Social Security: withholdingbooklet2008

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2008 Income Tax Withholding Cory Fong, Tax Commissioner North Dakota Office of State Tax Commissioner Rates & Instructions ng ldi s ho th hod i W et M Dear Employer, The attached 2008 withholding rate schedules are being provided to help as you update employee withholding for 2008. The enclosed information is effective for wages paid on or after January 1, 2008. You will notice three different methods are explained in this booklet. Of the three methods you might consider using the first method,
    W  i t  h  h o  l d  i n g  M e t  h o d s  W  i t  h  h o  l d  i n g  R a t e s Rates & Instructions For Wages Paid In 2008   www.nd.gov/tax Visit our web site forforms and information aboutNorth Dakota’s taxes. ndTax  Cory Fong, Tax Commissioner Cory Fong, Tax Commissioner North Dakota Office of State Tax Commissioner 2008 Income Tax 2008 Income Tax Withholding Withholding Dear Employer,The attached 2008 withholding rate schedules are being provided to help as youupdate employee withholding for 2008. The enclosed information is effective for wages paid on or after January 1, 2008. You will notice three different methods are explained in this booklet. Of thethree methods you might consider using the fi rst method, Percentage of Wages .This method most closely resembles the Internal Revenue Service PercentageMethod.As noted on page 6, the second method, Percent of Federal Withholding , iscalculated as a percent of federal withholding. We do not recommend that youuse this method for certain employees because it is possible to create a situationof over-withholding.Lastly, the third method utilizes Withholding Tables. These tables are moreuseful for those employers who only have a few employees and use a manualpayroll operation. If you decide this option best suits your needs, you will fi ndthe tables on our web site at www.nd.gov/tax , or contact our of  fi ce. Our addressand telephone number are listed on page 6 of this booklet.Providing you with exceptional service is important to the Of  fi ce of State TaxCommissioner. Your feedback helps us identify ways to make fi ling and payingtaxes in North Dakota as easy as possible. I encourage you to contact me withyour suggestions.Sincerely,Cory FongTax Commissioner   Introduction This booklet contains the instructions, rates, and formulas that employers need todetermine how much North Dakota income tax to withhold from employees’ wages for2008. It is important for employers to note that only the minimum and maximum dollaramounts for each income bracket have changed from 2007. The tax rate for each incomebracket has not changed. Two of the three withholding methods allowed are presented inthis booklet. Method One presented on page 3, is the Percentage of Wages Method and is similar to theIRS Percentage Method described in detail in  IRS Publication 15, Circular E, Employer’sTax Guide. This method is fairly straightforward for computer programming purposes. Method Two (Alternative Method), which continues the long-standing percent of federal withholding method, is presented on page 6. Use of this percentage-of-federal-withholding method for certain employees will result in a signi fi cant amount of excesswithholding . Therefore, employers are strongly urged to use Method One or Three. Method Three involves the use of Withholding Tables. The tables are available eitherfrom our web site at www.nd.gov/tax or by contacting our of  fi ce. If you decide this optionbest suits your needs, you will fi nd contact information on the last page of this booklet.-1-  Supplemental Wages Supplemental wages, as de fi ned for federal income tax purposes, are treated as supplemental wagesfor North Dakota income tax purposes. This includes bonuses, commissions, overtime pay, paymentsfor accumulated sick leave, severance pay, awards, prizes, back pay, and any other payment thatis considered a supplemental wage for federal income tax withholding purposes. The method forcalculating the amount of North Dakota income tax to withhold from supplemental wages is similar tothe federal income tax withholding method. The amount of North Dakota income tax to withhold fromsupplemental wages depends on whether the supplemental wages are identi fi ed as a separate paymentfrom regular wages.If supplemental wages are combined and paid with regular wages, and the amounts of each are notseparately identi fi ed, calculate the amount of North Dakota income tax to withhold from the combinedamount using any of the regular methods allowed—i.e., Methods 1, 2, or 3.If supplemental wages are paid separately from regular wages (or are combined and paid withregular wages but each are separately identi fi ed), calculate the amount of North Dakota income tax towithhold using the applicable method below:A. Multiply the supplemental wages by 3.92% (.0392), orB. Add the supplemental wages to the regular wages for the most recent payroll period. Thencalculate a tentative withholding amount on this total amount using any of the regular methodsallowed—i.e., Methods 1, 2, or 3. From this tentative withholding amount, subtract the amountof North Dakota income tax already withheld (from the regular wages). The result is the amountto withhold from the supplemental wages. Withholding by Passthrough Entities The information provided in this booklet does not apply to any passthrough entity that is required towithhold income tax from the year-end distributive shares of North Dakota income of its nonresidentmembers. For the passthrough entity withholding requirements and procedures, see the instructions to:ã North Dakota Form 38, if a trust subject to North Dakota income tax.ã North Dakota Form 58, if a partnership or a limited liability company that fi les as a partnership.ã North Dakota Form 60, if a subchapter S corporation.Please direct any questions relating to passthrough entity withholding to the Individual Income TaxSection (phone: 701.328.1032; e-mail: individualtax@nd.gov) or the Corporation Income Tax Section(phone: 701.328.2046; e-mail: corptax@nd.gov).-2-   Method One: Percentage Of Wages Method  Every employer must obtain a federal Form W-4, Employee’s Withholding Allowance Certi fi cate ,for each employee. Using the table below, employers can determine the total value of the withholdingallowance(s) claimed on employees’ Forms W-4. This amount is subtracted from the wages to arriveat the amount used to calculate the withholding:OneWithholdingPayroll Period Allowance*Weekly ...............................$ 67.31Biweekly ............................ 134.62Semimonthly ...................... 145.83Monthly ............................. 291.67Quarterly ............................ 875.00Semiannually ..................... 1,750.00Annually ............................ 3,500.00Daily or Misc. .................... 13.46 Steps: ã Multiply one withholding allowance for the payroll period (from the table above) by thenumber of allowances the employee claims on Form W-4. ã Subtract that amount from the employee’s wages. ã Determine the amount to withhold from the appropriate table on the following pages.  Example: A single employee is paid $600 weekly. This employee has a Form W-4 claiming twowithholding allowances. The amount of withholding is:1. Wage payment $600.002. One (weekly) allowance $67.313. Allowances claimed on W-4 24. Multiply line 2 by line 3 $134.625. Amount subject to withholding(Subtract line 4 from line 1) $465.386. Tax to withhold from Table 1,single person $ 8.28 (optional - may round to$8.00)The appropriate tables for all pay periods are on pages 4 and 5.  Rounding: Rounding to the nearest whole dollar is strongly recommended but not required.  Minimum Amount to Withhold: If the amount of North Dakota income tax to withhold for any payperiod is less than $1.00, the employer is not required to withhold that amount.  Additional Withholding: There is no state form equivalent to federal Form W-4. If employees wantadditional state withholding, employers should accommodate the request whenever possible. * The withholdingallowances listed are as of this printing. Please referto IRS Publication 15,Circular E for 2008, for themost current amounts. -3-
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