Yount's federal income tax withholding is $2,606.20.
Paul Yount's federal income tax withholding, follow these steps:
Annual Gross Income: Annual Gross Income = Weekly Gross Pay x Number of Weeks in a Year.
Annual Gross Income = $605/week x 52 weeks/year = $31,460.
Taxable Income: Taxable Income = Annual Gross Income - Standard Deduction - (Number of Withholding Allowances x Withholding Allowance Amount).
Taxable Income = $31,460 - $25,100 - (7 x $4,450) = $5,260.
Determine Tax Brackets: Use the 2023 tax brackets. For income up to $19,750: 10% tax rate.
For income over $19,750 and up to $80,250: 12% tax rate.
Tax on the First Bracket: Tax on the first $19,750 = $19,750 x 10% = $1,975.
Tax on the Remaining Income (Second Bracket): Tax on the remaining income = (Taxable Income - Upper Limit of First Bracket) x Tax Rate of Second Bracket.
Tax on the remaining $5,260 = ($5,260 x 12%) = $631.20.
Total Federal Income Tax Withholding: Total Withholding = Tax on the First Bracket + Tax on the Remaining Income. Total Withholding = $1,975 + $631.20 = $2,606.20.
Therefore, tax withholding is $2,606.20.