11-P-019 2011 Percentage Method Tables for Federal Tax Withholding (Supersedes 10-P-016)
|DATE:||December 17, 2010|
2011 Percentage Method Tables for Federal Tax Withholding
|EFFECTIVE DATE:||January 1, 2011|
New Federal Withholding Tax Tables Effective for Paychecks Issued On or After January 1, 2011.
The Internal Revenue Service (IRS) has issued new tables for the percentage method of withholding for 2011. The attached tables are to be used in computing federal tax withholding for wages paid on or after January 1, 2011. 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 is increased to $3,700 for 2011.
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, 2010 to all SHARP employees who were exempt from federal withholding in 2010. The notification reminded employees that a new W-4 must be submitted to continue the federal tax withholding exempt status for 2011. 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 2011 W-4s. The IRS has indicated that the 2011 Form W-4 will be available in the near future at the IRS website at http://www.irs.gov/ and will also be available at the Accounts and Reports website at http://www.da.ks.gov/ar/payroll/default.htm once it is released by the IRS. 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 20, 2010 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 2011.
The KPAY320 will process during the batch cycle generated on the evening of December 20, 2010. 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, 2011 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’.
In prior years, this same process was used to notify employees claiming the Advance Earned Income Credit (EIC) that a new W-5 should be filed. The Education Jobs Act of 2010, enacted August 10, 2010, repeals IRC §3507, which allows low- and moderate-income employees to receive the advance payments of the earned income tax credit (EIC) through their paycheck, for tax years beginning after December 31, 2010. An email notification was sent December 1, 2010 to all SHARP employees who are receiving advanced EIC payments, informing them of this change. Agency payroll/human resource staff should enter no W-5 information into the system for calendar year 2011. KPAY320 will insert a January 1, 2011 effective-dated row in the Employee Tax Data record of employees to whom a W-5 email notification was sent. This record will stop all advance EIC payments for paychecks with a 2011 pay date. Agency payroll/human resource staff should verify that all employees’ advance EIC payments have been stopped.
For any Form W-4s for 2011 received between December 20, 2010 and January 1, 2011, agency personnel will need to enter the data with a January 2, 2011 effective date. The data will need to be entered into SHARP by 6:00 p.m. on Thursday, December 30, 2010 in order to be reflected in the on-cycle paycheck dated January 7, 2011. Agency Workflow Administrators will also need to change the effective date to January 2, 2011 for any electronic FormsW-4s for 2011 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
2010 must file a new 8233 form for calendar year 2011 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 20, 2010 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 2011. The new tax data row will be dated January 1, 2011. Regents Institutions are responsible for updating the 8233 indicator on the tax data records once a form 8233 for calendar year 2011 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 20, 2010. The report will be available in the agency directory on the MVS on Tuesday, December 21. 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