To advise agencies of changes in withholding allowances and maximum Social Security Tax.
New rates will be reflected in the Administration checks dated January 2, 2002 and Institution checks dated January 10, 2002.
The value of a withholding allowance has been increased to $57.69 weekly, $115.38 biweekly, $250.00 monthly and $3000 annually. To request a copy of the Circular E, Employer's Tax Guide, contact the IRS at the toll-free number 1-800-829-3676 or visit their website at www.irs.ustreas.gov to view this publication.
The New York State Payroll System calculates taxes based on the annual table.
Advance Payment of Earned Income Credit
In 2002, employees whose earned income is less than $29,201 may be eligible for the advance payment of the Earned Income Credit (EIC), with a maximum credit of $1,503. The new 2002 tables for calculating the credits are also included in the circular E.
Eligible employees must complete a new W-5, Earned Income Credit Advance Payment Certificate each year. Copies of the forms may be obtained from IRS.
Social Security- Medicare Deductions
The 2002 Social Security tax will be calculated at 6.2% on the first $84,900 of wages resulting in a maximum Social Security tax deduction of $5,263.80. The 1.45% Medicare tax will apply to all taxable wages, as there is no wage cap.
Questions regarding this bulletin may be directed to the Payroll Deductions mailbox.