Two formula tables for percentage method withholding are on pages
26 and 27. The differences in the Alternative Percentage Method
formulas and the steps for figuring withheld tax for different payroll
systems are shown in this example.
MARRIED PERSON
(Weekly Payroll Period)
| If wages exceeding the allowance amount are over $124
but not over $960: |
| Method: |
Income Tax Withheld: |
| Percentage (Pub. 15) |
15% of excess over $124 |
| Alternative 1 (Page 26) |
15% of such wages minus $18.60 |
| Alternative 2 (Page 27) |
Such wages minus $124, times 15% of
remainder |
When employers use the percentage method in Circular E or the
formula tables for percentage method withholding in this publication,
the tax for the pay period may be rounded to the nearest dollar. If
rounding is used, it must be used consistently. Withheld tax amounts
should be rounded to the nearest whole dollar by (1) dropping amounts
under 50 cents and (2) increasing amounts from 50 to 99 cents to the
next higher dollar. This rounding will be considered to meet the
tolerances under section 3402(h)(4).
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