Withholding Tax Guide - City Of Grayling - Income Dax Division- 2005 Page 2
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1
2
3Therefore Grayling is a nonresident’s pre-
Employers requiring additional quantities
While
individuals
with
income
as
dominant place of employment if:
too large for mailing are requested to pick
described in items 1, 2, and 3 above are not
them up at 1020 City Blvd., Grayling City
subject to withholding on such income, such
1) He earns a greater percent of his com-
Hall, Grayling Michigan 49738 between the
individuals are never the less required to file
pensation in Grayling than any other
hours of 8:00 a.m. and 4:30 p.m. weekdays.
an annual return and report such income if
Michigan city with an income tax,
These may also be printed off our website:
they are Grayling residents, or are nonresi-
except his city of residence.
dents earning such income in Grayling.
2) This greatest percentage constitutes
25% or more of his total compensation
EXEMPTIONS
Do not mail GRW-4 cards to the city;
from you.
these are for the employer’s use and
Exemptions of $3000 per year, as
must be retained by him.
allowed in the Federal Internal Revenue
An employee can have only one predom-
Code, are allowed the employee for himself,
inant place of employment.
WHAT PAY TO WITHHOLD FROM
his spouse, and each of his dependents.
Additional exemptions, as allowed in the
Example No. 1: An employee resides in a
The Ordinance requires that the City of
Internal Revenue Code, are allowed if either
Michigan city that levies an income tax. He
Grayling income tax be withheld from all
the employee or his spouse is 65 or over, or
performs 60% of his work for you in his home
compensation (salaries, wages, commis-
blind.
city and 40% in Grayling. Grayling is his pre-
sions, bonuses, etc.) for services rendered
The withholding may be determined by a
dominant place of employment because it is
or work performed by Grayling residents,
direct percentage computation. The employ-
the taxing city, other than his city of resi-
regardless of whether such services or work
ee must first advise you of his exemptions by
dence, in which he earns the greatest per-
performed are in or out of the city, and from
filling out an Employee’s Withholding
centage of his compensation.
all compensation for services rendered of
Certificate, Form GRW-4. Employees should
work performed in the city by nonresidents
be instructed to claim their actual and true
Example No. 2: An employee resides in a
for whom Grayling is the predominant place
number of exemptions.
city that does not levy an income tax and
of employment.
performs 60% of his services in Grayling and
(Note: Some employees claim fewer exemp-
40% in Detroit (both of which levy an income
Vacation, holiday, sickness and bonus
tions than the actual number either to pre-
tax). Grayling would be his predominant
pay to nonresidents who perform part but not
pay additional Federal tax which will be
place of employment. You would not be
all of their work or services in Grayling is tax-
owed or to create a claim for a refund.) If an
required to withhold for Detroit.
able in the same ratio as their normal activi-
employee fails or refuses to file a Form
ties.
GRW-4 with you, the ordinance requires the
Example No. 3: An employee resides in
employer to withhold one percent from the
Grayling and performs 60% of his services in
Example: A nonresident employee who is
employee’s total compensation without ben-
City A and 40% in City B. All three are
subject to withholding on 60% of his earn-
efit of exemptions.
Michigan cities which have an income tax.
ings, because 60% of his work is performed
If making a direct percentage computa-
The employer is required to withhold for
in Grayling, is also subject to withholding on
tion, use the following amounts per exemp-
Grayling (the city of residence) and City A
60% of his vacation, holiday, bonus and
tion:
(the predominant place of employment), but
salary or wage payments during periods of
Weekly................................................$57.68
not for City B.
sickness.
Bi-Weekly............................................115.38
Semi-Monthly......................................125.26
GRW-4 FORMS REQUIRED
PAYMENTS NOT SUBJECT TO
Monthly........................................(12) 250.00
WITHHOLDING
To determine each employee’s place of
Per Diem.................................................8.20
residence and predominant place of employ-
Withholding does not apply to:
After computing the tax, ignore all frac-
ment you must have each employee fill out
tions less than 1/2c and raise all fractions of
1) Wages paid domestic help;
an Employee’s Withholding Certificate, Form
1/2c and over to the next cent.
2) Fees paid professional men, brokers,
GRW-4. Only one Form GRW-4 is required
and any other independent contractors
WITHHOLDING REQUIRED ON
for each employee, even though he may be
who are not employees of the payer.
RESIDENTS
subject to withholding for two cities.
3) Payment to a nonresident employee
The withholding rate for Grayling resi-
for work or services performed in
When properly filled out, the Form GRW-
dents not subject to withholding in any other
Grayling, if his predominant place of
4 will give the employee’s city of residence
city is one percent (1%). This is applied to
employment is not Grayling.
and the two cities or communities in which
the total compensation after allowance for
4) Payment to a nonresident employee
he earns the greatest percentage of his com-
the exemptions.
for work or services rendered outside
pensation. Most employees will only have
The withholding rate for Grayling resi-
the city;
one city of employment, of course, and will
dents whose predominant place of employ-
5) Pensions and annuities, workmen’s
circle 100% as the percentage of compensa-
ment is Detroit or any other Michigan city
compensation and similar benefits;
tion earned in that city.
with an income tax is one half of one percent
6) Amounts paid for sickness, personal
(1/2%). In addition to withholding half of one
injuries or disability (so-called exclud
The Form GRW-4 is also the employee’s
percent for Grayling, you must withhold half
able sick pay) to the same extent that
statement of the number of exemptions
of one percent for the other taxing city in
these amounts are exempt from the
claimed for himself, his spouse and his
Michigan.
Federal income tax, but the employer
dependents.
If a Grayling resident works for you in two
may withhold from such payments if he
other cities that have an income tax, you
withholds the Federal income tax from
Employers withholding for Grayling may
must withhold:
them;
obtain any quantity they require free of
1) half of one percent for Grayling, the city
7) Amounts paid to an employee as rein-
charge from the city. All forms may be
of residence;
bursments for expenses he incurred in
retrieved off of the city of Grayling website at
2) half of one percent for whichever of the
performing his services.
two cities is the predominant place of
employment;
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