Withholding Tax Guide - Saginaw,michigan (Page 2 of 17) in pdf

The amounts in the preceding table are used to adjust gross

Vacation, holiday, sick, severance and bonus pay to

pay for payroll withholding. The adjustment is the number of

nonresidents who perform part but not all of their work or

exemptions on Form SW-4 multiplied by the exemption

services in Saginaw are taxable in the same ratio as their

value. On a weekly payroll for a wage earner with three (3)

normal activities.

exemptions, the adjustment is 3 times $14.42, or $43.26.

Example: A nonresident employee who is subject to

EXAMPLE: Gross pay is $200.00 per week and the wage

withholding on 60% of their earnings, because 60% of their

earner lives in Saginaw and has 3 exemptions. The amount

work is performed in Saginaw, is also subject to withholding

taxed is $200.00 minus $43.26, or $156.74. Apply the 1.5%

on 60% of their vacation, holiday, sick pay, severance pay,

resident rate (.015 times $156.74), and withhold $2.03 from

bonus pay or wage payments during

the employee for the week.

periods of sickness.

The above method is applicable to all City of Saginaw

withholding for regular payrolls. Withholding tax tables follow

PAYMENTS NOT SUBJECT TO

these instructions.

WITHHOLDING

Withholding does not apply to:

For bonuses or other taxable earnings paid in addition to

1) Wages paid domestic help;

regular payroll, do not adjust for exemptions. Withhold the

2) Fees paid independent contractors who are not

correct tax percentage from the entire bonus or other taxable

employees;

earnings amount.

3) Payment to a nonresident employee for work or services

performed in Saginaw, if the predominant place of

COMPUTER PREPARATION OF PAYROLL

employment is not Saginaw;

Since hardware and software used to compute income tax

4) Payment to a nonresident employee for work or services

withholding varies, it is impossible to give an actual program

rendered outside of Saginaw;

with which to compute Saginaw withholding. The following is

5) Pensions and annuities, worker’s compensation and

a description of the most commonly used method to

similar benefits;

compute income tax withholding.

6) Amounts paid for sickness, personal injury or disability (so

1) Multiply gross earnings by the percent earned in Grand

called excludable sick pay) to the same extent that these

Rapids for nonresidents or use gross earnings for residents.

amounts are exempt from federal income tax, but the

2) Multiply number of exemptions by the appropriate

employer must withhold from such payments if federal tax is

exemption value:

withheld;

Weekly $14.42

7) Amounts paid to an employee as reimbursement for

Bi-Weekly $28.84

expenses incurred in performing services.

Semi-Monthly $31.25

Monthly $62.50

An individual with income described in items 1, 2 and 3

Per Diem $ 2.05

above is not subject to withholding on such income. The

3) Subtract the result of Step 2 from the result of Step 1.

individual is nevertheless required to file an annual return

4) Multiply the result from Step 3 by:

and report such income if the individual is a Saginaw

a. 1.5% for residents; or

resident, or is a nonresident earning such income in

b. 0.75% for nonresidents.

Saginaw.

RESIDENT – JOB IN OTHER CITY LEVYING A

INCOME TAX WITHHOLDING RATES

TAX

The Saginaw income tax rate for residents is 1.5% (multiply

by .015).

When a resident works at a job in a city other than Saginaw

The Saginaw income tax rate for nonresidents is 0.75%

and the other city levies an income tax, the employer must

(multiply by .0075).

withhold separately for both Saginaw and the other city. The

rate of income tax to be withheld for Saginaw depends on

the tax rate of the other city. If the nonresident tax rate of the

CALCULATING THE AMOUNT TO WITHHOLD

other city is less than 0.75%, compute the Saginaw

The Saginaw City Income Tax is a straight percentage on

withholding rate by subtracting the other city’s nonresident

compensation after an adjustment for personal and

tax rate from 1.5%. If the other city’s nonresident tax rate is

dependency exemptions. Each exemption is valued at

0.75% or higher, withhold Saginaw tax at the rate of 0.75%.

$750.00 per year. For the various pay periods the exemption

translates to the amounts in the table below.

NONRESIDENT – JOB PARTLY IN SAGINAW

Weekly $14.42

If a nonresident of Saginaw works less than 100% of the

Bi-weekly $28.84

time within the City of Saginaw for an employer, the amount

Semi-monthly $31.25

withheld should be based only on wages earned in Saginaw.

Monthly $62.50

If gross pay is $200.00 and only 60% of the employee’s work

Per diem $ 2.05

is in Saginaw, the gross pay for Saginaw tax purposes is

60% of $200.00 or $120.00. In this example, compute the

Exemptions are allowed for the employee and spouse.

amount to be withheld for Saginaw as if the employee

Additional exemptions are allowed if either the employee or

earned $120.00 gross pay.

spouse is 65 years of age or older, or blind (this is different

from the federal rule). Individuals who may be claimed as an

NONRESIDENT – PREDOMINANT PLACE OF

exemption on the individual return of another may still have a

EMPLOYMENT

personal exemption for themselves (this is different from the

Nonresidents of Saginaw are subject to withholding only if

federal rule). Exemptions for dependents other than the ones

Saginaw is their predominant place of employment.

referred to above are governed by applicable federal rules.

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Withholding Tax Guide - Saginaw,michigan Page 2

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