Employers - New Withholding Tables Available For 2001

Under the recently enacted Economic Growth and Tax Relief Reconciliation Act of 2001, personal income tax rates will be reduced effective July 1.

The IRS has issued Publication 15-T, New Withholding Tables for 2001 (for wages paid after June 30, 2001), and reminds employers that they are to begin using the new tables for withholding on wages paid after June 30, 2001.

The new withholding tables are a supplement to Publications 15, 15-A, and 51, and should be used instead of the tables in those publications. Of specific note are changes to supplemental wages and backup withholding.

The new withholding publication contains a "Notice to Employees," which employers are to make available to workers so that workers are aware of how the new law affects their withholding.

Effective for wages paid after August 6, 2001 (or as soon as possible thereafter), the supplemental wage flat withholding rate is decreased to 27.5%.

Effective for payments after August 6, 2001 (or as soon as possible thereafter), the backup withholding rate is decreased to 30.5%.

The withholding tables do not reflect the new 10% tax bracket, which was made effective retroactive to Jan. 1, 2001. (The new law lowered from 15 to 10 percent the tax rate for the first $12,000 of taxable income on a joint return, $6,000 for singles, and $10,000 for heads of households.) Congress decided to provide the benefit of that rate cut by sending rebate checks to taxpayers this summer and fall. Sending the rebate was deemed a quicker way to deliver money into the pockets of Americans and stimulate the economy than through an adjustment to the withholding tables. For details, see Tax Rebate.

You may like these other stories...

IRS must take oath on Lerner emails: judgeMackenzie Weinger of Politico reported on Thursday that a federal judge ordered the IRS to explain under oath how it lost emails connected to Lois Lerner, the ex-IRS official at the...
The Republican-controlled House of Representatives passed a bill on Friday morning that would permanently extend the bonus depreciation tax break for businesses.The measure, HR 4718, which was crafted by Representative Pat...
The Republican-led House of Representatives is expected to pass a bill this week that would permanently extend the bonus depreciation tax break. But don’t expect President Obama to sign it.The Obama administration said...

Upcoming CPE Webinars

Jul 16
Hand off work to others with finesse and success. Kristen Rampe, CPA will share how to ensure delegated work is properly handled from start to finish in this content-rich one hour webinar.
Jul 17
This webcast will cover the preparation of the statement of cash flows and focus on accounting and disclosure policies for other important issues described below.
Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.