 In this presentation, we will enter data into the payroll register for the first month of the payroll, which will be August for us. So for more accounting information and accounting courses, visit our website at accountinginstruction.info. I'm going to say this is the first month that we have payroll in this company. We're going to have the four employees. We're going to be running this from August till the end of the year, just entering the first month of the operations into the payroll register here. We're going to be operating on a monthly basis. So our payroll process is going to be run monthly. So we're going to have this as of the month ended for August and calculate the payroll and related withholdings. And it's what we're going to calculate within the payroll register. When we consider that, we're going to have to first calculate what the earnings are. And then we're going to have to calculate the deductions on those earnings. Then we'll get to the net pay. And then we'll talk about the employer taxes portion of this as well. So we can see this. None of these calculations are very complex in and of themselves, but we have a lot of calculations here. To do this, we will have to maneuver a bit around the worksheet. So note that we can do that with the scroll bar down here, or we can use the arrows in order to maneuver through the worksheet. So we're going to start entering this data. Now, some of this data, we're just going to give you as part of the problem within the presentation here. So we're just going to give some of the data that will be given and will perform the calculations that need to be performed. We'll try to tell you where this information would be coming from in practice as we go. So first, we're going to enter data for Anthony Moore. And we're going to go through this. This first information is going to have to do with the filing status and the allowances that usually comes from the form W4. So if we go to the form W4, we typically will have the name. So when we first enter information into our system, wherever we enter the system information in, typically it would come from the W4, where we would have the formal name, marital status, and the number of allowances. So that's what we'll have here and the social security number. So we're going to enter that data here. We're going to say that Anthony is married. We're going to say have an M in B5. Note we're in essence going to be entering information where there's blue areas. So there's going to be an M in B5 tab. We're going to say the number of allowances from the W4 is four. So four allowances from the W4. Then we're going to have the regular pay hours. This is going to be the number of hours we would need to calculate this somehow in practice. Maybe we have a time clock calculating it where someone has to punch in and out of the time clock and track the hours in some format. We're doing this on a monthly basis note here. So we're going to say that anytime we have an hourly employee, we'll enter the number of hours here. If it's a salary employee, we'll just say it's a salary employee here. So we're going to say this is an hourly employee and we're going to put 161 hours for the month. Now note, these are just regular hours, not overtime hours. And when we break those out between regular hours and overtime hours, what we're going to have to do is figure out what our overtime regulations are. Is overtime meaning after a 40-hour work week or is overtime going to be something more stringent, meaning federal overtime typically is a 40-hour work week, which means we'd have to, even though we're paying monthly, look at each week within the month and see if there's any overtime hours and then pull those out and calculate those. So we're not going to do that here. We're just going to tell you what the overtime hours are based on that information. So just note if it's a 40-hour week, that's what we would end up doing. We'd have to calculate the hours for each week. Anything over 40 would then be overtime hours. As we then calculate everything for the month, the time period that we're using in order to put the information into the earnings records. If on the other hand you're in a state that has more stringent rules such as an eight-hour work day, anything over eight hours would be overtime. And we'd have to calculate the days as well to see if there's any days over the eight hours and that could come out to a different calculation for overtime. So this is going to be the regular hours, then we're going to give you the regular rate. This would be the rate that we agree upon within our payment agreement. It's going to be 25 here. Then we're going to calculate the regular pay, which of course now that we have the hours of 161 and the rate times the rate of 25, that would give us 4025. We will do that with a formula here. So we are in F5 where we will say equals point to the 161 hours, which is in D5 times the $25 in E5. We want to use formulas as much as possible. I'm going to select a tab and they're going to give us our 4025. We're going to try to put dollar signs wherever we're talking dollars, non-dollar signs when we're not talking dollars to give an indication of when we're talking about some other type of measurement other than in dollars. So then we're going to go to the overtime hours. And again, we're just going to give the overtime hours. So based on our calculations, we're saying that the overtime hours is one. That means total hours was 161 plus one or 162. Then we're going to give the overtime rate. Overtime rate is typically calculated as time and a half. Meaning you can kind of think of it as a 50% raise, meaning if you had $25 an hour times 0.5, another half $12.5 plus the original 25, that would be 37.5. Or we calculate that as 25 times time and a half or 100% 1.5, another 50%. If we move the decimal to two places to the right, 150%. So that gives us the 37.5. So our overtime rate we'll put in H5. We're going to do that with a formula equals the 25 times 1.5 and tab. Then we're going to give our overtime pay, which will just be the one times 37.5. So in I5 we will say equals point to the one in G5 times 37.5 in H5 and enter. That'll give us the 37.5. Now obviously we could have calculated that and just typed in 37.5 here, but we really want a formula. We want to standardize the worksheet. We want to have it all uniform and use formulas as much as possible, meaning this whole column should be symmetrical and have the same formula in it. Then the total earnings, we're going to add up the regular pay and the overtime pay. So that's just going to be the 4025 plus the 37.5. We will do that with a formula again. So in J5 equals this 47.25 in F5 plus this 37.5 in I5. That gives us our 4062. This is our total earnings. Now going from there, I'm going to scroll to the right a bit. What we're going to do is just use these earnings to complete the rest of the worksheet. Now, what we're going to do here is have a few more earnings columns, not calculating the tax. This isn't calculating the OASDI or the Social Security, the Food of Federal Unemployment Tax and the SUTA, State Unemployment. These are going to be wages that we'll use to calculate. They will be much the same in the first month of operations until we hit some of these caps. So the reason we need the second calculation of wages is because if, for example, the earnings for an individual goes over the cap of 128,400, which we'd have to check on their individual earnings records to see if it does, then these two numbers will differ. Otherwise they'll be the same. Also note that these Social Security wages could change for FICA taxes, including Medicare and Social Security to the total earnings if there's pre-tax deductions, which could include a group insurance plan if that group insurance plan was qualified as a cafeteria plan or a section 125 plan. For the purposes of this example problem, the group insurance that we will have here is going to be a post-tax deduction, not going to be a pre-tax deduction for our wages that's going to come out of the calculation for net income, but it's not going to be reducing the taxable income for federal income tax, Social Security, or Medicare. So that'll be the same for most employees throughout the entire time. But the FUTA has a cap of 7,000. So after they hit 7,000, then we don't calculate FUTA anymore. So we need to, so these numbers will change, not this pay period, but next pay period. SUTA is a state tax. We don't usually use SUTA. We're not, you know, focusing on the state, I should say, but SUTA is so closely related to FUTA the way the terminology of the law is that we're going to use it here. We're going to have a slightly different cap, 8,000, that the cap oftentimes will simulate the FUTA cap or be somewhat similar in nature in terms of the calculation. So we're going to say that there's an 8,000 SUTA cap. So for now, these will all be the same. So in K5, we're just going to say this equals the 4,062.50. No change because the total earnings, they haven't hit the cap. This is still under 7,000 and it's the first payroll period. So it's going to be the same here as well. So L5 is just going to be equals the 4,062.50. Same for the SUTA. There's no change here. So this just equals the 4,062.50. Now we'll calculate the OASDI, which is Social Security. It's part of the FICA tax. So remember, there's going to be two components. OASDI is an easy abbreviation for it. So that's often used on the abbreviation, probably most commonly called Social Security in terminology. So in order to do that, we want to make sure that we pick up the Social Security wages, not the earnings here, even though it's the same now, but it won't be or possibly won't, if any of the employees reach the cap amount. So we want to make sure to pick that up so we don't cause ourselves problems in the future. So it's going to be the 1, let's see, it's going to be the 4,062.50 times 0.062, which is 6.2%. So 0.062 if we move the decimal point over. So that's going to be our calculation here. We'll do that with a formula in cell N5. So within N5, we're going to say equals. Make sure we pick up the K5. It'll be the same as we're picking up here. But again, we want to make sure that we're in conformity, don't cause us problems in the future, times 0.062. Now we'll calculate HI, which is Medicare. So again, this is an easy abbreviation. Sometimes it'll be MED or HI. So it's part of a FICA tax. We're going to pick up the total earnings here because there's no cap on Medicare. So there is an added tax if it's above 200, but we're not going to deal with that here 200,000. So we're just going to take the total earnings since there is no cap. So we're going to take the 4062.5 times 0.0145. 1.45%, 0.0145. That gives us the 5890. I noticed that it won't be perfectly rounded. That's just what we have to deal with. We want to round it to the nearest penny. So 58.91. When we calculate in Excel, of course, it will look like it's rounded to the nearest penny, but it's actually taken it out. When we do calculations with it, it'll be taking the actual number. So we're going in 05 equals, we're going to pick up the total earnings this time, times 0.0145. And that'll give us the 5891. So here's what I mean by Excel picking up the total number. If I go to the home tab numbers and increase the decimals, it's really 58.906 on and on. But we're just going to pick up the 95891. If we use this cell to calculate, it's really using the actual number, not the rounded number we see. Now we're going to do the federal income tax. Now this is the most complex of the taxes because it's not a flat tax as these two pretty much are. So we have to basically use tables and we need to know the marital status. We need to know the number of allowances and we need to know how often the payroll is, which is ours monthly. So I'm going to scroll back over. We need them. In this case, this is where the marital status comes into play. The number of allowances and the earnings are what we're going to use. We're going to go to the circular E to do this. So it'll be a simplified calculation. We'll go to the circular E. You have to look these up in the tables. So we're looking up withholding. So I'm going to start by going down to page 21. And then I'm just going to scroll down, just using the page down until we get to the table calculations here. And so there are going to be two types of tables. One is going to be the percentage method. That's the more complex table. We want to use, if possible, the just the table method. So we're going to be down here. Now when we look at the tables, we have to see that we get in the right pay period. This is a weekly pay period or monthly. So we're going to scroll down till we get to the monthly pay periods. That's weekly. Then we got weekly. Then we got weekly. We've got bi-weekly. We've got bi-weekly. We've got bi-weekly, bi-weekly, and semi-monthly, semi-monthly, and semi-monthly. And finally, we should finally have monthly down here. We're jumping back over here to the payroll register. Note that we're going to be using these numbers in order to look up this information for the total earnings, which isn't entirely correct. It'll be a good example here. But just note that as we look this up that it should be the total earnings, which is the 406.5 minus the 401k if the 401k is going to be a non-tax item, a pre-tax item, which it typically is, so minus the 203.13. And that's the number we should be looking up. So in our example, we're going to be looking up these numbers. So we get an idea of the table. We're going to run with those numbers because for the FIT, because that's how the problem is set up. But just note that typically we would reduce it by the 401k. Also note that the group insurance if it was a cafeteria plan would then be deductible here as well as with the OASDI wages and for Medicare. But we're going to say that this is not a cafeteria plan for this example, meaning it's not going to be a pre-tax deduction, but a post-tax deduction. And note what the result would be if we basically over withheld, if we do it this way, we're going to take this number instead of the lower number, which would have been the total withholdings minus the 401k plan, which will result in us withholding more than we otherwise would, which would typically result when the employees do their 1040 at the end of the year with the withholdings being too high and possibly having more of a refund at the end of the year. So typically this kind of will wash itself out in a way in that withholdings will be too high during the year. And at the end of the year, the refund after filling out the individual tax return, the 1040 would typically be higher if an employee hadn't the refund at the end of the year or else the tax owed would be lower. Now this is monthly, this is single monthly single. We're looking for monthly married. So I'm going to scroll down till we get to a monthly married table. And so here's monthly married. So here's our table. Now we're going to have four allowances. So what we're going to do is we're just going to look at our total earnings, which is this 4062.50. I know I'm scrolling back and forth here, but we're looking for this 4062.50 going back to our tables. We go back to our tables. It's going to give us a range. So we want to be in this column. That's the number we're going to pick up. And we're picking up a range of 4062. So it's got to be between these two numbers. So if I scroll down all the way down, we start picking up 4000. So here we are 4030 to 4070. So 4062 is in between there. So I'm going to scroll over to four allowances. And that will give us this number of the 173. So that's what we'll use. That's how we're going to use these tables. So we've got to make sure in order to use the tables, we just need to make sure that we're picking up the right table in terms of monthly picking up the right table in terms of marital status. And then we got to pick up the right column number and the wages within the wage range. So then if we go back to our table, we're going to go back to our sale over here. And we have to manually input this 173 was it 173, I believe. Okay, so those are the taxes we're going to deal with. And we're not going to deal with state income taxes. They could differ. Some states won't have taxes. Some states will have different taxes in terms of SIT. It might follow the federal income tax. We're then going to go to insurance as a voluntary type of deduction. And I'm just going to give the insurance number so that we can see what it is. Notice these are mandatory. They're going to come out of the paycheck. The insurance is going to be something that is voluntary. We're going to be participating in the insurance, but it's still going to come out of our wages. Also note that the insurance for the purposes of this problem will not be a section 125 cafeteria plan, not be qualified for section 125 cafeteria plan, which means it'll be a post tax deduction and not a pre tax deduction. So that means that it's not going to be reducing total earnings when we calculate the federal income tax and the social security and Medicare taxes. So it's going to be taken out of the paycheck post tax calculation. So the insurance, I'm just going to say that it is going to be for 1416 points. Undo that. It's going to be here. It's going to be 1416.67 for insurance. Union dues. We're going to say that there's two employees that have union dues. And that's again something that we're just going to have to pull out of the paycheck. And I'm going to give the number here in our number. So whatever the union dues are, I'm going to say they're eight dollars. And then the 401k plan or some type of retirement plan. This is going to be the amount that's going to be withheld from the wages to get to the net pay to put into a retirement plan, such as a 401k plan. And I'm just going to give the number here. This will vary based on what the plan is and based on what the employee decides to withhold within the plan. It is voluntary. So we're going to have 203.13 for this employee. And then we'll calculate the net pay. So this is going to be the actual paycheck. So what we have here is our total earnings here. We'll pick up this one. These are the same, but just this number. And then everything that we took out, OASDI, HI, Medicare, Social Security, federal income tax, FIT, group insurance, union and the retirement plan 401k. So let's do that. We're going to say that we have 4062.5 minus the OASDI 251.88 minus the 58.91 Medicare HI minus the FIT federal income tax 173 minus group insurance 1416.67 minus union dues, $8 minus the 401k 203.13. That gives us the 1,950.91. Now there's a couple of ways we can do that with a formula here. We're going to do a formula. We could say that this is going to be equal to this number minus the sum of these. That's what we'll do next time. Right now, we're just going to point and click to each of them. So we'll just say this equals the total earnings in J5 minus, and I'm just going to say the OASDI in N5 minus the HI in O5 minus the FIT federal income tax in P5 minus the group insurance in Q5 minus the union dues in R5 minus the 401k plan in S5. That'll give us the 1,950. This would be the actual net check. So in other words, the employee earned 4062.50 in theory. Again, if we had economic earnings without these withholdings, it might be different. But in theory, they earned 4062.50. We took out from their check for them to pay on their behalf OASDI Medicare federal income tax insurance union dues 401k to get to a net check that they'll actually receive of $1,950.92. Now we're going to calculate the employee earnings because the employee error is going to have to pay and match some of this information. So this OASDI, this is only the employee half, the employer is going to in essence pay the same amount for their half. So we're just going to take the same calculation, I'll take this number the OASDI wages times the 6.2% or 0.062 equals the 4062 in K5 times 0.062 tab. The HI is going to be the same. We already had it here. We're going to do it again for the employer's half. It's going to equal, I'm going to scroll all the way to that blue column, the total pay times 0.0145. So same number here. And then we're having the FUTA. This is a purely employer tax. Notice there was no FUTA here. It's only an employer half tax. So we're going to pick up the employer times 0.006. So we're going to say this equals scrolling back to the total wages. Actually, sorry, we're going to go to the FUTA taxes, the 4062 times 0.006. Enter. So if we saw that again, it's going to be free set of calculator. We're taking the FUTA wages, which is this 4062.5 times 0.006, 0.6%. And that gives us 2437, 2438 if we round. So that's our 2438. And then the SUTA is going to be our SUTA wages times 0.054. So this equals, I'm going to scroll over to the SUTA wages right here in M5 times 0.054. And that'll give us our SUTA. So this doesn't come out of the paycheck for the employee, but is something that the employer has to pay on behalf or because of payroll taxes. Okay, so you can see that's the calculation. So that's going to be that's one pay period. And you can see the complexity. None of the calculations in and of themselves are that complex. But when we put this whole thing together, it can look quite intimidating. So we're going to do the same thing for the other two here. So we got Cindy Lewis, we're going to say it's married with four as well, total hours. And this would be given from the W4. And we're going to say that the hours, regular hours are 158 versus overtime of zero overtime hours. Her pay rate, which we would get from the agreement when we employed her is the $28. And then if we multiply this out, I'm going to do this a little bit faster this time. It's going to be the 158 times the $28 in F6. So this equals the 158 times $28 tab. And then the overtime rate, we're going to calculate even though she didn't have any overtime because we want to have some some metrics see in our Excel sheets and it should be symmetrical in some way. So we're going to calculate the rate anyway. So it's going to be the 28 times time and a half, which is equal to the hourly rate $28 times time and a half or 100% 0.5 another 50% giving us 42.5 or 42, 42. And then we're going to calculate the overtime again, it's zero, she didn't work any overtime. But we're going to we're going to keep the calculation there. So if we wanted to copy these formulas across, it would be easy to do so. So I'm just going to say this equals the zero hours times the $42 and the overtime rate that will give us, of course, zero. So then with the total earnings, again, you could just say, hey, it's only the 4426, I don't need to add the zero to it, because that doesn't do anything. But we want to for one note that if I copied this formula down, if we highlight and copy down, which we'll probably do later, it'll do that for us and it'll pick up this cell. So we want to make sure even if we don't need this cell, we pick it up so that if we copy something down, it's all symmetrical. We're going to do the calculations straight through, rather than copying and pasting formulas for a while, at least. So in j6, we're going to say this equals this 4,424 plus this zero tab. Now we're going to get to those wages for OASDI Social Security wages for FUTA federal unemployment wages for SUTA state unemployment, they're all the same right now because no one has hit these caps yet. But they will next time. So we have to be in good practice and make sure that we're doing everything so that the system will be the same when these become relevant. So in k5, this just equals this 4,424. In l6, this just equals the same 4,424 for FUTA. In m6, this just equals that same 4,424 for SUTA. Then we'll go to the OASDI calculation and that's going to be based on this wages. It's the same, but we want to make sure to pick up the right column times the Social Security or OASDI rate of 6.2% or 0.062. So this equals the this column in k6 times 0.062. Tab. I note that this one then is going to be the Medicare or and that's going to be H.I. or Medicare. We're going to pick up the total earnings because there's no cap. So we're just going to be in 06 and say this equals point to the 4,424 times 0.0145 and tab. Then we have the most complicated one the FIT. I'm going to scroll back over. This is the federal income tax. We have to use the tables because of the progressive tax system. We don't have a flat tax. It would be nice and easy. We need to know the marital status. We need to know the number of allowances. The pay period, which is monthly for us and the amount, which is going to be this 4,424. So I'm going to go to our tables and we're in the right table. Married monthly. All we need to know is the pay amount, which is 4,424. So 4,430, 4,390 to 4,430. Here it is and four allowances. So here's the four allowances and I lost where I was here. 4,390, 4,430 is going to be this 216. That 216 right there. So that's going to be the amount that we're going to withhold that 216 for the FIT. So I'm going to go back to FIT. And obviously if we had a system, the computer would be able to do that lookup table, which would be very nice. It's very nice to use, but it's important to know how complicated that can be for tax planning purposes. It's great when the computer will look it up for you, but still makes problems when we have the tax plan on it. So that's going to be 216. Group insurance I'm just going to give. It's going to be the 1,416.67 that's going to come out of the paycheck. These are voluntary benefits, or that one is. Union dues. We're going to say she's another union worker. We're just going add that union worker in there just to note that that would have to be removed. And the 401k. Again, I'm going to give it. We're not going to get into the 401k calculation. Just note this is the employer portion that is going into some type of retirement plan like a 401k, which is I'm just going to say 442.40. So these are given and we would have to look those up based on one, the union agreement, the group insurance agreement and the 401k, whatever was decided by the employer and the employee under the terms of the agreement. Then we got the net pay. Net pay is just going to be then the calculation of this right there. This 442.4 our total earnings minus what we withhold Social Security 274.29 minus Medicare 64.16 minus federal income tax 216 minus the group insurance 1416.67 minus the union dues $8 minus the 401k 442.4 gives us the 2005 49. Let's see if we did that correctly. We're going to do that with a formula here and do the same calculation. This time I'm going to pick up this number minus the sum of these numbers, and it's a bit nicer of a formula. It looks nicer. Short release. This equals this 4,424 and J6 minus the sum. I'm going to double click the sum function and pick up all the deductions. So then we're just picking up the OASDI to the 401k plan. And then we should close it up. Notice I should close the black brackets with shift nine. If I don't do that and I just hit enter, it's okay. It's kind of scary. It says that we messed up somehow. But all it's saying is we found a typo. We're going to close it up for you and we're going to say this is what you want. We're like, yeah, that's what I want. And then we have the 2002 49. Then we'll calculate the employer portion. Same calculations, but we're going to match the OASDI, match the Medicare, and then calculate FUTA and SUTA, which are employer only taxes. So same calculation here in U6 as the employee portion of Social Security. It's going to equal the 42424 in K6 times the 0.062 tab. And then for the HI, we're going to pick up the total wages. So this equals, I'm going to scroll to the right, just a little, that one is what we should pick up times. I'm going to scroll back over just a little bit. So it's J6 times 0.0145. Because if we move the decimal places two points over that, then FUTA, notice we haven't seen FUTA over here. It's only an employer tax. We're going to pick up the FUTA wages, this number. But just make sure it's this column because this one will change for sure next time period times the 0.006 or 0.6%. So this equals the 4,424 times 0.006 tab. So there's FUTA and then SUTA is going to we're going to pick up the SUTA wages, which has a cap of 8,000 times 0.054 or 5.4%. So this equals the SUTA wages times 0.054. Enter. So that's our 23890. Note these don't affect the net pay, but are something that the employer has to pay. All right, let's do this two more times. We got the next one is Jill Jackson. We're going to say that Jill is single, one exemption. Her total, her regular earnings are going to be 170 for the month hours. Overtime hours are going to be 3. And once again, we're just giving those numbers. It would be based on either a 40 hour workweek or an eight hour day, typically depending on the state, 40 hours being the regular calculation for the Fed, which could then include some state more stringent calculations. So then we're going to say that her rate is going to be $31. Then we'll calculate her regular rate. So I'm just going to take the 170 hours times 31. Note that this three hours might be a little not enough, depending on on the hours that were worked in a week, but we're going to go with that for now, because that's our calculation. But remember that we would have to calculate that on a 40 hour workweek, break them out into a per week basis and see what was over 40 hours per week, typically. So we'll multiply this out. We're going to say this equals the 170 regular hours times the 31 hourly rate. And that'll give us the 5,270. Then we'll calculate our time and a half rate or overtime rate, which will be the 31 regular times time and a half or 1.5. So this equals the 31 regular rate in E7 times 100.5, 150%. That'll give us the 4650. Then the overtime pay then will be the three hours times the 4650. So in I7 equals the three hours times 4650. So G7 times H7 tab, then the total earnings are going to be the regular pay plus the overtime pay. So in J7 equals the regular pay in F7 plus the overtime in I7. And there we have it. So now we're going to bring this over to calculate our taxes on it. So we have the OASDI. These are going to be the wages again. So they're all the same this time because no one has hit our caps. So the first one is just going to be equals. This is OASDI Social Security wages, not the tax. Then the FI FUTA equals the same amount in J7. And then SUTA equals the same amount. And so they're all the same right now. No change because no one's hit the cap yet. And then we're going to go to the Social Security or OASDI tax, which will be this number, the OASDI wages times 6.2% or 0.062. So in N7, we're going to say this equals the 5409 times 0.062. And that will give us our 33539 HI, which is going to use the total earnings. So we're going to be an 07 equals 540950 times 0.0145. Then we're going to go to the FIT where we will need our information once again. So we have the single one and the 5,270 for a monthly pay period. So we're currently in monthly, but it's married. So we're going to scroll back up to single. All right. So here we are in the singles and we need the 540950. So we're in single 5,000. And we're actually a little bit over. The highest point of the table is 5405. So it's 5409. So I'm going to use the table here because we're going to use the percentage method next time. So I'm going to pick up what we have here. So we're going to use the table on this one. And so we're going to pick up the highest number. There's one. So I believe that's this column, as far as the allowances. So here's the allowances. We're going to pick up this 702. So that's what we're going to use, the 702. So we'll scroll back over here and we're going to pick up the FIT at 702. Next, we're going to enter the rest of our information here. So we've got the group insurance. I'm going to give this information. It would be the voluntary deduction for the group insurance. And we are going to say that the group insurance is 1166.67. The union dues, there are none for this employee, not part of the union. 401k is we're going to say is 378.67. That would depend on the elections by the employee and the employer plan that is available. Then we'll calculate the net pay. It's going to be this number minus the sum of the deduction areas, all the taxes and the deductions. So we're going to use the same formula. We're going to type it in here. Note that we could copy this down now, but we want to practice this calculation. So we're going to say this equals this number, J7 minus the sum SUM of everything in the red here, the deductions to the 401k. Don't worry about a blank sale. That's okay. And then we should shift nine, close it up. So J7 minus the sum of brackets in 7 colon S7 brackets and enter. Okay. And then we're going to calculate the employer taxes. So we're in the employer taxes for Social Security or OASTI in U7. This will equal, we're going to point to the OASTI wages times 0.062 tab. And then we're in Medicare. We're going to do the same thing here. We're going to say this equals this time picking up total wages in J7 times, I'm going to scroll back over so we can see the percent, which is 0.0145 or 1.45%. So 0.0145 tab. And then FUTA where we're going to pick up the FUTA wages. This one equals FUTA in L7 times 0.006. And if any of these, if I'm going too fast, the procedure is the same as the prior one. So we probably went a little slower there. So if you want to go through that or actually go through this one slower, slower down, but tab, then the SUTA is going to be the SUTA wages, which will be this item here times the 0.054. So this equals scrolling over to SUTA here in M7, M7 times 0.054. And there's our SUTA. All right. So there is this one. Now we're going to do this one more time. This one for Judy Jones, who we're going to basically say is the owner. So she's going to be married. We're going to have three. This is going to come from the W4. We're giving it here. No hourly rate. We're going to say she's a salaried employee. And so she's not subject. She's exempt from overtime calculations. And we're going to give her a high wage because we want to get over this cap to see what would be the implications. We won't get over the caps or some of the caps, at least social security. We want to get over this social security cap to see what happens when we get to later time periods. So we're going to say that her wages are 35,000 a month. So 35,000 is her monthly rate here. And so we're going to say that the regular pay that I'm sorry, I just undid that. I deleted that. I'm going to put the 35, we don't need a regular rate. We're just going to say she gets paid salary of 35,000 in the regular pay. Now there's no going to be any overtime hours because she's a salaried employee, no overtime pay. So the total earnings are nice and simple for a salaried employee. It's just going to be the same as or equal to the 35,000. Now it is possible for someone to be salaried and still be subject to overtime regulations, but typically the salaried individuals will be higher paid and not subject to overtime calculations. That's going to be our assumption here. Then we're going to do our same information on this side. We're going to say the OASDI wages is the same because she didn't hit this cap yet. So this equals the same number. Futa, however, she completely cleared the 7,000 cap. So we're capping it at 7,000. And that's the most confusing thing. These caps are kind of confusing. So she got up to 7,000 already. So we take the lower of the two or 7,000. We could use a formula, like an if then formula to logically calculate that in Excel, but I won't get into that right now. That's just the logic of payroll. Maybe we'll do one later. So then we got the 8,000. She hit the 8,000, which is lower than the 35. So we capped it at 8,000. And then the social security, we can calculate now based on this 35,000. So social security equals the 35,000 times 0.062. Medicare equals the 35,000 total earnings times 0.0145. Then we have the FIT federal income tax. Now we're going to use the other tables to do this, because this is going to be complicated because it's too high for the tables. So I'm going to go back to, we can't just use the merry tables because as we saw last time, we should have gone to the percentages because it's too high. Our earnings are too high. So we need to go up to the percentage method. So I'm going to scroll all the way up. Probably should use the page up button. So we get to the percentage method. I'm going to go through all of these to get back up to the percentage method. And this will give us an idea of what these tables are actually doing, what are these tables actually calculating. So we're in the percentage method now. And this will actually show us the tiers on how this progressive tax system works. So here we've got payroll single for a quarterly. This is semi-annual, we want monthly. So here we got weekly, we got weekly semi-annual monthly. So we're monthly. She's married and three exemptions. So that means we're going to use the one on the right hand side. So married if we read through this, it says if the amount of wages after subtracting withholdings and allowances is not over. So this is like kind of the key term here after subtracting withholdings and allowances. What is that? So in order to do this method, we have to go and find what they give us for the withholding and allowances. So if we scroll up top, we'll see that information given here. So what we're looking is for the percentage method amount for withholding allowances. And we have a monthly of the 34580. So the 34580, she has three allowances that we got from her W4. So we're going to take this 345.8 times 3. That's going to give us the 103740. Now her total wages were 35,000. So we're just going to subtract that from 35,000. So I'm just going to say my I'm going to get to a negative number, but I'm going to say minus the 35,000. And that'll give us the 33,96260. So that's what we're going to that's going to be like her wages that we're going to use to calculate this. So we subtract out the allowances this way, we took the allowances 34580 times the number I'm going to be talking. We took the monthly allowance rate 34580 times the number of allowances three, subtracted it from her wages up 35,000 to get the 33,96260. That's what we're then going to use. So now we're going to go go back to our table down here and we'll scroll down to our table. So here's weekly by weekly semi and then here's monthly. We want to be on the married side. We're looking for between these brackets here. So we can see that each of these has a progressive increasing tax rate, but it's only more tax on the added amount of revenue. So if we go to we have to find the bracket that we're in 33,933,962 is between this last one here. So between 30, actually it's between this one between the 27 and the 34. So this is the area that we are looking at. So in the way this reads is it basically says, Hey, look, we already know at the last point at basically the 27,000 at the end of the last bracket, how much tax will be paid, we can calculate that. That's going to be this 5,34826. What we need to calculate is the amount that falls within this time period, because we're not at the next time point, we're not at the 34,296. So whatever's between what our rate is, which is the 33,962 minus the last point that we calculated exactly what the tax is at that period, 27 to 13, that's the only amount that's going to be taxed to 32. Our prior income at the highest rate was taxed at 24, 22, 12 and 10. So all those brackets, we don't have to recalculate all those brackets, because it's able to calculate it on the table based on this last point in time or the last wage rate, the highest wage rate before the bracket that we are in, it's able to calculate that, that's 5,348. So in essence, the calculation then would be this, or it will be this, not really in essence. So we're just going to say that it's going to be our 33,962.6 minus this 27, 27,213, that gives us 6,749,60. That's what's going to be taxed at the highest rate of 32%. So that's times 0.32, that gives us our 2,159,87 about, and then we're going to add to it this 5,348,26. So plus this 5,348.26, that'll give us our 7,508.13. And that's what we're going to use. So if we scroll back over, or if we go back over to our tables, we're going to go to the FIT, and we can try to do that one more time in the calculations here, right? We're going to say it was the FIT is going to be the 33, or we can even take, it's going to be equal to this 35,000 minus the exemptions, which were 345.8 times 3. And then I'm going to take this whole thing, I'm going to bracket this whole thing. I know this is kind of a complex formula to look like this, but I'm going to bracket, whatever that comes out to, I'm going to bracket that whole thing. And at this point, it should come out to 33,962, if we were to do it. We're going to take that and subtract it minus the amount from our table, which is going to be this 27, 27213. So we're going to take our 27213 and multiply it times the highest rate, which is 32 percent. So the 32 percent. So if we go back over here, we're going to say that's minus the 27213. So this is kind of like our wages, the side minus the low point in the brackets. And then I'm going to put brackets again around the entire thing, because now I want to take this entire thing, whatever that comes out to, times the highest rate of 0.32. And then we're going to take that, and then we're going to add to it plus, we go back to our table, the 5,348.26. So we're going to add to that plus the 5348.26. And that's going to be our entire thing and enter. So that gives us our 7,508.13. I know that's a complex formula, so you don't have to do it that way. It's easier to do basically in a calculator or in an Excel sheet, vertically, so we can see subtotals. But if you want to practice that formula you can, this is one area where if you don't want to use the formula, then that's that's fine right there. The FIT is where we've been hard coding this whole thing because of the complexities there. So then group insurance, we're going to say that the group insurance is going to be the group insurance 1,500. Union dues, none. 401K plan is going to be for her 1,750. Net pay then we're going to calculate the total earnings minus all the withholdings and deductions equals the net pay 35 minus the sum of all the deductions. So we're going to take N8 to the S8 and enter. And yes, that's what we want. So there it is. Now we're going to take the OASDI, the Employer Taxes. So this is going to equal the Employer Wages 35,000 times 0.062. Tab Medicare, we're going to say equals. And we're going to pick up this amount in J8 times 0.0145. And then FUTA, we're going to pick up the 7,000 equals there's a big difference here, of course, 7,000 rather than the 35 times 0.006, the FUTA rate. Tab. And then SUTA equals the SUTA times the 0.054 and enter. So there we have it and it sums it all up for us. And that's going to be our information there.