Anna is single with one four-year-old child. She earns a monthly salary in 2012

Question

Anna is single with one four-year-old child. She earns a monthly salary in 2012 of $5,000. Her filing status is head of household. a. If she claims two withholding allowances, how much will her employer withhold from her monthly paycheck? Refer to IRS Publication 15 and use the wage bracket method. Withholding amount $ b. If she claims four withholding allowances, how much will her employer withhold from her monthly paycheck? Refer to IRS Publication 15 and use the wage bracket method. Withholding amount $ c-1. Assuming that she has no other income, claims the standard deduction, and claims one personal and one dependency deduction, what is Anna

Explanation / Answer

Anna, claiming 4 allowances and receiving salary between $5,000, and $5,040 per month, will have $557 withheld each month.2 Annas filing status will be Head of Household. Using the 2010 Tax Rate Schedule (not the Tax Table). AGI Standard Deduction Personal Exemption s Taxable Income Tax $60,000 $8,400 $7,300 $44,300 $6,048 Annas tax is $6,048 which is $4,853 [($44,300 - $11,950) 15%] + $1,195 ($11,950 10%). On a monthly basis, Anna should have $504 withheld ($6,048 / 12). Using the table, if Anna claims 4 withholding allowances her monthly withholding would be $557. Alternatively, if Anna claims 5 allowances her monthly withholding would be $481. If Anna claims 4 allowances, she will be over withheld. If she claims 5 allowances she will be under withheld..

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