Question

PSb 3-3 Calculate Federal Income Tax Withholding Using the Wage-Bracket Method

For each employee listed, use the wage-bracket method to calculate federal income tax withholding. Refer to Appendix A, 2018 Federal Tax Tables in your textbook.

NOTE: For simplicity, all calculations throughout this exercise, both intermediate and final, should be rounded to two decimal places at each calculation.

Paul Yount (married; 7 federal withholding allowances) earned weekly gross pay of $605.

Federal income tax withholding = $

Answer 1

To calculate federal income tax withholding for Paul Yount, you would need to deduct the value of 7 federal withholding allowances from his weekly gross pay to find the taxable income, then use the 2018 tax tables to find the amount to withhold. However, without the specific allowance values, an exact amount cannot be determined.

Step-by-step explanation:

To calculate the federal income tax withholding using the wage-bracket method for Paul Yount, who is married with 7 federal withholding allowances and earns a weekly gross pay of $605, we would begin by determining his taxable income. Taxable income is gross income minus any allowances and deductions. In the absence of specific withholding allowance amounts from the 2018 tax tables, a hypothetical calculation would be made.

From the 2018 tax tables, each allowance for a married person filing jointly could potentially shield a certain amount of income from tax. However, that amount would need to be specified by the tax tables provided in the textbook's appendix. After subtracting the value of the 7 withholding allowances from the gross pay, the remaining amount is the taxable income.

We then use the taxable income to look up the appropriate amount of federal income tax to withhold in the wage-bracket tables. Additionally, if the taxable income does not fit neatly into the brackets provided, we would apply the relevant marginal tax rate to the amount of income that exceeds the highest full bracket below the taxable income level and add that to the tax amount for the highest full bracket.

Therefore, without the specific withholding amount values from the 2018 tax tables, we cannot provide an exact number for Paul Yount's federal income tax withholding.