Instructions For California Withholding Schedules - Method B - Exact Calculation Method - 2001 Page 3
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10CALIFORNIA WITHHOLDING SCHEDULES FOR 2001
METHOD B - EXACT CALCULATION METHOD (continued)
EXAMPLE C:
Monthly earnings of $3,500.00, married, and claiming five withholding allowances on form DE 4 or W-4.
Step 1
Earnings for the monthly payroll period are GREATER than the amount shown in "TABLE 1 - LOW INCOME
EXEMPTION TABLE" ($1,549.00); therefore, income tax should be withheld.
Earnings for monthly payroll period .......................................................................................
$3,500.00
Step 2
Not applicable - no estimated deduction allowance claimed.
Step 3
Subtract amount from "TABLE 3 - STANDARD DEDUCTION TABLE".................................
-469.00
Taxable income .....................................................................................................................
$3,031.00
Step 4
Tax computation from "TABLE 5 - TAX RATE TABLE":
•
Entry covering $3,031.00 (over $2,156 but not over $3,404)
•
4% of amount over $2,156.00 (.04 x [$3,031 - $2,156]) .................................................
$
35.00
•
Plus marginal tax amount...............................................................................................
+34.04
•
Computed tax.................................................................................................................
$
69.04
Step 5
Subtract amount from "TABLE 4 – EXEMPTION ALLOWANCE TABLE" for
5 regular withholding allowances.........................................................................................
-31.25
Net amount of tax to be withheld ...........................................................................................
$
37.79
========
EXAMPLE D:
Weekly earnings of $700.00, unmarried head of household, three withholding allowances on form DE 4 or W-4.
Step 1
Earnings for the weekly payroll period are GREATER than the amount shown in "TABLE 1 - LOW INCOME
EXEMPTION TABLE" ($357.00); therefore, income tax should be withheld.
Earnings for weekly payroll period.........................................................................................
$700.00
Step 2
Not applicable - no estimated deduction allowance claimed.
Step 3
Subtract amount from "TABLE 3 - STANDARD DEDUCTION TABLE".................................
-108.00
Taxable income .....................................................................................................................
$592.00
Step 4
Tax computation from "TABLE 5 - TAX RATE TABLE":
•
Entry covering $592.00 (over $498 but not over $642).
•
4% of amount over $498.00 (.04 x [$592 - $498]) ..........................................................
$
3.76
•
Plus marginal tax amount...............................................................................................
+7.85
•
Computed tax.................................................................................................................
$ 11.61
Step 5
Subtract amount from "TABLE 4 - EXEMPTION ALLOWANCE TABLE" for
3 regular withholding allowances.........................................................................................
-4.33
Net amount of tax to be withheld ...........................................................................................
$
7.28
======
NOTE: Employers may determine the amount of income tax to be withheld for an annual payroll period and
prorate the tax back to the payroll period. This method may be useful to employers who have employees
being paid for more than one payroll period and want to conserve computer memory by storing only the
annual tax rates, wage brackets, deduction values, and tax credits.
EXAMPLE E:
Semi-monthly earnings of $1,500.00, married, and claiming four allowances on form DE 4 or W-4.
Step 1
Earnings for the semi-monthly payroll period are GREATER than the amount shown in "TABLE 1 - LOW INCOME
EXEMPTION TABLE" ($774.00); therefore, income tax should be withheld.
Annualized wages and salary (24 x $1,500.00).....................................................................
$36,000.00
Step 2
Not applicable – no estimated deduction allowance claimed.
Step 3
Subtract amount from "TABLE 3 - STANDARD DEDUCTION TABLE".................................
-5,622.00
Taxable income .....................................................................................................................
$30,378.00
Step 4
Tax computation from “TABLE 5 - TAX RATE TABLE”:
•
Entry covering $30,378.00 (over $25,878 but not over $40,842)
•
4% of amount over $25,878.00 (.04 x [$30,378 - $25,878]) ...........................................
$ 180.00
•
Plus marginal tax amount...............................................................................................
+408.38
•
Computed annual tax .....................................................................................................
$ 588.38
Step 5
Subtract amount from "TABLE 4 - EXEMPTION ALLOWANCE TABLE" for
4 regular withholding allowances.........................................................................................
-300.00
Annual amount of tax to be withheld ...................................................................................
$ 288.38
Divide by number of payroll periods in year (24) ...................................................................
$
12.02
=======
Method B (INTERNET)
Page 3 of 10
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