Tips and information for withholding employment taxes and estimated tax payments.

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Tax Withholdings and Estimated Payments
Presented by: Jennoa R. Graham, Ph.D.
Friday, March 8, 2013

2.  Income – Money that is received in exchange
for a product, service or contract agreement
 Tax Withholding – Installment payments that
are deducted from the total income earned
(gross) prior to issuing employee paycheck
 Estimated Tax – Installment payments made
by independent contractor from the total
income received for services
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Small Business is not included in this presentation

3.  Allowances (Exemptions) - A point system
based on IRS Form 1040 filing status and
number of dependents, that reduces the
dollar amount deducted from the total
income earned (gross) prior to issuing
employee paycheck
 Withholding Calculator – an application that
determines IRS Form W-4 allowances and
estimated tax liability. Does not calculate
state estimated tax liability.
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4.  IRS Form W-4 – used to determine the dollar
amount to withhold from a payroll check for
federal income tax installments.
 IRS Form 1040-ES – voucher used to submit
estimated federal income tax installment
payments
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5.  GA Form G-4 – used to determine the dollar
amount to withhold from a payroll check for
Georgia state income tax installments.
 GA Form 500ES - voucher used to submit
estimated Georgia state income tax
installment payments
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6.  Determine whether tax withholding or
estimated tax is applicable
 Determine applicable forms for tax
withholding and estimated tax processes
 Calculate the number of tax withholding
allowances or dollar amount of estimated tax
 Determine when and how to submit
applicable forms/payments
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7.  Traditional Employee – Payer controls what work
is assigned and how it is completed
 Independent Contractor – Worker controls what
work is assigned and how the work is completed
 There are exceptions to these general rules
under statutory and common laws guidelines:
 Form SS-8, Determining of Worker Status for Purposes
of Federal Employment Taxes and Income Tax
Withholding
 See www.irs.gov for more information
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8.  Traditional Employee – Payer controls what
work is assigned and how it is completed
 Payroll Tax Withholding - Mandatory
 With Consent (W-4)
 Without Consent (highest rate)
 Withholding Allowance
 W-4 Personal Allowances Worksheet
 Withholding Calculator – Complicated; See
www.irs.gov or tax professional for more information
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Rule of Thumb:
Number of Allowances
Form W-4 < Form1040
Submitted at time of employment; update at anytime

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Rule of Thumb:
Number of Allowances
Form W-4 < Form1040

11.  Independent Contractor – Worker controls
what work is assigned and how the work is
completed
 Estimated Tax Installments - Voluntary
 Prepay (1040-ES)
 Tax Season (1040-V, may include penalty fees)
 Installment Amounts
 1040-ES Estimated Tax Worksheet
 Withholding Calculator – Complicated; See
www.irs.gov or tax professional for more information
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Payments are made once
every 4 months (quarterly)

13.  Payroll Tax Withholding - Mandatory
 G-4, Employee Withholding Allowance Certificate
 G-4, Allowance Worksheet
 Estimated Tax Installments – Voluntary
 500-ES Individual and Fiduciary Estimated Tax Payment
Voucher (Prepay)
 GA-9465 Installment Agreement Request (Tax Season)
 Send request if full payment cannot be made at time of
filing
 Penalties may be applied if request is denied
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See www. etax.dor.ga.gov or tax professional

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Rule of Thumb:
Number of Allowances
Form G-4 = Form W-4

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Payments are made once
every 4 months (quarterly)

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Repayments are due monthly
not to exceed 36 months

17.  Determine whether tax withholding or estimated
tax is applicable
 Tax withholding applicable to Employees
 Estimated tax is applicable to Contractors
 There are exceptions to every general rule
 Determine applicable forms for tax withholding
and estimated tax processes
 W-4 Employee Withholding Allowance Certificate
 G-4 Employee Withholding Allowance Certificate
 1040-ES Estimated Tax
 500-ES Individual and Fiduciary Estimated Tax
Payment Voucher
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18.  Calculate the number of tax withholding
allowances or dollar amount of estimated tax
 Allowances Worksheet
 Estimated Tax Worksheet
 Withholding Calculator (Federal only)
 Determine when and how to submit
applicable forms/payments
 W-4 & G-4 submitted at time of employment and
can be updated at any time during the year
 ES payments submitted quarterly
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20.  IRS (2013). Tax forms and definitions.
Internal Revenue Code, Retrieved March
5, 2013, from http://www.irs.gov
 GA Dept of Revenue (2013). Tax forms and
definitions. Office of Tax Policy, Retrieved
March 6, 2013, from http://etax.dor.ga.gov
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