According to the Spring 2009 edition of the SSA/IRS Reporter (see www.irs.gov/pub/irs-pdf/p1693.pdf ), the following statement was added to the 2009 Form W-4 instructions based on a recommendation from the American Payroll Association, even though flat amount or percentage of wage withholding has never been allowed: "For regular wages, withholding must be based on allowances you claimed and may not be a flat amount or percentage of wages." The IRS notes that while payroll professionals are familiar with this rule, "they've often had a hard time convincing the workers who have insisted on incorrectly completing their W-4s." The IRS recommends that employees use its withholding calculator if they are having problems making withholding calculations on the W-4 worksheets.
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About Reed Tinsley, CPA
As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →