15-P-019 2015 Percentage Method Tables for Federal Tax Withholding (December 9, 2014)
Informational Circular No.: 15-p-019
Supersedes Informational Circular No: 14-P-014
Effective Date: January 1, 2015
Contact Name: Nancy Ruoff
Ph: (785) 296-2853
Approval: Nancy Ruoff (Original Signature on File)
Summary: New Federal Withholding Tax Tables Effective for Paychecks Issued on or After January 1, 2015
The Internal Revenue Service (IRS) has issued new tables for the percentage method of withholding for 2015. Therefore, the attached tables will be used in SHARP for computing federal tax withholding for wages paid on or after January 1, 2015. In order to use the attached tables, income must be annualized. To annualize income, multiply federal taxable income for the current bi-weekly pay period by twenty-six pay periods. In addition, the value of one withholding allowance has increased to $4,000 for 2015.
Regents should also note that the annual amount to add to Nonresident Alien employee’s wages for calculating income tax withholding for 2015 has increased to $2,300. In addition, Regents should check IRS Publication 1494 for any changed amounts when computing tax levies for garnishments. Currently, the IRS has not yet released Publication 1494 for 2015.
IRS regulations continue to require employees claiming exempt status from federal tax withholding (for income earned in the United States) to file a new W-4 form annually. Employees are eligible for the exempt status if the following criteria are met: 1) the employee had no income tax liability in the previous year, and 2) the employee anticipates no income tax liability in the upcoming year.
An e-mail notification was sent on December 1, 2014 to all SHARP employees who were exempt from federal withholding in 2014. The notification reminded employees that a new W-4 must be submitted to continue the federal tax withholding exempt status for 2015. The notification was sent to the employee’s e-mail address listed under ‘Update My Profile’ in the Employee Self Service Center at Sharp Login. Agencies will need to distribute notifications to their employees who lack an individual e-mail address.
SHARP employees are encouraged to use the Employee Self Service functionality to file their 2015 W-4s. The 2015 Form W-4 is immediately available at the IRS website at IRS W4 and at the Office of Systems Management website at Document Center. Employees should submit their new W-4s as soon as possible to allow adequate time for processing. Agency personnel have until 6:00 p.m. on December 18, 2014 to enter all paper W-4s into the system. It is important that agency personnel check the ‘New W-4 Received’ radio button on the employee’s ‘Federal Tax Data 1’ page in SHARP for the effective-dated row that is entered. Agency Workflow Administrators also need to check the ‘New W-4 Received’ radio button on electronic W-4s submitted by the employee for calendar year 2015.
The KPAY320 will process during the batch cycle generated on the evening of December 18, 2014. This process will search for employees for whom a W-4 notification was sent. If a new W-4 has not been received, a January 1, 2015 effective-dated row will be placed in the employee’s Tax Data record, and will update the employee’s marital status to ‘single’ and exemptions to ‘zero’.
For any Form W-4s for 2015 received between December 18, 2014 and January 1, 2015, agency personnel will need to enter the data with a January 2, 2015 effective date. Agency Workflow Administrators also will need to change the effective date to January 2, 2015 for any electronic FormsW-4s for 2015 received in this time period. Please refer to the Employee Payroll Tax Data section of the Payroll module in the on-line CBT (Computer Based Training) for specific instructions on entering employee tax data information and worklist maintenance.
IRS regulations require non-resident alien employees who claim an exempt status from federal withholding tax up to their treaty limit (for income earned in the United States) to file a new 8233 annually. Employees who claimed a non-resident alien exempt status in calendar year
2014 must file a new 8233 form for calendar year 2015 if they wish to continue their non-resident alien status. As a reminder, Regents Institutions are responsible for the accuracy of the eligibility of their non-resident alien employees and for monitoring maximum presence.
The KPAY320 processed on December 18, 2014, will enter a new effective dated row in the SHARP federal tax data records for employees with a special tax withholding status of ‘Non-Resident Alien’ to reflect that no 8233 form has been submitted for calendar year 2015. The new tax data row will be dated January 1, 2015. Regents Institutions are responsible for updating the 8233 indicator on the tax data records once a form 8233 for calendar year 2015 has been submitted.
The KPAY320 creates a report (by SHARP agency) that identifies all agency employees whose exempt withholding status was updated in SHARP on the night of December 18, 2014. The report will be available in the agency directory on the MVS on Friday, December 19, 2014. A report will not be provided for the ‘Non-Resident Alien’ updates since reports are generated periodically throughout the calendar year to identify employees who have had non-resident alien earnings reported but whose tax data records indicate a current 8233 form has not been received.
The Office of Systems Management, Payroll Services, will make all of the necessary changes in the computation of withholding taxes for SHARP agencies. Regents’ institutions are responsible for implementing the new withholding tax rates in their respective payroll systems.