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 Previous Page: Publication 15 - Circular E, Employer's Tax Guide - 14. Federal Unemployment (FUTA) Tax Next Page: Publication 1542 - Per Diem Rates - Per Diem RatesUse to find additional instances of index items. |
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There are several ways to figure income tax withholding. The following methods of withholding are based on the information that you get from your employees on Form W-4, Employee's Withholding Allowance Certificate. See section 9 for more information on Form W-4.
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Under the wage bracket method, find the proper table (on pages 38-57) for your payroll period and the employee's marital status as shown on his or her Form W-4. Then, based on the number of withholding allowances claimed on the Form W-4 and the amount of wages, find the amount of federal tax to withhold. If your employee is claiming more than 10 withholding allowances, see below.
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The wage bracket tables can be used if an employee claims up to 10 allowances. More than 10 allowances may be claimed because of the special withholding allowance, additional allowances for deductions and credits, and the system itself.
Adapt the tables to more than 10 allowances as follows:
This is a voluntary method. If you use the wage bracket tables, you may continue to withhold the amount in the "10" column when your employee has more than 10 allowances, using the method above. You can also use any other method described below.
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If you do not want to use the wage bracket tables on pages 38 through 57 to figure how much income tax to withhold, you can use a percentage computation based on Table 5 below and the appropriate rate table. This method works for any number of withholding allowances the employee claims and any amount of wages.
Use these steps to figure the income tax to withhold under the percentage method.
| Payroll Period | One Withholding Allowance |
| Weekly | $61.54 |
| Biweekly | 123.08 |
| Semimonthly | 133.33 |
| Monthly | 266.67 |
| Quarterly | 800.00 |
| Semiannually | 1,600.00 |
| Annually | 3,200.00 |
| Daily or miscellaneous (each day of the payroll period) | 12.31 |
Taxmap/pubs/p15-017.htm#TXMP2c005bb9 Example: |
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An unmarried employee is paid $600 weekly. This employee has in effect a Form W-4 claiming two withholding allowances. Using the percentage method, figure the income tax to withhold as follows:
Percentage Method Example To figure the income tax to withhold, you may reduce the last digit of the wages to zero, or figure the wages to the nearest dollar.
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Figure the income tax to withhold on annual wages under the Percentage Method for an annual payroll period. Then prorate the tax back to the payroll period.
A married person claims four withholding allowances. She is paid $1,000 a week. Multiply the weekly wages by 52 weeks to figure the annual wage of $52,000. Subtract $12,800 (the value of four withholding allowances for 2005) for a balance of $39,200. Using the table for the annual payroll period on page 37, $3,950 is withheld. Divide the annual tax by 52. The weekly income tax to withhold is $75.96.
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Rather than the Wage Bracket Method or Percentage Method described above, you can use an alternative method to withhold income tax. Publication 15-A, Employer's Supplemental Tax Guide, describes these alternative methods and contains:
Some of the alternative methods explained in Publication 15-A are annualized wages, average estimated wages, cumulative wages, and part-year employment.
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To figure the advance EIC payment, you may use either the Wage Bracket Method or the Percentage Method as explained below. You may use other methods for figuring advance EIC payments if the amount of the payment is about the same as it would be using tables in this booklet. See the tolerances allowed in the chart in section 9 of Publication 15-A. See also section 10 in this booklet for an explanation of the advance payment of the EIC.
The number of withholding allowances that an employee claims on Form W-4 is not used in figuring the advance EIC payment. Nor does it matter that the employee has claimed exemption from income tax withholding on Form W-4.
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If you use the wage bracket tables on pages 60 through 65, figure the advance EIC payment as follows.
Find the employee's gross wages before any deductions using the appropriate table. There are different tables for (a) single or head of household, (b) married without spouse filing certificate, and (c) married with both spouses filing certificates. Determine the amount of the advance EIC payment shown in the appropriate table for the amount of wages paid.
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If you do not want to use the wage bracket tables to figure how much to include in an employee's wages for the advance EIC payment, you can use the percentage method based on the appropriate rate table on pages 58 and 59.
Find the employee's gross wages before any deductions in the appropriate table on pages 58 and 59. There are different tables for (a) single or head of household, (b) married without spouse filing certificate, and (c) married with both spouses filing certificates. Find the advance EIC payment shown in the appropriate table for the amount of wages paid.
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The income tax withholding amounts in the Wage Bracket Tables (pages 38-57) have been rounded to whole-dollar amounts.
When employers use the Percentage Method (pages 36-37) or an alternative method of income tax withholding, the tax for the pay period may be rounded to the nearest dollar.
The Wage Bracket Tables for advance EIC payments (pages 60-65) have also been rounded to whole-dollar amounts. If you use the Tables for Percentage Method of Advance EIC Payments (pages 58-59), the payments may be rounded to the nearest dollar.
Percentage Method 1 Percentage Method 2 Wage Bracket 1 Wage Bracket 2 Wage Bracket 3 Wage Bracket 4 Wage Bracket 5 Wage Bracket 6 Wage Bracket 7 Wage Bracket 8 Wage Bracket 9 Wage Bracket 10 Wage Bracket 11 Wage Bracket 12 Wage Bracket 13 Wage Bracket 14 Wage Bracket 15 Wage Bracket 16 Wage Bracket 17 Wage Bracket18 Wage Bracket 19 Wage Bracket 20 Percentage Method AEIC 1 Percentage Method AEIC 2 Wage Bracket AEIC 1 Wage Bracket AEIC 2 Wage Bracket AEIC 3 Wage Bracket AEIC 4 Wage Bracket AEIC 5 Wage Bracket AEIC 6 Employer's Order Blank Multi-Media/Back Page | Previous Page:
Publication 15 - Circular E, Employer's Tax Guide - 14. Federal Unemployment (FUTA) TaxNext Page:
Publication 1542 - Per Diem Rates - Per Diem Rates Use
to find additional instances of index items. |
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