TAXES 18-01, Nonresident Federal Income Tax Withholding

TAXES 18-01, Nonresident Federal Income Tax Withholding

Published: January 09, 2018
Effective: Pay Period 25, 2017

Summary

Beginning with salary payments for Pay Period 25, 2017, employees may see a change in their Federal withholding tax amounts due to the fact that there are 27 pay dates in the tax year for 2018 instead of the usual 26 pay dates. This could affect an employee tax deductions as biweekly salary payments are annualized to compute the salary from which related tax withholdings are calculated.

Please be aware that the employee tax withholdings are likely to change again with the processing of the 2018 annual pay raise.

The new Federal withholding rates which are part of the Tax Cuts and Jobs Act (TCJA), have not yet been implemented. NFC will implement these withholding changes upon Internal Revenue Service (IRS) review. It is anticipated that the new withholding amounts will occur in February of 2018.

No action on the part of the employee or the personnel office is necessary.

Tax Formula

Acceptable Exemption Form:

W-4

Basis for Withholding:

Federal Exemptions

Acceptable Exemption Data:

S/M, Number of Allowances

TSP Deferred:

Yes

Special Coding:

Determine the Total Number of Allowances as follows: Exemption Code N is the only acceptable code for nonresident aliens. Claim only one exemption, unless a resident of Canada, Mexico, South Korea, or a United States national.

Additional Information:

None

Withholding Formula (Effective Pay Period 25, 2017)

  1. Subtract the nontaxable biweekly Thrift Savings Plan contribution from the gross biweekly wages.
  2. Subtract the nontaxable biweekly Federal Health Benefits Plan payment(s) (includes dental and vision insurance program, and flexible spending account - health care and dependent care deductions) from the amount computed in step 1.
  3. Add the taxable biweekly fringe benefits (e.g., taxable life insurance) to the amount computed in step 2 to obtain the adjusted gross biweekly wages.
  4. Multiply the adjusted gross biweekly wages times the number of pay dates in the tax year to obtain the gross annual wages.
  5. Add $2,300 to the employee's annualized gross wages.
  6. Determine the personal exemption by applying the following guideline and subtract this amount from the gross wages to compute the taxable income:

    Exemption Allowance = $4,050 x Number of Exemptions

  7. Apply the taxable income computed in step 6 to the following table to determine the Federal income tax withholding:

    Tax Withholding Table Single or Head of Household

    If the Amount of Taxable Income Is:

    The Amount of Federal Income Tax Withholding Should Be:

    Over $0 but not over $2,300

    $0

    Over $2,300 but not over $11,625

    $0 plus 10.0% over $2,300

    Over $11,625 but not over $40,250

    $932.50 plus 15.0% over $11,625

    Over $40,250 but not over $94,200

    $5,226.25 plus 25.0% over $40,250

    Over $94,200 but not over $193,950

    $18,713.75 plus 28.0% over $94,200

    Over $193,950 but not over $419,000

    $46,643.75 plus 33.0% over $193,950

    Over $419,000 but not over $420,700

    $120,910.25 plus 35.0% over $419,000

    Over $420,700

    $121,505.25 plus 39.6% over $420,700

     

    Tax Withholding Table Married

    If the Amount of Taxable Income Is:

    The Amount of Federal Income Tax Withholding Should Be:

    Over $0 but not over $8,650

    $0

    Over $8,650 but not over $27,300

    $0 plus 10.0% over $8,650

    Over $27,300 but not over $84,550

    $1,865.00 plus 15.0% over $27,300

    Over $84,550 but not over $161,750

    $10,452.50 plus 25.0% over $84,550

    Over $161,750 but not over $242,000

    $29,752.50 plus 28.0% over $161,750

    Over $242,000 but not over $425,350

    $52,222.50 plus 33.0% over $242,000

    Over $425,350 but not over $479,350

    $112,728.00 plus 35.0% over $425,350

    Over $479,350

    $131,628.00 plus 39.6% over $479,350

     

  8. Divide the annual Federal income tax withholding calculated in step 7 by the number of pay dates in the tax year to obtain the biweekly Federal income tax withholding.

Resources

To view the updated tax formula, go to the HR and Payroll Clients page from the MyNFC drop-down menu on the National Finance Center (NFC) homepage. Select the Publications tab and select U.S. Income Tax Formulas from the Publications menu to launch the tax map. Select the desired State from the map provided for the formula.

Previous Tax Bulletin

Inquiries

For questions about NFC processing, authorized Servicing Personnel Office representatives should contact the NFC Contact Center at 1-855-NFC-4GOV (1-855-632-4468) or via the customer service portal.