Final answer:
No, the employer should not withhold 22% of the worker's gross earnings. The amount withheld for federal income taxes is determined by the tax brackets and the employee's taxable income, which takes into account the number of allowances claimed on Form W-4.
Step-by-step explanation:
No, the employer should not withhold 22% of the worker's gross earnings for federal income taxes just because the employee claimed 22 withholding allowances on Form W-4. The amount withheld for federal income taxes is determined by the tax brackets and the employee's taxable income, which takes into account the number of allowances claimed. The employer must calculate the correct amount to withhold based on these factors.
Withholding allowances on Form W-4 are used to adjust the amount of federal income tax withheld from an employee's paycheck. Each allowance reduces the amount of taxable income subject to withholding. However, claiming too many allowances may result in under-withholding and a higher tax liability when filing the tax return. It is important for employees to accurately complete Form W-4 based on their personal situation to ensure the correct amount of federal income tax is withheld.
For example, if an employee's gross earnings are $1,000 and they claim 22 withholding allowances, the employer would not withhold 22% of the $1,000 ($220) for federal income taxes. Instead, the employer would calculate the taxable income based on the number of allowances claimed and apply the appropriate tax rate. The IRS provides tables and formulas to determine the amount to withhold based on the employee's taxable income and allowances claimed.