Alert for your employees!
Some may face underpayment of FIT
Because of the new withholding tables under the American Recovery and Reinvestment Act, some employees might want to adjust their 2009 FITW by submitting a new W-4 now. The Act reduced FITW to reflect the Make Work Pay tax credit. But for some employees, that adjustment may result in paying less than the required 90% of FIT by Dec. 31, 2009, which may lead to penalties.
Employees most likely to have too little withheld under the new tables are:
· two-earner married couples;
· individuals with more than one job;
· a dependent on another’s tax return (they are not eligible for the credit, but you will withhold as though they were);
· those receiving a pension; and
· individuals also receiving Economic Recovery Payments (they are not eligible for the credit, but you will withhold as though they were.
Tip: Provide employees with a copy of the “Notice to Employees” on page 73 of IRS Pub. 15-T, at www.irs.gov and/or direct employees to the IRS Withholding Calculator on its Web site (type “withholding calculator” in the IRS search box), which is now updated to reflect the new withholding.