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...

Renaissance avoided more than $6 billion tax, report saysThe Senate Permanent Subcommittee on Investigations said on Monday that a Renaissance Technologies LLC hedge fund’s investors probably avoided more than $6...
A new Gallup survey found that 58 percent of smokers in the United States see increased state and federal taxes on cigarettes as an act of unjust discrimination, while 39 percent believe the tax hikes are justified.The...
Liberal groups object to bill barring taxes on Internet accessThe Internet Tax Freedom Act hasn’t been a controversial bill. In fact, it’s so popular that senators are seeking to pair it up with a far more...

Upcoming CPE Webinars

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.
Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.