How to Figure Out Georgia State Tax Withholding
Georgia is one of the many states that require employers to withhold state income tax from employees' wages. A few states require employers to use a flat withholding percentage to calculate state income tax; Georgia, however, uses guidelines that are comparable to the IRS' federal income tax withholding system.
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Withholding Form
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The Georgia Department of Revenue administrates the state's income tax withholding laws. The department requires employers to give new employees a G-4 form to complete; it is also given to employees who wish to change their state income tax withholding conditions. Similar to Form W-4 for federal income tax withholding, the employee puts her filing status, allowances and any additional taxes to be withheld from each of her paychecks on her G-4 form. An employee who fails to submit a G-4 is subject to state income tax withholding at the highest rate of single with zero allowances.
Withholding Tables
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The IRS Circular E's tax-withholding tables detail the amount of federal income tax to withhold from an employee's paychecks based on the employee's W-4 information, wages and pay period. Georgia uses a similar system for state income tax withholding, except that employers must use the withholding tables in the Georgia Department of Revenue Employer's Tax Guide. Tax is determined using either the wage bracket method or the percentage alternative. The percentage method is more in-depth than the wage bracket method; it's best to use it only if the employee's wages are more than the wage bracket's income range or if he claims more than 10 allowances on his G-4 form.
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Wage Bracket Calculation
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To determine state income tax withholding, obtain the employee's filing status and allowances from lines 3 and 4 of her G-4 form. Check line 5 for additional allowances. Add lines 4 and 5 to get the total allowances. Then find the tax-withholding table in the Employer's Tax Guide that matches the employee's filing status, pay period, allowances and wages. For example, if the employee earns $900 biweekly and claims married filing separately with one allowance, her withholding is $40.09 weekly in 2011. Check line 6 of her G-4 for additional withholding. If applicable, add the extra amount to the withholding amount you obtained from the Employer's Tax Guide to arrive at the employee's total withholding for the pay period.
Percentage Calculation
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If applicable, use the Georgia Employer's Tax Guide percentage method to calculate state income tax. The employee's standard deduction is based on his filing status and his personal allowance is based on his dependents and whether he claims himself and/or his spouse. Subtract these deductions as shown in Table E from the employee's gross pay. If the employee does not have any allowances, he still gets the standard deduction. Apply the percentage formula in Table F, G or H to determine the amount of state income tax to withhold.
Considerations
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Do not withhold Georgia income tax if the employee claims -- and qualifies for -- exempt on line 8 of her G-4 form.
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