Vision Payroll

February 9, 2011

Tip of the Week: IRS Releases 2011 Spanish Language W-4

The 2011 Form W-4, Employee’s Withholding Allowance Certificate was released last month. The Spanish equivalent, 2011 Formulario W-4(SP), Certificado de Exención de la Retención del Empleado, is now available.

February 16, 2011 Is Filing Deadline

Employees claiming exempt status must file 2011 Form W-4 or 2011 Formulario W-4(SP) with their employer by February 16, 2011 to continue to claim exempt status. Prior-year forms will no longer be valid as of that date. If an employee has not filed a 2011 form by February 16, 2011, the employer must start withholding income tax with the next paycheck.

Contact Vision Payroll for Further Information

Contact Vision Payroll if you have any further questions on 2011 Formulario W-4(SP).

January 7, 2011

Question of the Week: Why Did My Federal Income Tax Withholding Go Up in 2011?

Why Did My Federal Income Tax Withholding Go Up in 2011?
Why Did My Federal Income Tax Withholding Go Up in 2011?
This week’s question comes from Gabrielle, an office manager. I noticed that my federal income tax withholding increased for my first check of 2011 as compared to my last check of 2010. Several of my co-workers noticed the same thing. I thought the tax cuts were extended. Why did my federal income tax withholding go up in 2011? Answer: The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (2010 Tax Act) did extend lower marginal rates for many taxpayers and some taxpayers will see lower federal withholding.

Expiration of Making Work Pay Credit Will Increase Withholding for Many

The expiration of the Making Work Pay credit meant an adjustment in the withholding tables that results in increased federal withholding for many taxpayers. Since taxpayers no longer may claim the Making Work Pay credit on their tax returns, the withholding tables have been adjusted

Taxpayers May File an Amended Form W-4 to Adjust Federal Withholding

Employees may complete a revised 2011 Form W-4, Employee’s Withholding Allowance Certificate or its Spanish equivalent, Formulario W-4(SP), Certificado de Exención de la Retención del Empleado, to adjust their federal withholding for 2011.

Many Taxpayers Have Reduced Social Security Tax Withholding

For taxpayers subject to social security tax withholding, the 2010 Tax Act reduced the rate of withholding in 2011 from 6.2% to 4.2%. This reduced withholding will generally result in higher net pay as it will more than offset the increase in federal income tax withholding.

Vision Payroll Has Implemented New Withholding Tables

Vision Payroll has already updated its tax tables and will calculate both the reduced Social Security and updated federal income tax withholding for all 2011 paychecks.

January 5, 2011

Tip of the Week: IRS Releases 2011 Form W-4

IRS Releases 2011 Form W-4
IRS Releases 2011 Form W-4
The Internal Revenue Service (IRS) has released the 2011 Form W-4, Employee’s Withholding Allowance Certificate. Form W-4 is used by employers to calculate the amount of federal tax to be withheld from an employee’s paycheck.

Employees Claiming Exempt Status Must File a New Form W-4

Employees who have provided a Form W-4 claiming exemption from federal income tax withholding must file a new 2011 Form W-4 by February 16, 2011 in order to continue their exemption from federal income tax withholding. Employers must start withholding on February 16, 2011 if employees have not provided a 2011 Form W-4 claiming exemption.

Employees Changing from Exempt to Non-Exempt Should Also File Form W-4

Even employees who are no longer claiming exemption should file a 2011 Form W-4 so that employers may calculate the proper amount of withholding. If an employee has not provided a 2011 Form W-4 by February 16, 2011, the employer should withhold based on a previously filed Form W-4 not claiming exemption, if available or using single, zero allowances, if not.

Spanish Language Form Is not Yet Available

Spanish-speaking employees may complete Formulario W-4(SP), Certificado de Exención de la Retención del Empleado. This form is generally released in April of the applicable year. Further information will be available when the form is released.

Pre-Printed Forms W-4 Are Available from Vision Payroll

Upon request, Vision Payroll can provide employers with pre-printed 2011 Forms W-4 for all active employees. Vision Payroll will not automatically change any employee’s claimed withholding allowances. Employers should update the allowances claimed by logging in to their company file or providing Vision Payroll with the updated information.

August 29, 2010

Advance Earned Income Credit Is Repealed Starting in 2011

President Barack Obama
President Barack Obama
President Barack Obama recently signed the Education Jobs and Medicaid Assistance Act of 2010 (HR 1586) into law. As part of the legislation, the advance earned income credit, claimed by eligible employees by filing 2010 Form W-5, Earned Income Credit Advance Payment Certificate, is repealed for 2011 and thereafter.

Non-Refundable Portion Still Available by Adjusting Withholding

Eligible taxpayers will be able to claim the refundable portion of their credit on their individual income tax returns and can claim the non-refundable portion either on their individual income tax returns or by adjusting their federal income tax withholding on Form W-4, Employee’s Withholding Allowance Certificate or its Spanish equivalent, 2010 Formulario W-4(SP), Certificado de Exención de la Retención del Empleado.

Contact Vision Payroll if you have further questions on the advance earned income credit.

August 1, 2010

IRS Releases Information Letter on Making Work Pay Tax Credit

Senator Amy Klobuchar questioned IRS on Making Work Pay tax credit and payroll withholding
Senator Amy Klobuchar (D-MN)
In response to a letter from Senator Amy Klobuchar (D-MN), the Internal Revenue Service (IRS) recently released Information Letter 2010-0144, which includes a response to her constituent about the effect of the Making Work Pay tax credit on his employees’ annual withholding for 2009. The constituent was concerned that the reduced withholding would either reduce his employees’ refunds or increase the tax they would owe when they filed their 2009 and 2010 income tax returns. The IRS recommended that concerned employees consult the IRS withholding calculator and submit a revised Form W-4, Employee’s Withholding Allowance Certificate or its Spanish equivalent, Formulario W-4(SP), Certificado de Exención de la Retención del Empleado. Additionally, they should consult Publication 919, How Do I Adjust My Tax Withholding? Vision Payroll recommends that employees regularly review their income tax withholding to ensure the proper amount is paid in so that underpayment penalties may be avoided.

May 14, 2010

Question of the Week: Is the 2010 Spanish W-4 Now Available?

This week’s question comes from Kate, a restaurant manager. We know that the Spanish W-4 doesn’t come out at the same time as the English W-4. Is the 2010 Spanish W-4 now available? Answer: The 2010 Form W-4, Employee’s Withholding Allowance Certificate was released last December. The Spanish equivalent, 2010 Formulario W-4(SP), Certificado de Exención de la Retención del Empleado, was not released until April, but is now available. Contact Vision Payroll if you have any further questions on 2010 Formulario W-4(SP).

February 19, 2010

Question of the Week: When Will Form W-4 in Spanish Be Available for 2010?

This week’s question comes from Joe, a restaurant owner. We have many employees whose native language is Spanish. They are better able to understand forms in Spanish than they are in English. The regular 2010 Form W-4 is available in English, but we can’t find the Spanish version. When will Form W-4 in Spanish be available for 2010? Answer: The 2010 Form W-4, Employee’s Withholding Allowance Certificate was released last December. The Spanish equivalent, Formulario W-4(SP), Certificado de Exención de la Retención del Empleado, is generally not available until March or April. Therefore, expect the 2010 Formulario W-4(SP) to be available sometime in the next two months. Contact Vision Payroll if you have any further questions on Formulario W-4(SP).

December 4, 2009

Question of the Week: Do Employees Claiming Exemption from Withholding Need to File a New Form W-4 for 2010?

This week’s question comes from Shawn, an HR director. We have several employees claiming exemption from federal withholding. Do employees claiming exemption from withholding need to file a new Form W-4 for 2010? Answer: Employees who have provided a Form W-4, Employee’s Withholding Allowance Certificate claiming exemption from federal income tax withholding must file a new 2010 Form W-4 by February 16, 2010 in order to continue their exemption from federal income tax withholding. Employers must start withholding on February 16, 2010 if employees have not provided a 2010 Form W-4 claiming exemption. Even employees who are no longer claiming exemption should file a 2010 Form W-4 so that employers may calculate the proper amount of withholding. If an employee has not provided a 2010 Form W-4 by February 16, 2010, the employer should withhold based on a previously filed Form W-4 not claiming exemption, if available or using single, zero allowances, if not. Spanish-speaking employees may complete Formulario W-4(SP), Certificado de Exención de la Retención del Empleado. Upon request, Vision Payroll can provide employers with pre-printed 2010 Forms W-4 for all active employees. Vision Payroll will not automatically change any employee’s claimed withholding allowances. Employers should update the allowances claimed by logging in to their company file or providing Vision Payroll with the updated information.

June 5, 2009

Question of the Week: How Do Students Claim Exemption from Income Tax Withholding?

This week’s question comes from Will, a restaurant owner. We’ve hired several students to work for us this summer. Most of them don’t expect to owe any income tax this year. How do students claim exemption from income tax withholding? Answer: Students or others who expect to owe no tax for 2009 should review the conditions on line 7 of Form W-4, Employee’s Withholding Allowance Certificate or the Spanish W-4, Formulario W-4(SP), Certificado de Exención de la Retención del Empleado. Employees who meet both conditions should write “Exempt” (or “Exento”) on line 7 and file the form with their employer. The employer should not withhold any federal income tax from these employees for the rest of 2009. Employees who wish to continue their exempt status in 2010 must a complete and provide to their employer a 2010 Form W-4 before February 16, 2010. These employees may also wish to file a state equivalent form to claim exemption from state withholding as well. The filing of Form W-4 claiming exempt status does not stop social security or Medicare withholding or the requirement that the employer match these withholdings. These taxes, sometimes known as FICA or OASDI, have their own rules for determining exemption which are much less likely to apply. Contact Vision Payroll if you have any questions on employees claiming exempt status.

May 19, 2009

IRS Releases Withholding Adjustment Procedures for Pension Plans

In IR-2009-050, the Internal Revenue Service (IRS) has announced the release of Notice 1036-P, Additional Withholding for Pensions for 2009, in order to help some pensioners avoid a smaller refund or a balance due when filing their 2009 Form 1040.

Although using the new tables is not required, recipients from plans that adopt the new tables will not need to take any further action to have their withholding adjusted. The IRS is encouraging pension payors who choose to use the new withholding tables to notify pension recipients who requested additional withholding on Form W4-P, Withholding Certificate for Pension or Annuity Payments, after the February tables were released.

The IRS is recommending certain types of taxpayers should consider filing revised forms, especially if they use the IRS withholding calculator and determine that their withholding may be insufficient. Those types of taxpayers include the following:

  • Married couples with two incomes
  • Individuals with multiple jobs
  • Dependents
  • Some social security recipients who work
  • Workers who do not have valid social security numbers

Workers who wish to adjust their withholding should file revised Form W-4, Employee’s Withholding Allowance Certificate or its Spanish equivalent, Formulario W-4(SP), Certificado de Exención de la Retención del Empleado to adjust their withholding.

Contact Vision Payroll if you have any questions on Notice 1036-P.

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