Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 307 - Withholding › Rule 701-307.2 - Computation of Amount Withheld

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Amount withheld.
a.
General rules.
Every employer required to deduct and withhold
				a tax on compensation paid in Iowa to an individual shall deduct and withhold
				for each payroll period an amount the total of which will approximate the
				employee's annual tax liability. "Payroll period" for Iowa withholding purposes
				shall have the same definition as in Section 3401 of the Internal Revenue Code
				and shall include "miscellaneous payroll period" as that term is defined and
				used in that section and the associated regulations.
b.
Methods of computations.
Employers required to withhold Iowa income tax on compensation paid in this
				state shall compute the amount of tax to be withheld for each payroll period
				pursuant to the methods and rules provided herein.
(1) Tables. An employer may elect to use the
				withholding tables provided in the Iowa employers' withholding tax guide and
				withholding tables, which are available from the department of
				revenue.
(2) Formulas. Formulas
				that are provided in the Iowa employers' withholding tax guide and tax tables
				are available for employers who have a computerized payroll system.
(3) Other methods. An employer may request
				and be granted the use of an alternate method for computing the amount of Iowa
				tax to be deducted and withheld for each payroll period so long as the
				alternate proposal approximates the employee's annual Iowa tax liability. When
				submitting an alternate formula, the withholding agent should explain the
				formula and show examples comparing the amount of withholding under the
				proposed formula with the department's tables or computer formula at various
				income levels and by using various numbers of personal exemptions. Any
				alternate formula must be approved by the department prior to its
				use.
c.
Supplemental wage payments.
A supplemental wage payment is the
				payment of a bonus, commission, overtime pay, or other special payment that is
				made in addition to the employee's regular wage payment in a payroll period.
				When such supplemental wages are paid, the amount of tax required to be
				withheld shall be determined by using the current withholding tables or
				formulas. If supplemental wages are paid at the same time as regular wages, the
				regular tables or formulas are used in determining the amount of tax to be
				withheld as if the total of the supplemental and regular wages were a single
				wage payment for the regular payroll period. If supplemental wages are paid at
				any other time, the regular tables or formulas are used in determining the
				amount of tax to be withheld as if the supplemental wage were a single wage
				payment for the regular payroll period. When a withholding agent makes a
				payment of supplemental wages to an employee and the employer withholds federal
				income tax on a flat-rate basis, pursuant to Treasury Regulation §
				31.3402(g)-1, state income tax shall be withheld from the supplemental wages at
				a rate of 6 percent without consideration for any withholding allowances or
				exemptions.
d.
Vacation
				pay.
Amounts of so-called "vacation allowances" shall be subject to
				withholding as though they were regular wage payments made for the period
				covered by the vacation. If the vacation allowance is paid in addition to the
				regular wage payment for such period, the allowance shall be treated as
				supplemental wage payments.