Oh crumbs. We sell software that does EXACTLY that. I might even be able
to email you an out-of-date copy (several years out-of-date ...)

To try and explain how it works ...

We first look at the "first-priority" tax bands, and build an array of
gross2net at each kink. Let's say you pay 10% on the first 10K, 20% on
the next 10K, and 30% on the next...

Gross  Net
0      0
10K    9K
20K    17K
30K    24K

Now let's say that, on your "net of tax" income, you now have to pay 5%
of the first 10K in health premiums, and 10% of the next 10K.

Gross  Net1   Net2
0      0
10K    9K
       10K    9.5K
20K    17K
       20K    19.5K
30K    24K

For each tax in turn, you now add a new column to the right, and
extrapolate back to the left. It's easy. That's what our program does.
And you end up with, in the "gross" column, the exact gross for every
point at which the marginal tax rate changes.

Our ex-IT-manager once demonstrated this program at a "beauty contest",
up against one of the big accountancy firm. Their guy didn't believe him
when he said he could do a "net to gross" calculation instantaneously,
so they tried it. Our program was instant, while you could watch their
program iterating down towards the correct result :-)

Of course, in truth, our program didn't do it instantly. But as you exit
the "these taxes apply" setup screen, it calculates this table on the
way out. Then, when you actually enter the net, it simply interpolates
to get the gross, then does a forward calculation to report all the
taxes etc.

(By the way, no offence to the others who've replied, but do those
spreadsheets etc that you've referred to allow you to enter what taxes
apply? And (as in our case) might George possibly want to use the same
technique for other countries? After all, he did ask for the technique


-----Original Message-----
On Behalf Of George Gallen
Sent: 13 February 2004 15:40
To: 'Ardent List'
Subject: Payroll computations

I'm trying to write a program that will give a estimate (fairly close
for determine what amount of money deducted pre-taxed, will cause your
taxable income to drop a tax bracket.

What I'm looking for is an excel file for tax rates on salary income.
I'm assuming you take the gross * (# payperiods in year) for annualized
and use that as a base (depending on the # of dependants on the w4)
give you the % to charge for fed inc tax.

Is that how it works? 

(Annualized Salary - pre tax $) * (% based on dedecutions from table) =
withholding $

I'm not looking to include state / FICA at this point

Is the above the correct method for determining taxable income for a
paycheck, and
if it is via tables where can I get the table in computer readable


George Gallen
Senior Programmer/Analyst
Accounting/Data Division
ph:856.848.1000 Ext 220

SLACK Incorporated - An innovative information, education and management

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