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

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