Payroll Tax Withholding

January 11, 2016

Information in the Compensation category under the “Payroll Taxes and Withholding” topic has been revised as follows:

  • Discussions of employee withholding allowances were updated to reflect the 2016 value of a personal exemption ($4,050), phaseout amounts for the personal exemption, 2016 standard deduction amounts, and revised figures for determining income tax withholding for nonresident aliens. See the Quick Answers at ¶25,352 and ¶25,354 , as well as the Analysis and Guidance at ¶25,564 .

  • The supplemental withholding rate remains a flat 25 percent this year. See the Quick Answers at ¶25,354 and ¶25,362 .

  • The special tax withholding chart, which shows how various services and payments are treated for employment tax purposes, has been updated for 2016. Check out the Quick Answers at ¶25,372 .

  • In 2016, the amount of wages a domestic worker may earn without being subject to FICA taxes is $2,000 (up from $1,900 in 2015), while the coverage threshold for an election worker is $1,700 (up from $1,600 in 2015). See the Quick Answers at ¶25,372 and ¶25,468 .

  • Wage-bracket withholding tables for 2016 are reproduced in the following Quick Answers:

     

    • Single/weekly ( ¶25,374 );

    • Single/biweekly ( ¶25,375 );

    • Single/semimonthly ( ¶25,376 );

    • Single/monthly ( ¶25,377 );

    • Single/daily ( ¶25,378 );

    • Married/weekly ( ¶25,379 );

    • Married/biweekly ( ¶25,380 );

    • Married/semimonthly ( ¶25,381 );

    • Married/monthly ( ¶25,382 ); and

    • Married/daily ( ¶25,383 ).

  • The discussion of the percentage method of withholding was updated to include a revised allowance table, new withholding tables, and updated examples for 2016. Look in the Analysis and Guidance at ¶25,585 .

  • Information about employee tips, found in the Analysis and Guidance at ¶25,595 , was updated to include revised examples.

  • The 2016 versions of Form W-4, Employee’s Withholding Allowance Certificate, and Form W-4S, Request for Federal Income Tax Withholding from Sick Pay — both used to calculate the correct amount of federal income tax to withhold — are reproduced in the Sample Documents at ¶25,702 and ¶25,704 .

     

     

     

     

     

     

     

     

     

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