COMPTROLLER. MARYLAND

Transcription

1 COMPTROLLER. MARYLAND Sevrtt'ng the People Peter Franchot Cont/r troller Robert J.Murphy Director Central Payroll Bureau TO: All State Agencies FROM: Robert J. Murphy, Director Central Payroll Bureau DATE: January 23, 2014 SUBJECT: The Percentage Method of Withholding is addressed in this memo which includes extractions from the 2014 Federal Income Tax Withholding Tables (found in the IRS Publication 15, Circular E- Employer's Tax Guide). Please Note: ~ Advance payment of earned income credit (EIC) through payroll payments expired on December 31, Individuals eligible for EIC in 2013 can still claim the credit when they file their 2013 federal income tax return. Additionally any employee who expects to be eligible for the EIC and will have income tax withheld I'rom wages in 2014 may reduce their withholding in order to receive the benefit of a portion of the credit throughout the year. ~ The annual personal exemption amount for 2014 will be $3, ~ Tax calculations and estimates of net pay can be readily determined by using the Cenhal Payroll Bureau Net Pa Calculator located on the home page of our web sitehtt://com troller.mar landtaxes.com/government Services/State Pa roll Services/ ~ Other important links located on our home page are: 2014 Federal Withholding Tables 2014 Maryland Withholding Tables Annapolis Data Center, PO. Box 2396, Annapolis, Maryland ' (MD) Fax: 'aryland Relay 711'TY 'pbtacomp.state.md.us 8

2 - PERCENTAGE METHOD ALLOWANCE TABLE Dollar Amount of Withholdtng Allowances Number of Biweekly Monthly Withholding Pay Period Pay Period Allowances 0 $ 0 $ 0 I , , , , , , , , , , , Over 10 Multiply amount of one withholding allowance ($151.90for bi-weekly or $ for monthly) by the number of Allowances claimed. The annual personal exemption amount of $3,950 equals the Bi-Weekly amount of $ (1 exemption) multiplied by 26, rounding to nearest whole dollar, or the Monthly amount of $ (1 exemption) multiplied by 12, rounding to nearest whole dollar. NOTE: Use of these tables to compute estimated tax withholdings will result in amounts that differ slightly (by a few cents) from the precise amounts computed by the Statewide Payroll System 2

3 BIWEEKLY Pa roll Period Tax tables for Percentage Method of Withholding Single Person Including Head of Household Not over $87 0 Over- But not over- of excess over plus 10% -$87 $436 -$1, $34.90 plus 15% -$436 $1,506 -$3,523...$ plus 25% -$ 1,506 $3,523 -$7, $ plus 28% -$3,523 $7,254 -$15,667...$ 1, plus 33% -$7,254 $15,667 -$15,731...$ 4, plus 35% -$ 15,667 $ 15,731. $4, plus 39.6% -$ 15,731 $87 -$436...$ Married Person Not over $325 0 Over- But not over of excess over- $0.00 plus 10% -$325 $ 1,023 -$3,163...$ plus 15% -$ 1,023 $3,163 -$6, $ plus 25% -$3,163 $6,050 -$9, $ 1, plus 28% -$6,050 $9,050 -$15, $ 1, plus 33% -$9,050 $ 15,906 -$17, $4, plus 35% -$ 15,906 $ 17,925..$4, plus 39.6% -$ 17,925 *- Bi-weekly gross pay less tax sheltered and/or pre-tax deductions and the dollar amount of Biweekly withholding allowances. $325 -$ 1, NOTE; ~ 1nflation adjustments have increased the above Tax Bracket thresholds for each filing status ~ Use ofthese tables to compute estimated tax withholdings will result in amounts that differ slightly (by a few cents) from the precise amounts computed by the Statewide Payroll System. 3

4 Tax tables for Percentage Method of Withholding MONTHLY Pa roll Period Single Person Including Head of Household Taxable Income* Amount of Income tax Withheld is: Not over $ Over- But not over- of excess over plus10% -$ 188 $944 -$3, $75.60 plus 15% -$944 $3,263 -$7, $ plus 25% -$3,263 $7,633 -$15, $ 1, plus 28% -$7,633 $ 15,717 -$33, $3, plus 33% -$ 15,717 $33,946 -$34, $9, plus 35% -$33,946 $34,083 $9, plus 39.6% -$34,083 $ 188 -$944...$ Married Person Not over $704.0 Over- But not over- ofexcess over- $0.00 plus 10% -$704 $2,217 -$6, $ plus 15% -$2,217 $6,854 -$13, $ plus 25% -$6,854 $ 13,108 -$19, $2, plus 28% -$ 13,108 $ 19,608 -$34, $4, plus 33% -$ 19,608 $34,463 -$38, $9, plus 35% -$34,463 $38,838. $ 10, plus 39.6% -$38,838 $704 -$2, *- Monthly gross pay less tax sheltered and/or pre-tax deductions and the dollar amount of Monthly withholding allowances. NOTE: ~ Inflation adjustments have increased the above Tax Bracket thresholds for each filing status ~ Use of these tables to compute estimated tax withholdings will result in amounts that differ slightly (by a few cents) from the precise amounts computed by the Statewide Payroll System. 4

5 Exantyles of 8'ithholding Calculations using the Percentage Method 1. A married employee is paid $ 1,356.09bi-weekly. This employee has in effect a Form W-4 claiming (0) withholding allowances. The employee also has a deferred comp deduction. Using the percentage method, the income tax to withhold is computed as follows: Total wage payment $ 1, (0) allowances claimed on W4 $ 0.00 Deferred Comp deduction $ Amount subject to withholding $ 1, (Subtract lines 2 & 3 from line 1) BIWEEKLY Pa roll Period for married Person. $ 1, falls within the range of $ 1,023 - $3,163, the following calculation: $69.80 plus 15% of the amount over $ 1,023 $ 1, $ 1,023 = $ $ X 0.15= $40.96 Add $ $40.96 = $ Total Federal Tax to be withheld 2. An unmarried employee is paid $4, monthly. This employee has in effect a Form W-4 claiming (2) withholding allowances. Using the percentage method, the income tax to withhold is computed as follows: Total wage payment $4, (2) allowances claimed on W4 $ (From the Allowance table) Deferred Comp deduction $ 0.00 Amount subject to withholding $3, (Subtract lines 2 & 3 from line 1) MONTHLY Pa roll Period for unmarried Person. $3,341.60falls within the range of $3,263 - $7,633, use the following calculation: $ plus 25% of the amount over $3,263 $3, $3,263 = $78.60 $78.60 X 0.25 = $ Add $ $ = $ Total Federal Tax to be withheld 5