The documents below will assist you in how the system calculates the tax.

• 2019 W-4 FWT calculation.pdf  - Document that explains the FWT calculation 
• FWT Worksheet.pdf - Worksheet from IRS Publication 15-T to help you determine how tax withholding is calculated
• IRS Publication 15-T.pdf - Contains the IRS annualized tax withholding tables for the current year

1. Current timecard taxable pay * number of pay periods in the year - Annual pay.
    NOTE: Taxable pay is gross less any pre-tax deductions.
2. Enter the number of allowances claimed on the employee's W-4 and multiply by $4,300.
3. Subtact the amount from Step 2 (Allowances) from the amount in Step 1 (Annual pay) to get the Adjusted Annual Wage Amount.
4. Go to PR, Taxes, Maintain Tax Tables, then select US.
5. Use the annual tables to calculate the amount of tax for the year based on the Adjusted Annual Wage Amount (Step 3).
6. Divide the amount from Step 5 by the number of pay periods in the year to get the tax withheld by Sage BusinessWorks.

 EXAMPLE: The example is based on tax tables for the tax year 2024. 

• The employee has 2 allowances with filing status of married (PR, Employees, Maintain Employees, Status)
• The employee pay rate is $20.00/hour with a weekly pay period (PR, Employees, Maintain Employees, Pay Info)
• This employee also has a 401K pre-tax deduction at 5% of gross (PR, Employees, Maintain Employees, Deductions...)
• The employee worked 40 hours for the current pay period

      Calculation:

1. 40 hours * $20.00/hr = $800.00.
2. Subtract $40.00 pre-tax deduction  = $800.00 - $40.00 = $760.00 taxable pay.
3. $760.00 * 52 weeks/year = $39,520.00 annual pay.
4. $4,300.00 * 2 (# of allowances from W-4) = $8,600.00.
5. $39,520.00 taxable pay - $8,600.00 allowances = $30,920.00 Adjusted Annual Wage Amount.
6. Use the annual tables from Sage BusinessWorks for married employees for the tax year 2024.
7. The tax bracket is 10% of the amount over $16,300.00.
   
8. $30,920.00 - $16,300.00 = $14,620.00 (amount over $16,300.00).
9. $14,620.00 * 10% = $1,462.00. 
10. $1,462.00 / 52 pay periods $28.12 tax withheld for the pay period.
    

The documents below will assist you in how the system calculates the tax.

• 2020 W-4 Box 2c NOT checked.pdf - Document that explains the FWT calculation
• FWT Worksheet.pdf - Worksheet from IRS Publication 15-T to help you determine how tax withholding is calculated
• IRS Publication 15-T.pdf - Contains the IRS annualized tax withholding tables for the current year

1. Current timecard taxable pay * number of pay periods in the year = annual pay.
2. Enter the amount from Step 4(a) of the employee's From W-4 (other income).
3. Add the amounts from Step 1 and 2 (annual pay plus other income).
4. Enter the amount from Step 4(b) of the employee's W-4.
5. Enter $12,900.00 if the taxpayer is married filing jointly or $8,600.00 for all others.
6. Add the amounts from Steps 4 and 5 above.
7. Subtract Step 6 from Step 3 above to calculate the Adjusted Annual Wage Amount.
8. Go to PR, Taxes, Maintain Tax Tables, then select US.
9. Use the annual tables to calculate the amount of tax for the year based on the Adjusted Annual Wage Amount (Step 7).
10. Take the amount from Box 3 of the Form W-4 and divide by the number of pay periods in the year.
11. Subtract the amount on Step 9 from Step 10 to get the amount of tax to withhold.
12. Add any additional withholding.

 EXAMPLE: The example is based on tax tables for the tax year 2024.

• Employee uses the current W-4 form. Box in Step 2 isn’t checked
• Employee is married (PR, Employees, Maintain Employees, Status)
• Box 3 of the W-4 is $4,000.00 (PR, Employees, Maintain Employees, Status)
• Box 4(a) and 4(b) are 0 (PR, Employees, Maintain Employees, Status)
• Box 4(c) has an extra withholding of $100.00 (PR, Employees, Maintain Employees, Status)
• The employee is paid weekly at a rate of $20.00/hour (PR, Employees, Maintain Employees, Pay Info)
• There’s a 401K pre-tax deduction for 5% of gross wages (PR, Employees, Maintain Employees, Deductions...) 
• The employee worked 40 hours for the current pay period

     Calculation:

1. Adjust the employee's Adjusted Wage Amount
   1. 40 hours * $20.00/hour = $800.00.  Subtract $40.00 pre-tax deduction  = $800.00 - $40.00 = $760.00 taxable wages.
   2. 52 pay periods in the year.
   3. $0.00 from Step 4(a) of W-4.
   4. Multiply line 1a by the number in line 1b = $0.00 / 52 = $0.00.
   5. Add lines 1a and 1d = $760.00 + 0.00 = $760.00.
   6. $0.00 from Step 4(b) of W-4.
   7. Divide line 1f by the number in line 1b -= $0.00 / 52 = $0.00.
   8. Subtract line 1g from 1e = $760.00 - $0.00 = $760.00 Adjusted Wage Amount.
2. Calculate Tentative Withholding Amount
   1. $760.00 * 52 pay periods in a year = $39,520.00 Adjusted Wage Amount.
   2. $12,900.00 for married employee.
   3. Subtract line 2b from line 2a = $39,520.00-$12,900.00 = $26,620.00.
   4. Use the annual tables from Sage BusinessWorks for married employees for the tax year 2024.
   5. The tax bracket is 10% of the amount over $16,300.00.
      
   6. $26,620.00 - $16,300 = $10,320.00 (amount over $16,300.00).
   7. $10,320.00 * 10%  = $1,032.00 (annual tax).
   8. $1,032.00 / 52 = $19.85 (FWT tax for the pay period).
   9. Divide the amount in Box 3 of W-4 by the number of pay periods in a year = $4,000.00 / 52 = $76.92.
   10. Subtract the amount on line i from line h = $19.85 - $76.92 = $-57.07 or $0.00 tax.
   11. Add the additional withholding of $100.00.
   12. Total withholding is $0.00 + $100.00 = $100.00 tax withheld for the pay period.
       

The documents below will assist you in how the system calculates the tax.

• 2020 W-4 Box 2c checked.pdf - Document that explains the FWT calculation
• FWT Worksheet.pdf - Worksheet from IRS Publication 15-T to help you determine how tax withholding is calculated
• IRS Publication 15-T.pdf - Contains the IRS annualized tax withholding tables for the current year

1. Current timecard taxable pay * number of pay periods in a year = annual pay.
2. Enter the amount from Step 4(a) of the employee's Form W-4 (other income).
3. Add the amounts from Step 1 and 2 (annual pay + other income). 
4. Enter the amount from Step 4(b) of the employee's Form W-4.
5. Subtract Step 4 from Step 3 above.
6. The tables aren't available within the Sage BusinessWorks program.
   1. Use the 2024 IRS Publication 15-T.pdf. Use the tables on the right side of Page 11 - Form W-4 from 2020 or later and Box 2 is checked. 
7. Divide the amount calculated in Step 6 by the number of pay periods in the year.
8. Take the amount from Box 3 of the Form W-4 and divide by the number of pay periods in the year.
9. Subtract the amount on Step 8 from Step 7 to get the amount of FWT.
10. Add any additional withholding.

 EXAMPLE: The example is based on tax tables for the tax year 2024. 

• Employee uses a current year W-4 form and Box in Step 2 is checked
• The pay rate for the employee is $20.00/hour using a weekly pay period (PR, Employees, Maintain Employees, Pay Info)
• The employee has a filing status of married (PR, Employees, Maintain Employees, Status)
• Amount in Box 3 is $4,000.00 (PR, Employees, Maintain Employees, Status)
• Box 4(a) and 4(b) are $0.00 (PR, Employees, Maintain Employees, Status)
• Box 4(c) has extra withholding of $100.00 (PR, Employees, Maintain Employees, Status)
• Employee has a 401K pre-tax deduction at 5% of gross

      Calculation:

1. 40 hours * $20.00/hour = $800.00.  Subtract $40.00 pre-tax deduction  = $800.00 - $40.00 = $760.00 taxable wages.
2. Multiply the taxable wages * 52 per payers in the year = $760.00 * 52 = $39,520.00 (Annual pay).
3. Add the amount in Box 4(a) of W-4 to the amount in Line 2 above = $39,520.00 + $0.00 = $39,520.00.
4. Subtract the amount in Box 4(b) of W-4 from the amount on Line 3 = $39,520.00 - 0.00 = $39,520.00 Adjusted Annual Wage Amount.
5. Using the tax tables from Page 11 of the 2024 IRS Publication 15-T.pdf.
   
   
   
6. $39,520.00 - $26,200.00 = $13,320.00 amount over $26,200.00.
7. $13,320.00 * 12% = $1,598.40.
8. $1,598.40 + $1,160.00 (base amount) = $2,758.40.
9. $2,758.40 / 52 pay periods = $53.05 FWT calculated for the pay period.
10. Divide the amount from Box 3 of W-4 by the number of pay periods in the year = $4.000 / 52 pay periods = $76.92.
11. Subtract the amount from line 11 from line 10 = $53.05 - $76.92 = $-23.87 or $0.00 tax calculated.
12. Add the extra withholding of $100.00 = $100.00 total tax to withhold.

How SWT calculates

1. Current time card's taxable pay * number of pay periods in a year = 'annual pay'.
2. Annual pay - [(# of allowances) * (exemption amount)] = 'Annual taxable pay'.
3. Taxes, Maintain Tax Tables calculates the amount of tax for the year based on the Annual taxable pay.

4. Tax calculated for the year/Number of pay periods in the year = 'tax withheld'.

Helpful Information

• Define the Hours in a year in PR, Utilities, Maintain P/R Parameters
• Hours in a year = Hours in work week * 52
• Define the Number of allowances in PR, Employees, Maintain Employees, Status 
• Enter Exemption amounts in PR, Taxes, Maintain Tax Tables, Allowances Limits and Rates 
• If FWT and SWT calculate incorrectly for an employee, check the pay period in Maintain Employees. If you define the pay period incorrectly, the tax will calculate incorrectly because it’s annualized
• If FWT or SWT isn’t calculating, verify the employee status in PR, Employees, Maintain Employees, Status.  If there’s a checkmark in FWT Exempt or SWT exempt. the tax won't calculate