98-P-012 New Tables for Federal Withholding Tax for 1998 (Supersedes 97-P-009)
|DATE:||November 26, 1997|
|SUBJECT:||New Tables for Federal Withholding Tax for 1998|
|EFFECTIVE DATE:||January 1, 1998|
|CONTACT:||Payroll Services||(785) 296-3146|
|SUMMARY:||New Federal Withholding Tax Rates Effective for Paychecks Issued On or After January 1, 1998|
The Internal Revenue Service (IRS) has issued advance copies of the new federal percentage tables for computing the federal withholding tax deductions effective for all paychecks issued on or after January 1, 1998. In addition, the standard deduction for one withholding allowance changes to $2,700.00 per year in calendar year 1998.
The attached tables have been prepared for use in computing all federal withholding tax payments for wages paid on or after January 1, 1998. When calculating federal and state withholding tax by annualizing, 26 pay periods should be used to arrive at an annualized amount. Please refer to Division of Accounts and Reports Informational Circular No. 98-P-010, issued November 21, 1997 for the state withholding tax formula.
IRS regulations require employees who claim an exempt status from federal withholding tax, for income earned in the United States, to file a new W-4 form annually; employees who claimed an exempt status in calendar year 1997 must file a new W-4 form for calendar year 1998 if they wish to continue their exempt status.
Employees may be eligible for the withholding tax exempt status if the following criteria are met:
- The employee had no income tax liability in the previous year; and,
- The employee anticipates no income tax liability in the upcoming year.
The Department of Administration will be updating the SHARP federal and state tax data records on December 22, 1997, for all employees currently claiming exemption from withholding; the tax data record updates will be effective January 1, 1998. On-line agencies must enter a new effectivedated row into SHARP for employees who wish to claim exemption from withholding. Paper user agencies should submit an employee data sheet to the Division of Personnel Services for employees who wish to claim exemption from withholding in 1998. The new tax data row should be added effective January 2, 1998. Please refer to Pages 19 through 28 of the SHARP Payroll Participant Guide (Rev. 10-96) for specific instructions on entering employee tax data information.
The Division of Accounts and Reports will provide a listing to agencies which identifies all employees whose withholding tax status was updated on December 22, 1997. The listing will include department, employee ID, name, SSN, and withholding tax exempt status.
The Department of Administration 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 effective with all payroll warrants issued on or after January 1, 1998.