Page 207 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
at $200.26, and then multiply by 15 percent to arrive at the same
income tax of $30.04.
Several other, less-used methods for calculating tax withholding
amounts require the override of a computerized withholding calculation

system with manual calculations. They are:
• Basis is annualized wages. Under this approach, calculate an

employee’s annual pay rate and then determine the annual
withholding amount in the IRS Annual Payroll Period tax
table. Divide this amount by the number of pay periods in
the year to determine the deduction for an individual pay-
check.
• Basis is partial-year employment. This method can be used only
at an employee’s written request, which must state the last day
of work with any prior employer, that the employee uses the
calendar year accounting method, and that the employee does
not expect to work during the year for more than 245 days.
The company then compiles all wages paid to the employee
during his or her current term of employment, including the
current pay period. The next step is to determine the number
of pay periods from the date of the employee’s last employment,
through and including the current pay period, and divide this
amount into the total wages figure, resulting in an average
wage per pay period. Use the correct tax table to arrive at a
withholding amount for the average wage, then multiply this
amount by the total number of pay periods, as already calcu-
lated. Finally, subtract the total amount of withholdings
already made, resulting in the withholding to be made in the
current pay period.

This approach is requested by employees such as part-time
students or seasonal workers who expect to be out of work
so much during the calendar year that their full-year pay will
drop them into a lower tax bracket, resulting in smaller
income tax withholdings.

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