What are the basics of payroll withholding?
• Federal income tax, Social Security, and Medicare are withheld from wages when they are actually or constructively paid. • The value of a personal exemption is $3,650 for 2009. • The flat federal income tax withholding rate for supplemental payments remains 25% for 2009. • For 2009, the maximum earned income credit (EIC) amount that may be paid in advance to an employee is $1,826. Actual or constructive payment. Federal income tax, Social Security, and Medicare are withheld from wages when the wages are actually or constructively paid. Actual payment occurs when an employee is put in possession of wages, such as when given cash or a check. Constructive payment occurs when wages are set aside for an employee. The payment can be credited to the employee’s account or otherwise made available to the employee at any time. To be available to the employee at any time, the wages must be credited or set apart without any substantial limitation or restriction on the time or manner of their pay
