Round up, down, does it matter? I guess not.
Page 168, Chapter 10 of "Mastering Payroll" shows the FICA tax, employee portion, to be $156.83 on Gross Wages of $2,050. It's actually $156.825, but it has been rounded up.
Page 170, Quiz 1 shows FICA tax of $34.42 on Gross Wages of $450. It's actually $34.425. It's been rounded down. Same with FICA tax on Employee A on same page, FICA tax of $49.72 has been rounded down from $49.725, and Employee B's has been rounded down to $65.02 from $65.025.
Is this accepted practice or is this just errors in the text?
I've always rounded up at 5. I've never seen a round down before.
See line 7 of IRS form 941. In other words, it doesn't matter which way you do it.
The instructions say the following:
7.Current quarter's adjustment for fractions of cents. Enter adjustments for fractions of cents (due to rounding) relating to the employee share of social security and Medicare taxes withheld. The employee share of amounts shown in column 2 of lines 5a–5d may differ slightly from amounts actually withheld from employees' pay due to the rounding of social security and Medicare taxes based on statutory rates.
The same applies to W-2 information.
Hi Lorin, and thanks for the reply. I've been preoccupied and haven't checked into the forum in a while.
My purpose in asking the question was for the Bookkeeper Exam. I was trying to understand the rules for the Exam. I don't want whoever grades the Exam to mark my answer wrong because I rounded up or rounded down. Doing both in a study book confuses people like me who have always heard to round up if the number is 5 or higher.
So, hopefully I'll be okay come Exam time.
I haven't taken that part of the exam yet, but the parts I have taken are multiple choice and graded instantly, so the rounding shouldn't be an issue.