Prepared by Johnny Howard © 2015 South-Western, a part of Cengage Learning

10–2 © 2015 South-Western, a part of Cengage Learning

10–3 © 2015 South-Western, a part of Cengage Learning Preparing a Payroll Register A payroll register is a summary of employee status information, wages earned, payroll deductions, and take-home pay. The Fair Labor Standards Act (FLSA), commonly called the federal wage and hour law, requires that nonexempt employees be paid 1½ times their regular hourly rate for all hours worked in excess of 40 per week. T E R M S 1

10–4 © 2015 South-Western, a part of Cengage Learning in Calculating Gross Pay 1.Multiply hours worked (up to 40) times the regular rate. 2.Multiply the regular rate times 1.5 to calculate the overtime rate. 3.Multiply the hours in excess of 40 times the overtime rate. 4.Add the results of Steps 1 and 3 to determine gross pay. 1

10–5 © 2015 South-Western, a part of Cengage Learning Figure 10.1Form W-4 (2011)

10–6 © 2015 South-Western, a part of Cengage Learning Figure 10.2Weekly Payroll Register

10–7 © 2015 South-Western, a part of Cengage Learning Figure 10.3Percentage Method Amount for One Withholding Allowance

10–8 © 2015 South-Western, a part of Cengage Learning to Figure the Amount of Federal Income Tax Withholding, Using the Percentage Method 1.Determine the employee’s gross earnings. 2.Multiply the appropriate (weekly/monthly) “one withholding allowance” amount (from the withholding table in Figure 10-3) by the number of allowances the employee claims. 3.Subtract that amount from the employee’s gross earnings. 4.From the appropriate (weekly/monthly and single/married) percentage method table, subtract the “of excess over” figure to get the amount subject to the tax. 2

10–9 © 2015 South-Western, a part of Cengage Learning to Figure the Amount of Federal Income Tax Withholding, Using the Percentage Method (cont’d) 5.Multiply the amount from Step 4 by the appropriate percentage from the percentage method table. 6.If required, add the base tax amount (if any) shown next to the percentage from the percentage method table. (For example, see Table 1, WEEKLY Payroll Period, Married, the second line of the table: $34.90 plus 15% of excess over $512.) 2

10–10 © 2015 South-Western, a part of Cengage Learning Figure 10.4Tables for Percentage Method of Withholding

10–11 © 2015 South-Western, a part of Cengage Learning Figure 10.4Tables for Percentage Method of Withholding (cont’d)

10–12 © 2015 South-Western, a part of Cengage Learning

10–13 © 2015 South-Western, a part of Cengage Learning Figure 10.6Married Persons—Weekly Payroll Period

10–14 © 2015 South-Western, a part of Cengage Learning Social Security, Medicare, and Other Withholdings The Federal Insurance Contributions Act (FICA) provides for a federal system of old- age, survivors, disability, and hospital insurance. The old-age, survivors, and disability insurance part of FICA is financed by the Social Security tax (6.2%). The hospital insurance part of FICA is financed by the Medicare tax (1.45%). These payroll taxes on gross earnings are levied on both the employer and employee. T E R M S 3

10–15 © 2015 South-Western, a part of Cengage Learning Computing Social Security, Medicare, and Other Withholdings Example 3

10–16 © 2015 South-Western, a part of Cengage Learning Figure 10.7Weekly Medical and Dental Plan Rates

10–17 © 2012 South-Western, a part of Cengage Learning Figure 10.8Employee’s Earnings Record

Computing an Employer’s Quarterly Federal Tax Return 10–18 © 2015 South-Western, a part of Cengage Learning

10–19 © 2015 South-Western, a part of Cengage Learning Figure 10.9 Form 941 Employer’s Quarterly Federal Tax Return (extract)

10–20 © 2015 South-Western, a part of Cengage Learning Computing an Employer’s Federal and State Unemployment Tax Liability Federal Unemployment Tax Act (FUTA) Annually requires the employer to pay a 6.2% tax on the first $7,000 paid to each employee to fund the federal unemployment compensation program for those who have lost their jobs. State Unemployment Tax Act (SUTA) Requires the employer to pay 5.4% tax on the first $7,000 paid to each employee to fund state programs for the unemployed. T E R M S 6

10–21 © 2015 South-Western, a part of Cengage Learning Computing an Employer’s Federal and State Unemployment Tax Liability Example 6

10–22 © 2015 South-Western, a part of Cengage Learning Chapter Terms for Review employee’s earnings record Employer’s Quarterly Federal Tax Return Federal Insurance Contributions Act (FICA) Federal Unemployment Tax Act (FUTA) Form W-4 payroll register percentage method State Unemployment Tax Act (SUTA) wage-bracket method withholding allowance

10–23 © 2015 South-Western, a part of Cengage Learning Assignment 10.1: Payroll Problems A Complete the payroll.

10–24 © 2015 South-Western, a part of Cengage Learning Assignment 10.1: Payroll Problems B Solve the following problems. (cont’d)

10–25 © 2015 South-Western, a part of Cengage Learning Assignment 10.1: Payroll Problems B Solve the following problems. (cont’d)

10–26 © 2015 South-Western, a part of Cengage Learning Assignment 10.1: Payroll Problems B Solve the following problems. (cont’d)

10–27 © 2015 South-Western, a part of Cengage Learning Assignment 10.1: Payroll Problems C Compute and compare the federal income tax withholding amounts for each of the following individuals using the percentage method and the wage-bracket method. (Follow the steps in Section 10.2 for the percentage method.)

10–28 © 2015 South-Western, a part of Cengage Learning Assignment 10.2: Payroll, Earnings Record, Payroll Tax Returns A Solve the following problems.

10–29 © 2015 South-Western, a part of Cengage Learning Assignment 10.2: Payroll, Earnings Record, Payroll Tax Returns A Solve the following problems.

10–30 © 2015 South-Western, a part of Cengage Learning Assignment 10.2: Payroll, Earnings Record, Payroll Tax Returns B Solve the following problems.

10–31 © 2015 South-Western, a part of Cengage Learning Assignment 10.2: Payroll, Earnings Record, Payroll Tax Returns B Solve the following problems. (cont’d)

10–32 © 2015 South-Western, a part of Cengage Learning Assignment 10.2: Payroll, Earnings Record, Payroll Tax Returns C Solve the following problems.

10–33 © 2015 South-Western, a part of Cengage Learning Assignment 10.2: Payroll, Earnings Record, Payroll Tax Returns C Solve the following problems. (cont’d)

10–34 © 2015 South-Western, a part of Cengage Learning Assignment 10.2: Payroll, Earnings Record, Payroll Tax Returns C Solve the following problems. (cont’d)