Page 111 - Form W4 and payroll Tables

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
ous employment (defined below in this section) during
6. Alternative Methods for the current calendar year.
Complete the following steps to figure withholding tax
Figuring Withholding by the part-year method.

1. Add the wages to be paid to the employee for the cur-
You may use various methods of figuring federal income rent payroll period to any wages that you’ve already
tax withholding. The methods described next may be paid to the employee in the current term of continuous
used instead of the Percentage Method and Wage employment. See definition for “term of continuous
Bracket Method discussed earlier in this publication. Use employment,” later.
the method that best suits your payroll system and em-
ployees. 2. Add the number of payroll periods used in step 1 to
Employers must use a modified procedure to fig- the number of payroll periods between the employ-
ee's last employment and current employment. To
! ure the amount of federal income tax withholding find the number of periods between the last employ-
CAUTION on the wages of nonresident alien employees. ment and current employment, divide the number of
Before you use any of the alternative methods to figure calendar days between the employee's last day of
the federal income tax withholding on the wages of non-
resident alien employees, see Withholding Adjustment for earlier employment (or the previous December 31, if
later) and the first day of current employment by the
Nonresident Alien Employees, earlier. number of calendar days in the current payroll period.
Annualized wages. The Percentage Method Tables for 3. Divide the step 1 amount by the total number of pay-
Automated Payroll Systems in section 1 and Worksheet 1 roll periods from step 2.
allow you to figure federal income tax withholding based 4. Find the tax in the withholding tax tables on the step 3
on annualized wages. amount. Be sure to use the correct payroll period ta-
Average estimated wages. You may withhold the tax ble and to take into account the employee's withhold-
for a payroll period based on estimated average wages, ing allowances if their Form W-4 is from 2019 or ear-
with necessary adjustments, for any quarter. For details, lier; or take into account other information provided on
see Regulations section 31.3402(h)(1)-1. the employee's 2020 or later Form W-4.
5. Multiply the total number of payroll periods from step
Cumulative wages. An employee may ask you, in writ- 2 by the step 4 amount.
ing, to withhold tax on cumulative wages. If you agree to
do so, and you’ve paid the employee for the same kind of 6. Subtract from the step 5 amount the total tax already
payroll period (weekly, biweekly, etc.) since the beginning withheld during the current term of continuous em-
of the year, you may figure the tax as follows. ployment. Any excess is the amount to withhold for
Add the wages you’ve paid the employee for the cur- the current payroll period.
rent calendar year to the current payroll period amount. See Regulations section 31.3402(h)(4)-1(c) for more infor-
Divide this amount by the number of payroll periods so far mation about the part-year method.
this year, including the current period. Figure the withhold-
ing on this amount, and multiply the withholding by the Term of continuous employment. A term of continu-
number of payroll periods so far this year, including the ous employment may be a single term or two or more fol-
current period. Subtract the total tax already deducted lowing terms of employment with the same employer. A
and withheld during the calendar year from the total term of continuous employment includes holidays, regular
amount of tax calculated. The excess is the amount to days off, and days off for illness or vacation. A term of
withhold for the current payroll period. See Revenue Pro- continuous employment begins on the first day that an
cedure 78-8, 1978-1 C.B. 562, for an example of the cu- employee works for you and earns pay. It ends on the ear-
mulative method. lier of the employee's last day of work for you or, if the em-
ployee performs no services for you for more than 30 cal-
Part-year employment. A part-year employee who fig- endar days, the last workday before the 30-day period. If
ures income tax on a calendar-year basis may ask you to an employment relationship is ended, the term of continu-
withhold tax by the part-year employment method. The re- ous employment is ended even if a new employment rela-
quest must be in writing, under penalties of perjury, and tionship is established with the same employer within 30
must contain the following information. days.
• The last day of any employment during the calendar Other methods. You may use other methods and tables
year with any prior employer. for withholding taxes, as long as the amount of tax with-
• A statement that the employee uses the calendar year held is consistently about the same as it would be under
accounting period. the Percentage Method, as discussed in section 1. If you
• A statement that the employee reasonably anticipates develop an alternative method or table, you should test
that he or she will be employed by all employers for a the full range of wage and allowance situations to be sure
total of no more than 245 days in all terms of continu- that they meet the tolerances contained in Regulations
section 31.3402(h)(4)-1(a) as shown in the chart below.

Publication 15-T (2021) Page 61