each bracket.






X is the number of personal exemptions. X must be 2. (A personal
exemption is equal to $4,500.)






Y is the number of dependency credits. Y must be 0 or greater.
(Each dependency credit is equal to $1,000.)






N is the number of pay periods.







A = .021 (((X * 4,500) + (Y * 1,000)) ÷ N).







B = .0165 ((((X * 4,500) + (Y * 1,000))  25,000) ÷ N).







W = .021( S ) + .0165 (S  (25,000 ÷ N)) + .0135 (S  (100,000 ÷ N))
 (A + B).






The calculation for this example:







S = $4,600






X = 2






Y = 3






N = 26







A = the effect of the personal exemptions and dependency credits
equal to or less than $25,000;







A = .021 (((2 * 4,500) + (3 * 1,000)) ÷ 26)







A = .021 ((9,000 + 3,000) ÷ 26)







A = .021 (12,000 ÷ 26)







A = .021 (461.54)







A = 9.69







B = the effect of the personal exemptions and dependency credits in
excess of $25,000;







B = .0165 ((((2 * 4,500) + (3 * 1,000))  25,000) ÷ 26)







B = .0165 (((9,000 + 3,000) – 25,000) ÷ 26)







B = .0165 ((12,000 – 25,000) ÷ 26)







B = .0165 (0 ÷ 26)







B = .0165 (0)







B = 0







Remember, if any of the variables in the formula are negative, the
negative variable should be considered zero.







W = the withholding tax per pay period;







W = .021 ( 4,600 ) + .0165 (4,600  (25,000 ÷ 26))
+ .0135 (4,600  (100,000 ÷ 26))  (A + B)







W = 96.60 + .0165 (4,600 – 961.54) + .0135 (4,600 – 3,846.15)  (9.69 + 0)







W = 96.60 + .0165 (3,638.46) + .0135 ( 753.85 ) – 9.69







W = 96.60 + 60.03 + 10.18 – 9.69







W = $ 157.12
