How to Calculate Taxes on a Paycheck From New York

New York State is one of the many states that require employers to withhold state income tax from employees' paychecks. In addition, employers are supposed to withhold city income tax from residents of New York City and from residents and nonresidents of Yonkers. As an employer in New York, follow the New York State Department of Taxation Department of Taxation and Finance's instructions for calculating withholding taxes.

Instructions

1. Use the employee's state withholding allowance certificate (IT-2104 form) and the state withholding tax tables (Publication NYS-50-T-NYS) to figure out state income tax. Obtain the employee's total number of allowances/exemptions from line 1 of his IT-2104 form and apply the withholding tax table that matches his exemptions, wages and filing status to obtain the withholding amount.

2. Retrieve the employee's total exemptions from line 1 of her IT-2104 form and apply the tax table in Publication NYS-50-T-Y that matches her wages, exemptions, filing status and resident status to determine Yonkers income tax.

3. Obtain the employee's exemptions from line 2 of his IT-2104 form and use the tax table in Publication NYS-50-T-NYC that corresponds to his wages, filing status and exemptions to figure out New York City income tax.

4. Add the additional amount stated on line 3, 4 and/or 5 of the employee's IT-2104 form to the state or city income tax amount you obtained from the respective publication to arrive at the total withholding for each tax, if applicable.

5. Do not withhold New York State, New York City or Yonkers income tax if the employee claims and qualifies for exemption on Form IT-2104-E.

Tips & Warnings

• Consult IRS Circular E (see Resources) for federal income tax, Social Security tax and Medicare tax withholding rates. Federal income tax withholding is similar to New York income tax withholding, except that you use the employee's W-4 form and the Circular E tax tables to withhold the former. In 2011, calculate Social Security tax at 4.2 percent of gross income paid to the employee, up to $106,800 for the year, and Medicare tax at 1.45 percent of all the employee's gross income.

References

• New York State Department of Taxation and Finance: IT-2104
• New York State Department of Taxation and Finance: NYS-50-T-NYS
• New York State Department of Taxation and Finance: NYS-50-T-Y
• New York State Department of Taxation and Finance: NYS-50-T-NYC
• New York State Department of Taxation and Finance: IT-2104-E

Resources

• IRS: Circular E