PAYROLL CALCULATIONS--THE EASY WAY*

HOW MUCH WITHHOLDING TO DEDUCT FROM EMPLOYEE PAY
Recently one of my clients called. She has a part-time bookkeeper who usually prepares the payroll, but the bookkeeper was not available and someone had to do the payroll.
My client didn’t have the information needed to prepare the pay checks herself and asked me about it.

I don’t keep a copy of the payroll instructions myself, since I have software that does the job for me. There is a quick and easy way that I used to get the figures she needed.

I accessed the payroll calculator at : http://www.payroll-taxes.com/calculators.htm
All you have to do is click that link and plug in the gross pay, identify the period it covers (weekly, monthly, etc.), exemptions claimed, and enter the State. (so it can calculate State income tax, if any). She gave me the gross pay and I entered it in the payroll calculator. I was then able to give her the appropriate figures for Income tax, social security and medicare withholding and the net pay figure.

An even better way, if you have regular payrolls to prepare, is to use Medlin Payroll software. For a free download, go to www.medlin.com The free version does almost everything. It keeps a running total by employee and can be used to prepare quarterly payroll tax reports (Form 941) and accumulates the figures you need for State Unemployment Taxes and it has year end figures for W-2s and Form 940.

If you pay a modest fee, you can use the Medlin program to prepare W-2s and several other reports in a form you can use to file. The free version accumulates all of the totals you need –but it prints a message on the reports it generates that would make the reports unsuitable for filing. The paid version drops the message and prints fileable reports.

REFERENCES –KEY ITEMS:
WHERE TO FILE: http://www.irs.gov/file/index.html
RESTORED DEDUCIONS for Sales Tax
http://www.irs.gov//pub/irs-pdf/p600.pdf
OTHER FORMS AND PUBLICATIONS:
Car Expense-- Pub 334,463,535
Sale of Principal Residence-- Pubs 523 and IRC § 121
Sec 179 write-offs for SUVs and other equipment-- Form 4562, Pub 946, IRC §167
Office in Home-- Form 8829, Pub 587
Mutual Fund - phantom profits, reinvested dividends: Pub 550 and 564
Alternative Minimum Tax-- Pub 929 (individuals) Pub 542 (corporations)
Link to IRS forms and publications:
http://www.irs.gov/formspubs/index.html
Link to IRS Section # http://www.taxalmanac.org/index.php/Internal_Revenue_Code
To subscribe to IRS Newswire http://www.irs.gov/newsroom/content/0,,id=103381,00.html
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Email me at taxxcpa2007@hotmail.com

Link to IRS forms and publications:
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This information is not intended to be advice to the recipient. In compliance with Treasury Department Circular 230, unless stated to the contrary, any Federal Tax advice contained in this Blog was not intended or written to be used and cannot be used for the purposes of avoiding penalties.