77
Basic Calculations
Basic Calculations
Agenda
• 2017 Limits.
• What is Regular Rate of Pay
• Calculations• Regular Rate of Pay with Non discretionary Bonus
• Regular Pay of Pay with Attendance Bonus and
Overtime
• Salaried Non-Exempt
• Salaried Non-Exempt with OT and Non discretionary
Bonus
• Gross-Ups
• Gross-Ups over $1 million dollars
• Group Term Life
2017 Limits
3
2017 Limits
Social Security
4
2017
OASDI
Wage Base
2017
Tax
Rate
Social Security
Employee Share$127,200 6.20%
Social Security Employer
Share$127,200 6.20%
Maximum Employee
Share$7,886.40
Maximum Employer
Share$7,886.40
2017 Limits
Medicare Tax
5
2017
Tax Rate
2017 Maximum
Tax W/H
2016
Tax Rate
2016 Maximum
Tax W/H
Employee Medicare Tax 1.45% N/A 1.45% N/A
Additional Employee
Medicare Tax on Wages
Paid Over $200K
0.90% N/A 0.90% N/A
Employer Medicare Tax 1.45% N/A 1.45% N/A
2017 Limits
6
Social Security/Medicare Threshold
• Domestic Employee Coverage
2017 - $2,000
• Election Workers
2017 - $1,800
2017 Limits
Retirement Plans
7
Qualified Benefit Plan 2017
Maximum limitation for
defined benefit plan$215,000
Maximum contribution
limitation for defined
contribution plan
$54,000
2017 Limits
Retirement Plans
8
Qualified Benefit Plan 2017
Elective deferrals for 401(k) $18,000
Elective deferrals for 403(b) $18,000
Elective deferrals for 457(b) $18,000
2017 Limits
Retirement Plans
9
Qualified Benefit Plan 2017
Elective deferrals for 408(p) $12,500
Catch-up (401(k), etc.) $6,000
Catch-up (SIMPLE) $3,000
2017 Limits
Retirement Plans
10
Qualified Benefit Plan 2017
Highly compensated employee $120,000
Annual compensation limit $270,000
Annual compensation limit
collectively bargained$270,000
2017 Limits
Retirement Plans
11
Qualified Benefit Plan 2017
Annual compensation limit for
certain governmental plans$400,000
Minimum annual
compensation amount SEP$600
2017 Limits
Adoption Assistance
12
Maximum exclusion for qualified adoption expenses
2017 - $13,570
A phase out of the amount excluded from gross
income begins
2017 - $203,540
Gross amount when exclusion is totally lost
2017 - $243,540
2017 Limits
Medical Flexible
Spending Accounts
13
Maximum employee contribution
2017 plan year- $2,600
Dependent Care
2017 plan year - $5,000
2017 Limits
Standard Mileage Rates
14
2017
Business .535
(53.5 Cents)
Charitable .140
(14 Cents)
Medical and
Moving
.170
(17 Cents)
2017 Limits
Federal Supplemental
Withholding Rates
15
Tax Type Tax Rate
Optional Flat Rate Method 25% (Up to $1 Million)
Mandatory Flat Rate 39.6% (Exceeds $1 Million)
Regular Rate of Pay
16
What is Regular Rate
of Pay?• It is the hourly rate determined by calculating
the total compensation earned for a workweek divided by the total number of hours worked
• Remember – there are exceptions to this
17
Nonexempt
Employees
Regular rate of pay has to be considered for all types of nonexempt employees:
• Paid hourly
• Paid Salary
• Paid commission
• Paid piece rate
18
What is Included in
Regular Rate of Pay?
• Base pay for all hours worked
• Nondiscretionary bonuses
• Production Bonuses
• Fair market value of noncash compensation
• Shift differential premiums
• On call pay
• Retroactive pay
19
What is Included in
Regular Rate of Pay?
• Supplemental disability payments
• Sick leave buyback payments
• Per diem pay
• All payments not specifically excluded by law
20
What is Excluded from
Regular Rate of Pay?
• Gifts
• Paid time Off• Vacation, holiday and sick pay for un-worked hours
• Reimbursed business expenses
• Discretionary Bonuses
• Volunteer work counted toward group’s bonus
21
What is Excluded from
Regular Rate of Pay?
• Employer benefit plan contributions
• Stock Options
• Overtime in excess of FLSA requirements
• Premium for extra days worked with qualifications
• Premium pay under a union contract for extra hours
22
What is Needed to
Calculate Pay?
• Hours worked
• Hourly rate
• Any additional payments / recordings
23
What About Multiple
Rates of Pay?
• Multiple rates in the same period• Regular rate of pay must be the weighted
average of all rates used
• Exceptions
• Can be the highest rate in the week
• Employer can always pay higher than FLSA requirements
24
Calculations
25
Calculation
Nonexempt
with Nondiscretionary Bonus
26
27
Calculation
Nonexempt
with Nondiscretionary Bonus
28
Calculation
Nonexempt
with Nondiscretionary Bonus
Tax Tables
One Withholding
Allowance Table
Percentage Method
Tax Table
30
Calculation
Nonexempt with
Nondiscretionary Bonus
31
Calculation
Nonexempt with
Nondiscretionary Bonus
Calculation
Nonexempt with
Attendance Bonus
32
33
Calculation
Nonexempt with
Attendance Bonus
Calculation
Nonexempt with
Attendance Bonus
34
Tax Tables
One Withholding
Allowance Table
Percentage Method
Tax Table
Calculation
Nonexempt
with Attendance Bonus
36
Calculation
Nonexempt
with Attendance Bonus
37
Calculation
Nonexempt – Salaried Employee
No Additional Earnings
38
Calculation
Nonexempt – Salaried Employee
No Additional Earnings
39
Calculation
Nonexempt – Salaried Employee
No Additional Earnings
40
Tax Tables
One Withholding
Allowance Table
Percentage Method
Tax Table
Calculation
Nonexempt – Salaried Employee
No Additional Earnings
42
Calculation
Nonexempt – Salaried Employee
No Additional Earnings
43
Calculation
Nonexempt – Salaried Employee
OT and Nondiscretionary Bonus
44
Calculation
Nonexempt – Salaried Employee
OT and Nondiscretionary Bonus
45
Calculation
Nonexempt – Salaried Employee
OT and Nondiscretionary Bonus
46
Tax Tables
One Withholding
Allowance Table
Percentage Method
Tax Table
Calculation
Nonexempt – Salaried Employee
OT and Nondiscretionary Bonus
48
Calculation
Nonexempt – Salaried Employee
OT and Nondiscretionary Bonus
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Calculation
Nonexempt – Salaried Employee
OT and Nondiscretionary Bonus
50
Calculation
Nonexempt – Salaried Employee
OT and Nondiscretionary Bonus
51
Calculation
Nonexempt – Salaried Employee
OT and Nondiscretionary Bonus
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Calculation
Nonexempt – Salaried Employee
OT and Nondiscretionary Bonus
53
Gross Ups
54
Gross Up usually refers to an employer
paying the taxes on behalf of the employee
on this income. This is typically considered
supplemental wages.
For example, if an employee is promised
$5,000 for a retention bonus, that is what
they are expecting to take home. So the
employer grosses up the wages to give the
employee the expected net payment.
55
Define Gross Up
What is Supplemental
Wages?
Supplemental wages are wage payments to anemployee that are outside of their regular pay.Supplemental wages may include, but are not limitedto bonuses, commissions, severance pay, awards,prizes, back pay, retroactive pay increases andpayments for nondeductible moving expenses.
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Gross Up Calculator
57
58
Bonus
Gross Up Example
Total YTD Wages $100,000.00
Calculate: Net
Retention Bonus of: $20,000.00
Lives in a State with No Income Tax
59
Bonus
Calculating Gross- Up
Net Bonus $20,000.00
Divided by 67.35%
Grossed Up Amount $29,695.62
60
Bonus
Lets Check the Calculation
Grossed Up Amount 29,695.62$
Less:
Federal Supplemental Tax 25% 7,423.90$
Social Security Tax 6.20% 1,841.13$
Medicare Tax 1.45% 430.59$
Total 67.35% 20,000.00$
Grossing Up
Bonus over $1M
Gross Up Example
Total Wages YTD $1,135,000.00
Lives in a State with No Income Tax
We want to give Rention Bonus $250,000.00
Over $1 Million Dollar
Gross Up Calculator
62
Take 100%
Less:
Federal Supplement Rate for over $1 million in wages39.60%
Social Security Rate 0.00%
Medicare Rate 1.45%
Add'l Medicare Rate for wages over $200,0000.90%
Total 58.0500%
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Over $1 Million Dollar
Gross Up
Calculating Gross- Up
Net Bonus $250,000.00
Divided by 58.05%
Grossed Up Amount $430,663.22
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Over $1 Million Dollar
Gross Up
Lets Check the Calculation
Grossed Up Amount 430,663.22$
Less:
Federal Supplemental Tax 39.6% 170,542.63$
Social Security Tax 0.00% -$
Medicare Tax 1.45% 6,244.62$
Addt'l Medicard Tax 0.9% 3,875.97$
Total 67.35% 250,000.00$
Other
Calculations
Group Term Life
Insurance
Lets Calculate
• Deductions
– Pretax Deductions $168
(Includes medical,
dental and vision)
– Pretax 401k 12%
– GTL*
• 3x salary
• DOB 09/02/1972
• Annual Salary
– $120,000.00 (Paid Bi-
Weekly)
• Pay Date
07/10/2017
• Taxes
– Form W-4
• SINGLE, 1
Allowance
– Lives in a state with no
income tax
Group Term Life
Insurance
GTL Calculation
DOB 9/2/1972
Pay Date 7/10/2017
Coverage 3x salary
Salary 120,000.00$
times 3 360,000.00$
minus non taxable 50,000.00$
Amount of coverage that is imputable 310,000.00$
GTL Calculation
Units 310.00
Cost per Unit 0.15
Cost per Month 46.50
# of months 12
Annual Cost 558.00
# of pay periods 26
Cost per Pay Period 21.46
Imputable Coverage 310,000.00$
Divided by 1000 310
GTL Calculation
Units 310.00
Cost per Unit 0.15
Cost per Month 46.50
# of months 12
Annual Cost 558.00
# of pay periods 26
Cost per Pay Period 21.46
Imputable Coverage 310,000.00$
Divided by 1000 310
Lets Calculate
• Deductions
– Pretax Deductions $168
(Includes medical,
dental and vision)
– Pretax 401k 12%
– GTL*
• 3x salary
• DOB 09/02/1972
• Annual Salary
– $120,000.00 (Paid Bi-
Weekly)
• Pay Date
07/10/2017
• Taxes
– Form W-4
• SINGLE, 1
Allowance
– Lives in a state with no
income tax
Tax Tables
One Withholding
Allowance Table
Percentage Method
Tax Table
Taxable Wages and
Withholding
Federal Taxable Wages
Gross Wages 4,615.38$
W-4 Information Single/1
Withholding Allowance 155.80$
Pre Tax (Medical, Dental, Vision) 168.00$
Life Insurance (Monthly)
46.50 x 12 = 558.00/ 26 21.46$
Pre Tax 401 (k) Contribution 553.84$
$4615.38 X 12%
Federal Withholding :
Gross Wages 4,615.38$
GTL 21.46$
Withholding Allowance (155.80)$
Pre tax Deductions (Med/Den/Vis) (168.00)$
Pre Tax 401 (k) Contribuiton (553.84)$
Amt Subject to Withholding 3,759.20$
Federal Taxable Wages 3,759.20$
Excess (3,623.00)$
Sub Total 136.20$
Percentage to multiple 0.28$
Sub Total 38.14$
Amt to withhold 719.80$
Total Federal Income Tax to W/H 757.94$
Social Security
$4615.38+21.46-$168.00=$4468.84 X 6.2% 277.06$
Medicare
$4468.84 x 1.45% 64.79$
Calculate Take Home Pay
Gross Wages 4,615.38$
Federal Tax Withholding (757.94)$
Social Security Tax (277.06)$
Medicare Tax (64.79)$
Pre Tax Deductions (168.00)$
401(k) (553.84)$
Net Pay 2,793.75$
Question?
