How to Calculate 2012 Federal Income Tax Manually?

by admin 4. January 2012 16:06

If you are a small business owners and like to calculate the taxes manually. Please follow this step by step guide on how to use federal tax table and do it manually.

 

For example:

 

Karen is the employee of company ABC. She lives in Arizona. Her withholding rate is married/withhold at a single rate.  She has two exemptions and no extra withholds.  She gets paid $10 per hour biweekly.  She works 64 hours for each pay period.


Followings are the steps to calculate the federal tax:
 

1. Gross pay for each paycheck:
 
For each pay period, the gross pay is $640
 
2. Deduction for each paycheck:
The standard deduction is $3,800 per year (For Year 2012).
She can get total $3800*2=$7600
For each pay period the deduction is: $7600/26=$292.31

 
3. Taxable income for each paycheck
So for each paycheck, the taxable income is: 640-292.31=$347.69
 
4. Federal tax
(347.69-83.00) * 10%=264.69*10%=$26.47

 

Current Federal Income Withholding Tax table
http://www.halfpricesoft.com/federal_income_tax_2012.asp

 

Table 2 -- Biweekly Payroll Period

(a) SINGLE person (including head of household) --

If the amount of wages(after
subtracting withholding
allowances) is:

 

The amount of income tax
to withhold is:

Not over $83.00.......

 

$0

Over --

But no over --

 

 

Of excess over --

$83.00

$417.00

 ...

10%

$83.00

$417.00

$1,442.00

 ...

$33.40 plus 15%

$417.00

$1,442.00

$3,377.00

 ...

$187.15 plus 25%

$1,442.00

$3,377.00

$6,954.00

 ...

$670.90 plus 28%

$3,377.00

$6,954.00

$15,019.00

 ...

$1,672.46 plus 33%

$6,954.00

$15,019.00

...

 ...

$4,333.91 plus 35%

$15,019.00

 

EzPaycheck payroll software is designed to automate paycheck processes to reduce the time spent on running payroll. The software’s graphic interface leads users step-by-step through setting up employee information, importing data, calculating payroll—including calculation of federal, state and local taxes; deductions for Medicare, insurance and 401(k) plans; and printing paychecks.

 

Priced at just $89 per installation, ezPaycheck’s graphical interface and functions are so intuitive that even users without much computer or accounting experience can start automating payroll processes within minutes of installation. Additionally, customers can try ezPaycheck payroll software without cost or obligation for 30 days.

 

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