Vision Payroll

March 13, 2009

Question of the Week: Do Employees Need to File a Revised Form W-4?

This week’s question comes from Jerri, an HR director. I know federal income tax withholding is supposed to change because of the new tax law. Do employees need to file a new Form W-4? Answer: Employees are not required to file 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 to see the impact of the American Recovery and Reinvestment Act of 2009 (ARRA). The Internal Revenue Service (IRS) provided new tax tables in Publication 15-T that adjust withholding for most workers. Employers must begin using the tables no later than April 1, 2009.

Workers may file a new Form W-4 or Formulario W-4(SP) if they do not wish to have their withholding reduced. Employees may wish to review Publication 919, How Do I Adjust My Tax Withholding or use the IRS withholding calculator. The IRS also recommends that employers provide a copy of the notice on page 73 of Publication 15-T to employees to help them understand the changes.

Contact Vision Payroll if you have further questions on the impact of ARRA on federal income tax withholding.

March 4, 2009

Tip of the Week: IRS Releases Publication 15-T in Response to American Recovery and Reinvestment Act of 2009

The Internal Revenue Service (IRS) has released Publication 15-T, New Wage Withholding and Advance Earned Income Credit Payment Tables (For Wages Paid Through December 2009). Publication 15-T contains revised withholding tables to implement changes mandated by the American Recovery and Reinvestment Act of 2009 (the Act) as well as information on other changes required by the Act such as increased commuter exclusion amounts and changes required to the adjustment to taxes withheld on nonresident aliens.

The IRS recommends making a copy of the notice provided on page 73 of Publication 15-T available to all employees so that they may understand the change in withholding. Employees are not required to file a new 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 see the impact of the tax law change, but may wish to do so to ensure the correct amount of tax is withheld.

Vision Payroll implemented the revised withholding tables last week and eligible employees should notice an increase in net pay with their current paycheck.

Over the next several days, Vision Payroll will be posting additional articles on changes to payroll and HR by other sections of the Act. We’re also planning a seminar on implementing these changes, so contact Vision Payroll if you’d like to attend.

February 25, 2009

Tip of the Week: Most Workers to Receive Making Work Pay Credit

As part of the American Recovery and Reinvestment Act of 2009, the Internal Revenue Service (IRS) has released updated withholding tables. Though they won’t be published until new Publication 15-T is made available later this week, the IRS has released Notice 1036, Early Release Copies of New Wage Withholding and Advance Earned Income Credit Payment Tables and encouraged employers to start using them as soon as possible. The deadline for implementation of the new tables is April 1, 2009.

Workers are not required to file a new 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 see the impact of the tax law change. The Making Work Pay credit is equal to 6.2% of earned income, up to a maximum of $400 for single taxpayers and $800 for those filing joint returns. Phaseouts of the credit begin at $75,000 of adjusted gross income (AGI) for singles and $150,000 AGI for those filing joint returns and the credit is eliminated for singles with more than $95,000 of AGI and joint returns with more than $190,000 of AGI. Taxpayers in this phaseout range or above due to multiple jobs, a spouse’s income, or unearned income should consider an amended Form W-4 or Formulario W-4(SP).

Vision Payroll has already implemented the revised withholding tables and eligible employees should start seeing an increase in take-home pay as early as today. Contact Vision Payroll if you have any further questions on the impact of the Making Work Pay credit.

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