Updated income-tax withholding tables for 2014 have been released by the IRS and supersede withholding tables issued in December 2013. The newly revised version contains percentage method income-tax withholding tables and related information that employers need to implement these changes.
In addition, employers should continue withholding Social Security tax at the rate of 6.2 percent of wages paid. The Social Security wage base limit increases to $117,000. The Medicare tax rate remains at 1.45 percent each for the employee and employer.
The additional Medicare tax of .09 percent for employees (not employers) remains in effect and should be withheld from employee wages that exceed $200,000 in a calendar year, at the beginning in the pay period in which the employee’s wages exceed $200,000.
Employers should start using the revised withholding tables and correct the amount of Social Security tax withheld as soon as possible in 2014, but not later than February 15, 2014. For any Social Security tax under-withheld before that date, employers should make the appropriate adjustment in workers’ pay as soon as possible, but not later than March 31, 2014.
Employers and payroll companies will handle the withholding changes, so workers typically won’t need to take any additional action, such as filling out a new W-4 withholding form. Individuals and couples with multiple jobs, people who are having children, getting married, getting divorced or buying a home, and those who typically wind up with a balance due or large refund at the end of the year may want to consider submitting revised W-4 forms.
As always, it’s prudent for workers to review their withholding every year and, if necessary, fill out a new W-4 and give it to their employer. For example, individuals and couples with multiple jobs, people who are having children, getting married, getting divorced or buying a home, and those who typically wind up with a balance due or large refund at the end of the year may want to consider submitting revised W-4 forms.
Give us a call if you have any questions about income tax withholding in 2014. We’re here to help.