How to Define Employee Deductions and Iowa State Tax Tables based on 2024 IA W-4

When employees fill out the new 2024 W-4 for Iowa State, how to we now define the Employee Deduction record and Tax Tables?

• Payroll
• Tax Tables
• Employee Deductions 
• Payroll Start and Status
• Earnings and Deductions

With the new W-4 for IA, the Standard Deduction amount is now based on a flat amount instead of number of allowances and the Allowance amount is divided by the number of pay periods. 

1. Go to Employee Deductions (Payroll>Employee Maintenance>Employee Deductions) 
2. Search for the employee and their State Tax Deduction. Click Accept. 
3. On the 2024 W-4,  the amount defined on Step 6 for Total Allowances would be defined in the, Other Income or Annual Withholding Amount field. 
   
   1. Example, step 6 on the employee's W-4 shows $1,000.00. Then $1,000.00 is defined in that field. 
      1. That amount will then be divided by the employee's number of pays during the reconciliation of the deduction in payroll. 
   2. If employees did not fill out a new 2024 W-4, the Other Income or Annual Withholding Amount field would be $40.00. (based on the Iowa Tax Withholding form)
4. On the Iowa Tax Withholding Form, it states the Standard Deduction is now a specified amount if Allowances claimed is less $80.00 and a different amount if the total Allowances amount is over $80.00. 
   1. Go to Tax Tables (Payroll>Payroll Setup>Income Tax Setup>Tax Tables) 
   2. Search for the 1/1/2024 effective dated State Table. Click the Calc option in the toolbar. 
      1. IA State taxes are not different based on Marital Status so the Marital Status field should be left blank on the Tax Table.
   3. It will display Number of Exemptions Claimed with a field for less that $80.00 and a field for $80.00 or more. 
      1. Use Iowa Tax Withholding Form page 1 to determine the amounts to define based on Payroll Period. 
         1. Example, if using Annual Tax Tables, look at the Annually Payroll Period Line. ($14,600 for less than $80.00 and $29,200 for $80.00 or more)
         2. Note - Employees that did not fill out an IA 2024 W-4, since their Allowance amount will be $40.00, they will look to the amount less than $80.00 for the Standard Deduction. (based on the Iowa Tax Withholding form)
   4. Define the Supplemental Rate. 
   5. Click Tax Table in the toolbar. 
   6. Define the applicable tax table amounts based on pay period. (Example, if using Annual tax tables, look at the Annual Pay Period amounts on page 2 of the IA Tax Withholding Form)

Reconciliation:

1. During the Reconciliation in the payroll, the system will first annualize the taxable gross. 
   1. Deduction Gross x Number of Pay Periods (Example 4,000 gross x 26 (biweekly) pays = 104,000.00 taxable gross)
2. Then it will subtract the Standard Deduction amount based on the Allowance amount in the Other Income field.
   1. For this example, say the Allowance Amount defined is 1,000.00 
   2. Since the 1,000 allowance amount is over 80.00, the Standard deduction (using example above) would be 29,200. (104,000-29,200=74,800)
3. Calculate the tax from the Tax Table.
   1. Using Annual Tax tables, take the 74,800 minus the amount from column A of the table divided by 100 (74,800-24,480.00=50,320.00)
   2. Multiply that amount by the % 5.7 (50,320.00*5.7%=2,686.24)
   3. Add that amount to column C of the Tax Table (2,686.24+1159.37=4,027.61)
4. Divide by Number of Pays.
   1. 4.027.61/26=154.91
5. It will then calculate the Allowance Amount
   1. Allowance amount from the Other Income field divided by Number of Pays. (Using above example, the Allowance amount is 1,000. 1000/26=38.46)
6. Subtract the per-period allowance amount calculated from step 2.
   1. 154.91 - 38.46 = 116.45

2024 Iowa State Tax Tables - W-4 Change

2024 IA W-4

Iowa Withholding Income Tax Withholding Formula 2024