Sample Payroll Tax Calculations

Following are two examples showing how taxes are calculated in Spectrum.

Example #1:

Federal calculation of Income Tax for a married employee filing three exemptions (weekly payroll).

$600

Gross

$25

Cafeteria Deduction

$25

401(k) Deduction

Computation is as follows:

$ 600

gross

50

less cafeteria/401(k)

550

550

adjusted weekly gross

x 52

28,600

annualized pay

28,600

annual pay

- 8,400

3 exemptions (2350 x 3)

20,200

taxable gross

Tax rate is 15% of the gross over $6,450, hence:

$ 20,200

taxable gross

6450

13,750

13,750

gross over $6,450

X .15

tax rate

2,062.50

annualized tax due

2,062.50

annual tax due

¸ 52

(# of pay periods)

39.66

weekly deduction FIT

Example #2:

FICA calculation for the same employee. Since FICA is self-correcting for year-to-date, additional information is needed.

$10,500

Year-to-date Gross

$500

Year-to-date Cafeteria Deductions

$765

Year-to-date FICA Deduction (SS: 6.20%, Medicare: 1.45%)

Computation is as follows:

$10,500

year-to-date gross

+ 600

current check gross

11,100

11,100

gross to date

-500

less year-to-date cafeteria

-25

less current cafeteria

10,575

adjusted FICA wages

Social Security is 6.20% up to $117,000. Year-to-date gross has not reached the limit, hence:

$10,575

Adjusted year-to-date FICA wages

x .062

Social Security rate

655.65

Social Security due year-to-date

655.65

Social Security due year-to-date

620.00

Social Security deducted year-to-date

35.65

Social Security deduction this check

Medicare is 1.45% on all FICA wages, hence:

10,575

Adjusted year-to-date FICA wages

x .0145

Medicare rate

153.34

Medicare due year-to-date

153.34

Medicare due year-to-date

- 145.00

Medicare deducted year-to-date

8.34

Medicare deduction this check

FICA deduction is the sum of SS and Medicare deductions:

35.65

Social Security deduction this check

+8.34

Medicare deduction this check

43.99

FICA deduction this check