Payroll Tax Update: Higher Employee Income Tax Withholding in 2010
Posted on Tue, Jan 05, 2010
2010 Federal Tax Withholding Changes
As a result of the new IRS tax tables, employees will see an increase in their federal tax withholding in 2010. The increase is minimal in most cases, however lower wage earners that are filing as married will be impacted the most. The table below is an illustration of the withholding increase (expressed as a percentage) from 2009 to 2010 for an employee claiming zero exemptions and filing either single or married.
To access the complete 2010 tax tables, you can download the IRS Publication 15 (Circular E) here:
http://www.irs.gov/pub/irs-pdf/p15.pdf?portlet=3.
How This Impacts Your Payroll
Employee take home pay will decrease while your 941 payment liability will increase. For those employees that have elected to have additional federal withholding deducted from their pay, they may want to evaluate their withholding status and submit a new W-4. The new 2010 form W-4 can be accessed directly from the IRS website using the following link: 
http://www.irs.gov/pub/irs-pdf/fw4.pdf?portlet=3.
Nonresident Alien Withholding
The IRS has established a new procedure for calculating the amount of income tax to withhold from the wages of nonresident aliens. A new chart has been created that requires additional income to be added to wages for calculating the tax withholding amount only. In addition, a new withholding table for nonresident aliens must be used in conjunction with the new tax withholding tables used to figure withholding tax on other employees. The result of the new procedure is that withholding for nonresident aliens in 2010 is over 250% more than it was in 2009. To learn more, review section 9 of IRS publication 15 (Circular E) Employer's Tax Guide for 2010. You can download it from the IRS website using the following link: http://www.irs.gov/pub/irs-pdf/p15.pdf?portlet=3.
Learn more about APS Payroll Tax Services.
APS Customer Note: This payroll tax update is for informational purposes only. No action is required on the part of APS customers to comply with the information contained in this release.