On Jan 15, 7:50 pm, curiousgeorge...[at]hotmail.com wrote:
- quote -


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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On Jan 15, 4:50�pm, curiousgeorge...[at]hotmail.com wrote:
- quote -

Is this issue really worth losing sleep over? The IRS (and I imagine
all state tax departments) do things to the nearest dollar, not
pennies.

The accepted convention is to round UP if the result of a calculation
is 50 cents or more. Round DOWN if the calculation result is 49 cents
or less. Not perfect, but perfectly acceptable.

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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?

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >