Publication 15 |
2000 Tax Year |
Chapter 16 How To Use the Income Tax Withholding & Advance Earned Income Credit (EIC) Payment Tables
Income Tax Withholding
There are several ways to figure income tax withholding. The
following methods of withholding are based on information you get from
your employees on Form W-4, Employee's Withholding
Allowance Certificate. See section 9 for more information on Form W-4.
Wage Bracket Method
Under the wage bracket method, find the proper table (on pages
36-55) for your payroll period and the employee's marital status as
shown on his or her Form W-4. Then, based on the number of withholding
allowances claimed on the Form W-4 and the amount of wages, find the
amount of tax to withhold. If your employee is claiming more than 10
withholding allowances, see below.
Note:
If you cannot use the wage bracket tables because wages exceed
the amount shown in the last bracket of the table, use the percentage
method of withholding described below. Be sure to reduce wages by the
amount of total withholding allowances in Table 5 before using the
percentage method tables (pages 34-35).
Adjusting wage bracket withholding for employees claiming
more than 10 withholding allowances.
The wage bracket tables can be used if an employee claims up to 10
allowances. More than 10 allowances may be claimed because of the
special withholding allowance, additional allowances for deductions
and credits, and the system itself.
To adapt the tables to more than 10 allowances:
- Multiply the number of withholding allowances over 10 by the
allowance value for the payroll period. (The allowance values are in
Table 5, Percentage Method--2001 Amount for One Withholding
Allowance below.)
- Subtract the result from the employee's wages.
- On this amount, find and withhold the tax in the column for
10 allowances.
This is a voluntary method. If you use the wage bracket tables, you
may continue to withhold the amount in the "10" column when your
employee has more than 10 allowances, using the method above. You can
also use any other method described below.
Percentage Method
If you do not want to use the wage bracket tables on pages 36
through 55 to figure how much income tax to withhold, you can use a
percentage computation based on Table 5 and the appropriate rate
table. This method works for any number of withholding allowances the
employee claims and any amount of wages.
Use these steps to figure the income tax to withhold under the
percentage method:
- Multiply one withholding allowance for your payroll period
(see Table 5 below) by the number of allowances the employee
claims.
- Subtract that amount from the employee's wages.
- Determine the amount to withhold from the appropriate table
on pages 34 and 35.
2000 Percentage Method Table
Example:
An unmarried employee is paid $600 weekly. This employee has in
effect a Form W-4 claiming two withholding allowances. Using the
percentage method, figure the income tax to withhold as follows:
Percentage Method Example
To figure the income tax to withhold, you may reduce the last digit
of the wages to zero, or figure the wages to the nearest dollar.
Annual income tax withholding.
Figure the income tax to withhold on annual wages under the
Percentage Method for an annual payroll period. Then prorate the tax
back to the payroll period.
Example:
A married person claims four withholding allowances. She is paid
$1,000 a week. Multiply the weekly wages by 52 weeks to figure the
annual wage of $52,000. Subtract $11,600 (the value of four
withholding allowances for 2001) for a balance of $40,400. Using the
table for the annual payroll period on page 35, $5,092.50 is withheld.
Divide the annual tax by 52. The weekly tax to withhold is $97.93.
Alternative Methods of Income Tax Withholding
Rather than the Percentage or Wage Bracket Methods described on
page 32, you can use an alternative method to withhold income tax.
Pub. 15-A, Employer's Supplemental Tax Guide, describes
these alternative methods and contains:
- Formula tables for percentage method withholding (for
automated payroll systems).
- Wage bracket percentage method tables (for automated payroll
systems).
- Combined income, social security, and Medicare tax
withholding tables.
Some alternative methods explained in Pub. 15-A are annualized
wages, average estimated wages, cumulative wages, and part-year
employment.
Advance Payment Methods for the Earned Income Credit (EIC)
To figure the advance EIC payment, you may use either the Wage
Bracket Method or the Percentage Method explained below. You may use
other methods for figuring advance EIC payments if the amount of the
payment is about the same as it would be using tables in this booklet.
See the tolerances allowed in the chart in section 10 of Pub. 15-A.
See section 10 in this booklet for an explanation of the advance
payment of the EIC.
The number of withholding allowances an employee claims on Form W-4
is not used in figuring the advance EIC payment. Nor does it matter
that the employee has claimed exemption from income tax withholding on
Form W-4.
Wage Bracket Method
If you use the wage bracket tables on pages 58 through 61, figure
the advance EIC payment as follows.
Find the employee's gross wages before any deductions using the
appropriate table. There are different tables for (a)
single or married employees without the spouse filing a
certificate and (b) married employees with both spouses
filing certificates. Determine the amount of the advance EIC payment
shown in the appropriate table for the amount of wages paid.
Percentage Method
If you do not want to use the wage bracket tables to figure how
much to include in an employee's wages for the advance EIC payment,
you can use the percentage method based on the appropriate rate table
on pages 56 and 57.
Find the employee's gross wages before any deductions in the
appropriate table on pages 56 and 57. There are different tables for
(a) single or married employees without the spouse filing a
certificate and (b) married employees with both spouses
filing certificates. Find the advance EIC payment shown in the
appropriate table for the amount of wages paid.
Whole-Dollar Withholding and Paying Advance EIC (Rounding)
The income tax withholding amounts in the wage bracket tables
(pages 36-55) have been rounded to whole-dollar amounts.
When employers use the percentage method (pages 34-35) or an
alternative method of income tax withholding, the tax for the pay
period may be rounded to the nearest dollar.
The wage bracket tables for advance EIC payments (pages 58-61) have
also been rounded to whole-dollar amounts. If you use the percentage
method for advance EIC payments (pages 56-57), the payments may be
rounded to the nearest dollar.
The wage bracket tables for advance EIC payments (pages 58-61) have
also been rounded to whole-dollar amounts. If you use the percentage
method for advance EIC payments (pages 56-57), the payments may be
rounded to the nearest dollar.
- Percentage Method - Weekly, Bi-Weekly, SemiMonthly, Monthly
- Percentage Method - Quarterly, Semi-Annual, Annual, Daily or Misc.
- Single Persons - Weekly, Paid Wages $0 - $600
- Single Persons - Weekly, Paid Wages $600 - $1250
- Married Persons - Weekly, Paid Wages $0 - $740
- Married Persons - Weekly, Paid Wages $740 - $1390
- Single Persons - Bi-Weekly, Paid Wages $0 - $800
- Single Persons - Bi-Weekly, Paid Wages $800 - $2100
- Married Persons - Bi-Weekly, Paid Wages $0 - $1380
- Married Persons - Bi-Weekly, Paid Wages $1380 - $2680
- Single Persons - SemiMonthly, Paid Wages $0 - $840
- Single Persons - SemiMonthly, Paid Wages $840 - $2140
- Married Persons - SemiMonthly, Paid Wages $0 - $1420
- Married Persons - SemiMonthly, Paid Wages $1420 - $2720
- Single Persons - Monthly, Paid Wages $0 - $2440
- Single Persons - Monthly, Paid Wages $2440 - $5040
- Married Persons - Monthly, Paid Wages $0 - $3240
- Married Persons - Monthly, Paid Wages $3240 - $5840
- Single Persons - Daily or Misc., Paid Wages $0 - $222
- Single Persons - Daily or Misc., Paid Wages $222 - $391
- Married Persons - Daily or Misc., Paid Wages $0 - $234
- Married Persons - Daily or Misc., Paid Wages $234 - $399
- Percentage Method AEIC - Weekly, Bi-Weekly, SemiMonthly, Monthly
- Percentage Method AEIC - Quarterly, Semi-Annual, Annual, Daily or Misc.
- Wage Bracket AEIC - Single & Married, Weekly - Bi-Weekly
- Wage Bracket AEIC - Single & Married, Bi-Weekly - SemiMonthly
- Wage Bracket AEIC - Single & Married, SemiMonthly - Monthly
- Wage Bracket AEIC - Single & Married, Monthly - Daily
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