CHANGES TO 2010 PAYCHECKS

Federal and State withholding taxes will be computed each pay period on an annualized basis according to Federal and State tax tables. The amount of each personal exemption claimed is $3,650.00. You may notice slightly higher federal withholding due to the Making Work Pay Tax Credit being spread into twenty-six (26) periods in 2010. For 2009, it was the same annual amount but only applied over twenty (20) periods, so your tax was lower the last nine (9) months of 2009.

For calendar year 2010, the Old Age Survivors and Disability Insurance portion (retirement part) of the Social Security tax has a maximum wage base of $106,800.00 and a maximum contribution of $6,621.60. This has a tax rate of 6.2%. All covered wages will be subject to the 1.45% Medicare tax.

IRS Code Sec 79 - Group Term Life insurance purchased for employees by employers

The cost of Group Term Life insurance coverage in excess of $50,000.00 provided to an employee by an employer must be included in the employee's Federal and State Taxable Gross Earnings. We are required to withhold additional Social Security and Medicare on a biweekly basis and report this as Social Security and Medicare gross wages. Group Term Life insurance is based on 150% of employee's annual salary.

Any employee receiving 26 checks in 2010 with a salary greater than $1,282.05 per pay period or any employee receiving 20 checks in 2010 earning more that $1,666.66 per pay period will have taxable Group Term Life computed with their paychecks. Taxable Group Term Life is computed based on salary and age brackets and reported on a biweekly basis.

Reminder to review your W-4 Form for tax withholding

If situations in your personal life have changed, your taxable income such as marital status, dependents, non-wage income, deductions, etc., you may wish to file an amended W-4 Form with the Office of Human Resources.

SPECIAL NOTICE: A field has been added to the W-4 form which allows you to claim 1 or 2 additional withholding allowances for "CHILD TAX CREDIT". This is based on marital status, total income, and number of children so you need to work through the personal allowances worksheet to see if you can boost your take home pay by claiming the new credit.

If you are having additional arbitrary Federal and/or State withholding tax withheld, these amounts will continue for the 2010 tax withholding. If you wish to make a change on your arbitrary taxes, you will need to complete a new W-4 form in Human Resources (Federal). For Kansas withholding tax changes, please complete a new K-4 form in Human Resources (State). You may print and sign the forms and send to Human Resources, Box 15.

Reminder to Employees who may be claiming Exemption from Federal Withholding or Advanced Earned Income Credit: these forms expire each year and must be re-submitted each calendar year. If you are eligible and wish to claim exempt status for 2010, you must fill out a new W-4 (Federal) and/or K-4 (State) to be exempt from taxes. If you wish to take advantage of the Advanced Earned Income Credit, fill out the W-5 form in Human Resources (Advanced Earned Income Credit).

We hope that this information will assist you in understanding how your payroll is computed for the coming year. If you have any questions, please contact the Payroll department at 978-3074.