Effective as soon as possible in 2011, payroll checks will reflect a change in the withholding of federal taxes, primarily due to the passing of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The biweekly personal exemption value for each federal tax allowance has changed from $140.38 to $142.31. There have also been changes made to all of the Federal Income Tax Withholding Table wage range classifications, which includes a reduction in the number of different wage range classifications from nine to seven. All information in this article is based on a biweekly payroll period (PP) and the withholding tables in Internal Revenue Service (IRS) Publication 15, (Circular E), Employer’s Tax Guide.
For Wages Paid in 2011 Federal Income Tax Withholding Table
|
Single Person
|
Married Person
|
Wages*
|
The Withholding Amount Is:
|
Wages*
|
The Withholding Amount Is:
|
Over…
|
But Not Over…
|
Withholding Amount
|
Of Excess Over
|
Over…
|
But Not Over…
|
Withholding Amount
|
Of Excess Over
|
$0
|
$81
|
$0
|
|
$0
|
$304
|
$0
|
|
$81
|
$408
|
10%
|
$81
|
$304
|
$958
|
10%
|
$304
|
$408
|
$1,408
|
$32.70 plus 15%
|
$408
|
$958
|
$2,958
|
$65.40 plus 15%
|
$958
|
$1,408
|
$3,296
|
$182.70 plus 25%
|
$1,408
|
$2,958
|
$5,663
|
$365.40 plus 25%
|
$2,958
|
$3,296
|
$6,788
|
$654.70 plus 28%
|
$3,296
|
$5,663
|
$8,469
|
$1,041.65 plus 28%
|
$5,663
|
$6,788
|
$14,663
|
$1,632.46 plus 33%
|
$6,788
|
$8,469
|
$14,887
|
$1,827.33 plus 33%
|
$8,469
|
$14,663
|
|
$4,231.21 plus 35%
|
$14,663
|
$14,887
|
|
$3,945.27 plus 35%
|
$14,887
|
* Wages are determined after subtracting withholding allowances, CPP, FEDVIP, FEHB, FSA, HSA, and TSP contributions from your gross earnings.
Commuter Program pre-tax (CPP), Federal Employees Dental and Vision Insurance Program (FEDVIP), Federal Employees Health Benefits (FEHB), Flexible Spending Accounts (FSA), Health Savings Account (HSA), and Thrift Savings Plan (TSP) contributions made by employees are treated as pre-tax monies for these computations. When calculating your taxes, remember to subtract your withholding allowances and all of these contribution amounts from your gross earnings.
Note: There are two technical exceptions to this pre-tax rule. TSP contributions are tax-deferred; however, they are deducted during these computations. Additionally, in rare instances, if an employee has signed a pre-tax waiver for FEHB benefits, they are considered to be taxable income and not used in these calculations.
To determine the amount of withholding, follow steps 1 through 9:
1. Determine normal biweekly gross wages from earnings statement.
2. Determine normal biweekly TSP contributions from earnings statement.
3. Determine normal biweekly FSA contributions from earnings statement. If applicable, add the amounts from both the FSA Dependent Child (FSADC) and the FSA Health Care (FSAHC).
4. Determine normal biweekly FEHB pre-tax employee contributions from earnings statement (abbreviated as HP).
5. Determine normal CPP employee contributions from earnings statement.
Note: This program is administered on a monthly basis. The CPP contribution is deducted in every second pay period of the month.
6. Determine normal biweekly Federal Employees Dental and Vision Insurance Program (FEDVIP) employee contributions from earnings statement.
7. Determine normal biweekly Health Savings Account (HSA) contributions from earnings statement.
8. Multiply the number of exemptions claimed by the new biweekly exemption value of $142.31 (withholding allowance). The federal tax line on the earnings statement shows the number of exemptions claimed (e.g., S1 = single with one exemption, M3 = married with three exemptions).
9. Subtract the amounts in step 2 (TSP), step 3 (FSA), step 4 (FEHB), step 5 (CPP), step 6 (FEDVIP), step 7 (HSA), and step 8 (exemptions) from step 1 (biweekly gross wages). The balance is the amount subject to withholding.
10. Determine which range this amount falls into on the Federal Income Tax Withholding Table, and follow the instructions listed in the table.
The following is an example of how to compute federal income taxes for a Federal Employee Retirement System (FERS) employee who claims married with three exemptions, and makes pre-tax contributions to the TSP, FSA, FEHB, CPP, and FEDVIP.
A FERS employee receives $3,826.35 as biweekly gross wages. The employee makes the following contributions: 11 percent of gross ($420.90) per pay period (PP) to the TSP; $65 per PP for FSADC; $95 per PP for FSAHC; $133.83 per PP for FEHB ($133.83 is the actual cost for a Postal Service employee paying for High Option Self and Family (Category One) with the GEHA Benefit Plan); $105 for this PP to the CPP; and $44.33 for the GEHA PPO High Option Dental Biweekly Premium (Rating Region 2). The employee claims “Married” with three exemptions (M3 on the federal tax line of the earnings statement). Using the information provided in the Federal Income Tax Withholding Table in this article, federal taxes are computed as follows:
Computation continues as follows:
To complete the computation, refer to the Married/Biweekly segment of the Federal Income Tax Withholding Table. The amount of wages subject to withholding ($2,535.36) falls within the “over $958 but not over $2,958” range. Using the information provided within that range, the final computation is as follows:
* Rounding may vary this total by a few cents.
— Payroll,
Controller, 1-13-11
