As part of an attempt to balance California's budget, the 2010 payroll withholding
tables were modified to cause taxpayers to be overwithheld by 10%. The extra withholding
amounts to a loan from the taxpayers to the state that will be repaid when the taxpayers'
2010 income tax returns are filed. Not only is this increased withholding a hardship
for some taxpayers, the extra state refund may be taxable for itemizers the following
year.
Taxpayers can adjust their state withholding so that they are not overwithheld by
changing the number of allowances claimed on Form DE 4. If the taxpayer knows the
current rate of pay and number of allowances being claimed on Form DE 4 in 2009,
then this module will calculate the number of allowances to use in 2010 to maintain
the same rate of withholding. Enter the gross pay, non-taxable pay (if any), pay
period, current withholding filing status on Form DE 4, current withholding allowances
claimed, and current additional withholding (if any). If the taxpayer did not complete
Form DE 4, then use the status and allowances from federal Form W-4. Enter the allowances
as regular allowances (line 1A). Click the Calculate button when finished. Complete
a new Form DE 4 for the employer using the calculated allowances for line 1A and
line 1B and extra withholding on line 2, if any, to eliminate the 10% increase in
withholding.
DISCLAIMER: The withholding adjustments shown above are based on the taxpayer's
current withholding allowances and filing status. It is the user's responsibility
to verify that the settings above will achieve the desired withholding results.
The use of CFS W-4 Withholding Calculator is recommended to accurately match the
taxpayer's withholding to their estimated tax liability for the year.