Update (L4) Federal Tax Tables for 2011 Payroll Now

The U.S. Internal Revenue Service has published payroll tax withholding amounts that are applicable for wages paid in 2011.

If you use DDMS Payroll, update your payroll parameters now to reflect new tax withholding rates.

How Do I Update Tax Tables for 2011?

For illustrated details, see Setting (L4) Federal Payroll Taxes for 2011 (pdf). More »

Does this apply to me?

This only applies to dealers who use the DDMS Payroll application to pay employees who earn wages and pay federal taxes in the United States.

When Should I Do These Steps?

AFTER you close Payroll and print W-2s for 2010,

But BEFORE you run your first payroll for 2011.

What Are Some Key Changes?

For 2011, the Employee tax rate for Social Security is 4.2% (which differs from the Employer Social Security rate that remains at 6.2%).

The Federal Dependent Allowance is now $3700.

For illustrated details, see Setting (L4) Federal Payroll Taxes for 2011 (pdf).

What About the Extra Row?

To comply with new rates introduced last year for those grossing more than $375,000 (single) or $381,400 (married) in 2010, DDMS 8.22 added a 9th tier to the (L4) parameter screen.

However, the 2011 tax tables do not use the 9th tier of tax withholding rates.

Please fill the extra row with 9s, and use the top tax amounts and percentages in that row.

You may need to reverse a workaround published prior to the DDMS 8.22 software update.

For illustrated details, see Setting (L4) Federal Payroll Taxes for 2011 (pdf).

Where Can I Get More Information?

See Year-End FAQs on 2010 Tax Reports and First Payroll of 2011.

Please note, you are responsible for determining exactly how the tax laws affect your payroll.

Consult your accountant and the IRS Publication 15 (Circular E) Employer's Tax Guide for 2011 (http://www.irs.gov/pub/irs-pdf/p15.pdf).

Tuesday, Jan. 4, 2011

Need Help? (800) 366-4778 • https://support.ecisolutions.com • ddmssupport@ecisolutions.com