The percentage method of determining an employee's Federal income tax deductions __________________.
A) Is used to promote complexity in payroll practices
B) Allows payroll accountants to determine Federal income tax for the firm itself
C) Is used primarily for high wage earners and computerized payroll programs
D) Is less accurate than the results gained from using the wage-bracket method

Question

Quizplus · Accepted Answer

The percentage method is commonly used for computerized payroll programs and high wage earners, as it takes a percentage of the employee's taxable income to determine their Federal income tax deductions. It is not as accurate as the wage-bracket method, which uses a table to determine exact deductions based on an employee's income and filing status. It does not promote complexity in payroll practices, nor does it determine Federal income tax for the firm itself.

The Percentage Method of Determining an Employee's Federal Income Tax