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There are several other, less-used methods for calculating tax withholding amounts that require the override of one s computerized withholding calculation system with manual calculations They are: Basis is annualized wages Under this approach, calculate an employee s annual pay rate and then determine the annual withholding amount in the IRS s Annual Payroll Period tax table Then divide this amount by the number of pay periods in the year to determine the deduction for an individual paycheck Basis is partial-year employment This method can only be used at an employee s written request, which must state the last day of work with any prior employer, that the employee uses the calendar year accounting method, and that the employee does not expect to work during the year for more than 245 days The company then compiles all wages paid to the employee during his or her current term of employment, including the current pay period Next, determine the number of pay periods from the date of the employee s last employment, through and including the current pay period, and divide this amount into the total wages figure, resulting in an average wage per pay period Use the correct tax table to arrive at a withholding amount for the average wage, and multiply this amount by the total number of pay periods, as already calculated Finally, subtract the total amount of withholdings already made, resulting in the withholding to be made in the current pay period This approach is requested by employees, such as part-time students or seasonal workers, who expect to be out of work so much during the calendar year that their full-year pay will drop them into a lower tax bracket, resulting in smaller income tax withholdings

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Basis is year-to-date cumulative wages This method can only be used at an employee s written request To calculate it, compile all wages paid to the employee for the year-to-date through and including the current pay period and divide the sum by the total number of year-to-date pay periods, including the current period Then use the percentage method to calculate the withholding on this average wage Multiply the withholding amount by the total number of year-to-date payroll periods, and subtract the actual amount of withholdings made year-to-date The remainder is the amount to withhold from the employee s wages during the current pay period This complicated approach is requested by employees who may have had an excessive amount of taxes withheld from their pay earlier in the year, perhaps due to a large commission or bonus payment that bumped them into a higher income tax bracket By using the cumulative wages calculation, these excessive withholdings may sometimes result in a one-time withholding on the payroll in which this calculation is requested that is much smaller than usual

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Several of the alternative tax calculation methods just noted are used because the amount withheld from employee pay for the year-to-date is higher than will be needed by the end of the calendar year This may be caused by a large payment to an employee earlier in the year, perhaps a commission or bonus; when this happens, the extra payment is typically lumped into the person s regular pay, which bumps the person into a higher tax bracket on the assumption that he or she always receives this amount of money during every pay period As a result, there will be an excessively large withholding at the end of the year, and the employee will receive a tax refund One approach for avoiding the excessive amount of tax withholdings is to separate the supplemental pay from the base pay and issue two separate payments to an employee Under this approach, the percentage withheld will likely be smaller than if the pay had been combined into a single paycheck Another approach that is acceptable to the IRS is to combine the payments together, and then withhold a flat 27 percent rate from it Under most computerized payroll systems, it is easier to implement the first approach