Before reading this, make sure that in the employee edit mode, the employee is set to the proper pay period (like 52 for weekly as an example), they have the correct marital status and the correct number of dependants declared set up.

The Taxes from PayWindow are different from what I see in Publication 15 (Circular E), Why?

You are used to manually doing the calculations with the long lists that go on page after page. Those pages are "tax ranges" and not the exact tax deduction.

An example is that a person on a monthly pay person who earns $2,440 pays the same tax as a person who earns $2,480. That's the drawback of the bracket method pages and those employees will settle up at the end of the year when they do their returns.

A computer program such as PayWindow uses the Exact Calculation Method (Percentage Method) found in Publication 15 from the IRS.

You can use this information in your Publication 15 and by using the Tables for Percentage Method of Withholding along with the deductions and such and you will see that PayWindow is exactly the same as the results you will get with a calculator.

The same information applies to State taxes as well as we also use the State's computerized exact calculation method as we do with Federal taxes.