How to Calculate the Semiweekly Payroll for Hourly Employees
- 1). Calculate employee gross pay amounts. Multiply the hourly rate by the number of hours worked in the pay period.
- 2). Subtract pretax deferrals elected by employees. Examples of pretax elections include health insurance and 401(k) contributions. The result is the gross pay subject to tax.
- 3). Determine the W-4 exemptions claimed by each employee. This information is on the W-4 document your employees provide when hired. Use the filing status and number of exemptions on the form to determine the amount of federal and state income tax to withhold from each employee's pay.
- 4). Multiply $14.23 by the number of exemptions for each employee for each day in the pay period. For example, if the period has three days and an employee has three exemptions, multiply three by $14.23 by three. The result in this scenario is $128.07. This is the employee's withholding allowance.
- 5). Subtract the withholding allowance from the employee's gross pay subject to tax. This is the amount of wage subject to income withholding.
- 6). Divide the wage subject to income withholding by the number of days in the pay period. The result is the employee's daily pay.
- 7). Use the daily/miscellaneous federal and state withholding tables to look up the amount of income tax to withhold. The IRS does not provide a semiweekly withholding table, so you must use the daily table. Use the daily pay table in IRS Circular E to determine the daily amount of income tax withholding. Multiply the table result by the number of days in the pay period. Use the daily table for the correct filing status of your employee, as claimed on the W-4 form. State withholding tables are available for download from your state Department of Revenue website.
- 8). Deduct Social Security and Medicare taxes from the employee's gross pay. There are no withholding allowances for these taxes, so make sure you use the regular gross pay amount subject to tax. Multiply the amount by 6.2 percent for Social Security tax and 1.45 percent for Medicare tax.
- 9). Subtract all tax withholding amounts from the employee's gross pay subject to tax. The result is the employee's net pay and the paycheck amount to issue.
- 10
Retain all withholding amounts you deduct from employee paychecks and deposit federal income, Social Security and Medicare taxes with the IRS. As an employer, your IRS deposit must include your company matching portion of Social Security and Medicare tax. You must also contribute 6.2 percent for Social Security and 1.45 percent of your employees' gross pay for Medicare. Deposit state income tax withholding with your state department of revenue. Federal and state income tax is not subject to company matching. In general, deposits are due by the 15th of each month, unless otherwise notified by the IRS or state.
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