PAYROLL TAXES
Some wage earners will see more tax withheld from their paychecks, now that the Service has released the revised withholding tables for 2010.
Last year’s tables were updated in the spring to reflect the Making Work Pay Credit...a 6.2%credit on earned income, capped at $400 for singles and $800 for couples. Those tables crammed the benefit of the credit into the last nine months of the year, about $45 a month for singles and $67 a month for couples. Since this year’s tables spread the credit over a full 12-month period, the savings each month from the credit will be lower. Thus, on the same pay, the amount of tax withheld will be a bit larger.
And IRS has revised the optional table for pension withholding. It allows for extra withholding to offset the benefit of the Making Work Pay Credit that is built into the regular tables. Pensioners without earned income don’t qualify for the credit and may wind up being under withheld at year-end if the regular tables are used.
Schools must withhold FICA tax on grant payments to postdoctoral fellows, the Service privately rules. The fellows are treated as employees of the university. They are hired after the school secures funding for a project, and they are directed to particular areas of research. Their work is supervised by faculty members.
And they are eligible to receive retirement plan benefits while the position lasts.
All in all, the IRS concluded that the payments made to the fellows were for services. The rule is different for National Research Service grants. No FICA is due on those, IRS says, because the school doesn’t have direct control over that research.
Smalls get more flexibility in choosing how often to file payroll tax returns. Beginning next year, businesses that now file Form 944 annually will be permitted to switch to filing Form 941 quarterly for any reason. For 2009, firms filing annually could make the switch only if they expected their payroll tax deposits to top $1,000 for the year or they planned to e-file quarterly return. To make the changeover to quarterly filing, firms will have to notify IRS in writing, and keep filing annually until they receive written permission from the Service that they can file the 941.
Some wage earners will see more tax withheld from their paychecks, now that the Service has released the revised withholding tables for 2010.
Last year’s tables were updated in the spring to reflect the Making Work Pay Credit...a 6.2%credit on earned income, capped at $400 for singles and $800 for couples. Those tables crammed the benefit of the credit into the last nine months of the year, about $45 a month for singles and $67 a month for couples. Since this year’s tables spread the credit over a full 12-month period, the savings each month from the credit will be lower. Thus, on the same pay, the amount of tax withheld will be a bit larger.
And IRS has revised the optional table for pension withholding. It allows for extra withholding to offset the benefit of the Making Work Pay Credit that is built into the regular tables. Pensioners without earned income don’t qualify for the credit and may wind up being under withheld at year-end if the regular tables are used.
Schools must withhold FICA tax on grant payments to postdoctoral fellows, the Service privately rules. The fellows are treated as employees of the university. They are hired after the school secures funding for a project, and they are directed to particular areas of research. Their work is supervised by faculty members.
And they are eligible to receive retirement plan benefits while the position lasts.
All in all, the IRS concluded that the payments made to the fellows were for services. The rule is different for National Research Service grants. No FICA is due on those, IRS says, because the school doesn’t have direct control over that research.
Smalls get more flexibility in choosing how often to file payroll tax returns. Beginning next year, businesses that now file Form 944 annually will be permitted to switch to filing Form 941 quarterly for any reason. For 2009, firms filing annually could make the switch only if they expected their payroll tax deposits to top $1,000 for the year or they planned to e-file quarterly return. To make the changeover to quarterly filing, firms will have to notify IRS in writing, and keep filing annually until they receive written permission from the Service that they can file the 941.
No comments:
Post a Comment