Treasury Regulations (26 C.F.R.)
26 CFR § 31.3402(h)(2)-1
Withholding on basis of annualized wages.
An employer may determine the amount of tax to be deducted and withheld upon a payment of wages to an employee by taking the following steps:
Step 1. Multiply the amount of the employee's wages for the payroll period by the number of such periods in the calendar year.
Step 2. Determine the amount of tax which would be required to be deducted and withheld upon the amount determined in Step 1 if that amount constituted the actual wages for the calendar year and the payroll period of the employee were an annual payroll period.
Step 3. Divide the amount of tax determined in Step 2 by the number of periods by which the employee's wages were multiplied in Step 1.
Example.
On July 1, 1970, A, a single person who is on a weekly payroll period and claims one exemption, receives wages of $100 from X Co., his employer. X Co. multiplies the weekly wage of $100 by 52 weeks to determine an annual wage of $5,200. It then subtracts $650 for A's withholding exemption and arrives at a balance of $4,550. The applicable table in section 3402(a) for annual payroll periods indicates that the amount of tax to be withheld thereon is $376 plus $314.50 (17 percent of excess over $2,700), or a total of $690.50. The annual tax of $690.50, when divided by 52 to arrive at the portion thereof attributable to the weekly payroll period, equals $13.28. X Co. may, if it chooses, withhold $13.28 rather than the amount specified in section 3402 (a) or (c) for a weekly payroll period.
[T.D. 7053, 35 FR 11627, July 21, 1970]
Source: view the official text
In this part (40 sections)
- 31.3401(a)(19)-1 · Reimbursements under a self-insured medical…
- 31.3401(b)-1 · Payroll period.
- 31.3401(c)-1 · Employee.
- 31.3401(d)-1 · Employer.
- 31.3401(f)-1 · Tips.
- 31.3402(a)-1 · Requirement of withholding.
- 31.3402(b)-1 · Percentage method of withholding.
- 31.3402(c)-1 · Wage bracket withholding.
- 31.3402(d)-1 · Failure to withhold.
- 31.3402(e)-1 · Included and excluded wages.
- 31.3402(f)(1)-1 · Withholding allowance.
- 31.3402(f)(2)-1 · Furnishing of withholding allowance certificates.
- 31.3402(f)(3)-1 · When withholding allowance certificate takes effect.
- 31.3402(f)(4)-1 · Effective period of a withholding allowance…
- 31.3402(f)(5)-1 · Form and contents of withholding allowance…
- 31.3402(f)(6)-1 · Withholding exemptions for nonresident alien…
- 31.3402(g)-1 · Supplemental wage payments.
- 31.3402(g)-2 · Wages paid for payroll period of more than one year.
- 31.3402(g)-3 · Wages paid through an agent, fiduciary, or other person…
- 31.3402(h)(1)-1 · Withholding on basis of average wages.
- 31.3402(h)(2)-1 · Withholding on basis of annualized wages.
- 31.3402(h)(3)-1 · Withholding on basis of cumulative wages.
- 31.3402(h)(4)-1 · Other methods.
- 31.3402(i)-1 · Increases in withholding.
- 31.3402(j)-1 · Remuneration other than in cash for service performed by…
- 31.3402(k)-1 · Special rule for tips.
- 31.3402(l)-1 · Determination and disclosure of marital or filing status.
- 31.3402(m)-1 · Additional withholding allowance.
- 31.3402(n)-1 · Employees incurring no income tax liability.
- 31.3402(o)-1 · Extension of withholding to supplemental unemployment…
- 31.3402(o)-2 · Extension of withholding to annuity payments if…
- 31.3402(o)-3 · Extension of withholding to sick pay.
- 31.3402(p)-1 · Voluntary withholding agreements.
- 31.3402(q)-1 · Extension of withholding to certain gambling winnings.
- 31.3402(r)-1 · Withholding on distributions of Indian gaming profits to…
- 31.3403-1 · Liability for tax.
- 31.3404-1 · Return and payment by governmental employer.
- 31.3405(a)-1 · Questions and answers relating to Federal income tax…
- 31.3405(c)-1 · Withholding on eligible rollover distributions;…
- 31.3405(e)-1 · Questions and answers relating to withholding on…