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IRS Alternative Withholding Methods - Avoiding Underestimated Tax Penalties (MLC161A)
Learn How To Compute The "Correct" Or Target Annual Withholding To Avoid Underestimated Tax Penalties.
Employer federal income tax withholding is intended to collect, throughout the year, the approximate the amount of the employee's tax for the year. The wage bracket and percentage methods are the primary methods for computing the amount to withhold, but sometimes they just don't seem to get the right result.
When supplemental wages are added to the equation, the prescribed aggregate method and optional flat rate method frequently result in too much or too little withholding. Payroll professionals sometimes experience a flood of revised W-4 Forms just before and after scheduled bonus payments. This creates additional work and opportunities for mistakes for the payroll department and may not affect the withholding in the way the employee expected.
The IRS has developed several alternatives to the traditional withholding methods. These methods are designed to provide a withholding amount that is closer to the "correct" amount of withholding required to meet the employee's tax obligation. The methods can be useful when employee compensation varies from pay period to pay period or in special situations such as part-year employment. Employers may even design their own methods so long as the results fall within certain parameters.
The danger for employers and payroll professionals is that failure to withhold the correct amounts per employee W-4 parameters may result in penalties and possible personal liability for the amounts the employer failed to withhold imposed on individuals deemed responsible for correctly withholding taxes.
Attend this webinar by our expert speaker Patrick Haggerty to learn how tocompute the "correct" or target annual withholding to avoid underestimated tax penalties.
In this webinar you will learn
How to compute the "correct" or target annual withholding to avoid underestimated tax penalties
The part-year withholding method – what it does, when it works, and how to use it
Which methods require an employee request and which are employer options
How to test an employer designed method to assure compliance with IRS requirements
Which methods smooth withholding when compensation varies pay period to pay period
Which methods soften the impact of bonus payment withholding without changing the W-4
How regular use of the cumulative wage method automatically adjusts for fluctuating compensation
The special Form W-4 instructions and withholding rules for non-resident alien employees
Sample pages of basic and alternative withholding tables provided by the IRS
Detailed examples of IRS authorized alternative methods
Descriptions of situations in which particular alternative methods might be useful
Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens
References to regulations and rulings authorizing and describing alternative withholding methods
This program will provide examples of computations for
Annualized Wage Method
Cumulative Wage Method
Part-year Employment Method
Quarterly Average Wage Method
Who should attend?
Payroll Supervisors and Personnel
Payroll Service Providers
Tax Compliance Officers
Employee Benefits Administrators
Officers and Managers with Payroll or Tax Compliance Oversight
Public Agency Managers
Audit and Compliance Personnel/Risk Managers
*Single User Price. For multiple users please call 1-800-223-8720
Pat Haggerty is a tax practitioner, author, and educator. His work experience includes non-profit organization management, banking, manufacturing accounting, and tax practice. He began teaching accounting at the college level in 1988. He is licensed as an Enrolled Agent by the U. S. Treasury to repr...
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