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Posted by Benjamin Yazersky CPA on January 16, 2008, 8:49 am
Please log in for more thread options On Jan 15, 7:50 pm, curiousgeorge...@hotmail.com wrote:
> I am a household employer of one employee.
>
> How should I rounding errors that cause discrepancies between
> the sum of what we actually withheld periodically for SS,
> Medicare and CA SDI v. what we should have withheld based
> on the year-end total gross wages?
>
> And for the future, how should periodic amounts be rounded to
> minimize problems? In particular, should I always round down
> so that the employee is not penalized and any difference is
> simply paid by the employer (me)?
>
> Consider the following hypothetical. We pay a daily wage of
> $70.85 gross and $65.00 net, withholding $4.39 SS (at 6.2%),
> $1.03 Mc (at 1.45%) and $0.43 SDI (at 0.6%).
>
> If the employee works a total of 104 days, the year-end totals
> are $7368.40 gross, $6760 net, $456.56 SS, $107.12 Mc and
> $44.72 SDI.
>
> But based on the gross, the totals should be $456.84 SS,
> $106.84 Mc, and $44.21 SDI.
>
> Will the federal and state agencies overlook such small
> differences? Or will they raise flags, resulting in correction
> notices?
>
> With the DE 3HW in particular, the online form performs the
> computation, resulting in $44.21. Even if I filled in the blank
> form by hand, the form includes the computation. That is,
> Wages in box D1 times SDI% in box D2 should equal the
> total in box D3.
>
> For the future, should the withheld amounts in the hypothetical
> example have been $1.02 Mc and $0.42 SDI so that, at worst,
> we underwithhold from the employee, and the employer makes
> up the difference?
>
> --
Don't worry about rounding
It just isn't worth the time
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----
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