10-P-016 2010 Percentage Method Tables for Federal Tax Withholding (Supersedes 09-P-015)
|DATE:||December 14, 2009|
2010 Percentage Method Tables for Federal Tax Withholding
|EFFECTIVE DATE:||January 1, 2010|
New Federal Withholding Tax Tables Effective for Paychecks Issued On or After January 1, 2010.
The Internal Revenue Service (IRS) has issued new tables for the percentage method of withholding for 2010. The attached tables are to be used in computing federal tax withholding for wages paid on or after January 1, 2010. 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 the twenty-six pay periods in the year. In addition, the value of one withholding allowance remains at $3,650 for 2010.
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 years, and 2) the employee anticipates no income tax liability in the upcoming year.
An e-mail notification was sent on December 2, 2009 to all SHARP employees who were exempt from federal withholding in 2009. The notification reminded employees that a new W-4 must be submitted to continue the federal tax withholding exempt status for 2010. The notification was sent to the employee’s e-mail address listed under ‘Update My Profile’ in the Employee Self Service Center at https://sharp.ks.gov/psp/ESS/?cmd=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 2010 W-4s. The 2010 Form W-4 is immediately available at the IRS website at http://www.irs.gov/pub/irs-pdf/fw4.pdf and at the Accounts and Reports website at http://www.da.ks.gov/ar/payroll/default.htm. Employees should submit their new W-4s by December 16, 2009 to allow adequate time for processing. Agency personnel have until 6:00 p.m. on December 21, 2009 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 2010.
The KPAY320 will process during the batch cycle generated on the evening of December 21, 2009. 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, 2010 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’. (Please note the KPAY320 process will also update the existing SHARP federal tax data records for all employees claiming the advance Earned Income Credit in 2009 in which the ‘New W-5 Received’ radio button is not checked. The update will insert a January 1, 2010 effective dated row with an EIC Status of ‘Not Applicable’.)
For any Forms W-4s for 2010 (or Forms W-5s for 2010 for employees claiming the advance EIC) received between December 21, 2009 and January 1, 2010, agency personnel will need to enter the data with a January 2, 2010 effective date. The data will need to be entered into SHARP by 6:00 p.m. on Thursday, December 31, 2009 in order to be reflected in the on-cycle paycheck dated January 8, 2010. Agency Workflow Administrators will also need to change the effective date to January 2, 2010 for any electronic FormsW-4s for 2010 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
2009 must file a new 8233 form for calendar year 2010 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 21, 2009 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 2010. The new tax data row will be dated January 1, 2010. Regents Institutions are responsible for updating the 8233 indicator on the tax data records once a form 8233 for calendar year 2010 has been submitted.
The KPAY320 creates a report (by SHARP agency) that identifies all agency employees whose exempt withholding status and/or EIC was updated in SHARP on the night of December 21, 2009. The report will be available in the agency directory on the MVS on Tuesday, December 22. 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 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.
Attachment: Tables for Percentage Method of Withholding pdf