20.02.12 Upgrade Features

PAYROLL

If you have entered any new 2020 W4's please update employee's records.

NEW FEDERAL WITHHOLDING TAX TABLES FOR 2020 The IRS has published new tax tables to go along with the new W4 form.  The W4 can be downloaded at https://www.irs.gov/pub/irs-pdf/fw4.pdf .

The tax tables have been updated to follow the IRS guidelines for the W4 form.

There are two seperate tables for each category. Two for single, two for Married and so forth. The new tables are set up for employees with one job income or two or more job incomes. They also removed the personal and dependant exemptions.

The tables are using the child tax credit (Step 3 on W4) which if used will cut down on taxes withheld.

The tables use a fixed standard deduction, 12,900 for married filing jointly and 8,600 for all other tables.

The tables in TUT are US PFW table 1 thru 8. (Do not make changes to these tables without asking for assistance.)

The procedure for entering the new data is as follows:

The entry for Step 3 Under 17 is a value in $2,000 increments (Child Tax Credit). 

The entry for Step 3 Other is a value in $500 increments (Additional Tax Credit). 

The entry for Step 4(b) is a value in $500 increments for additional deductions that tax payer

may use on tax return. 

The entry for Step 4(c) is a value for Extra Withhholding that will be added to any calculated tax.

Calculation Steps

The steps for calulations are:

1.  Annual Income -- Multiply weekly wage by 52

2. Standard Deduction -- Subtract Standard Deduction from annual wage -- 12,900 for Married Filing Jointly or 8600 for all else

3. Additional Deductions -- Subtract amount from step 4(b)

4. Adjusted Income -- Compute tax on adjusted income

5. Tax Credits -- Subtract Step 3 Tax Credits from annual tax

6. Weekly Withholding -- Divide annual tax by 52

7. Additional Withholding -- Add Step 4(c) extra withholdings to calculated weekly withholding.