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
|
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