US Medicare tax calculation getting a difference of $0.01 - NOTES

US Medicare tax calculation getting a difference of $0.01

Issue:

The EE medicare tax was calculated at the rate of 1.45% on taxable earning amount(/605 Amount). This calculation is performing by BSI and it returns the tax amount (/405 amount) to SAP.  For an employee  for period 16.2010 & 17.2010 have the same taxable earning but the tax amount is different was calculated differently by BSI. There was difference of $0.01.
Period     /405 Amount     /605 Amount
16.2010     34.65     2,389.44
17.2010     34.64     2,389.44
We have approached BSI for the same but they asked us to refer Lawson article #558668 (Tax Deduction Table Off By 1 Penny).  

Answer

The rate is .0145. It has four decimal places, so the system has rounding issues. The total of the rounded numbers (34.65 +34.65 = 69.30) does not equal the total of the wages multiplied by the rate. The total is 69.29, when that total is rounded. The system has to occasionally report differences of $ 0.01 in order for the math to work. So it reports 34.65 for one payroll and 34.64 for one payroll. See below.
This happens in any vendor's payroll system in the US.  

rounded        unrounded 
34.65            34.64688       2,389 .44    Wages & Taxes

34.65            34.64688       2,389.44    Wages & Taxes 
69.30            69.29376       4,778.88   Total