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

Question

Quizplus · Accepted Answer

The percentage method is most commonly used for high wage earners and with the assistance of computerized payroll programs. It is not necessarily less accurate than the wage-bracket method, but it may require more complicated calculations for employees with variable incomes. This method is not used to determine the firm's own Federal income tax, but rather to calculate employee deductions. Therefore, the best choice is D.

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