The Official Website of the Louisiana Department of Revenue
BATON ROUGE - The Louisiana Department of Revenue has added a withholding tax calculator to its website at http://www.rev.state.la.us so that taxpayers can check to see if the proper amount of withholding tax is being withheld by their employer.
Because of recent state and federal tax changes, the Department has been conducting a public service campaign urging taxpayers to check with their employer to ensure the proper amount of withholding tax is being withheld from their salary. The constitutional amendment passed by voters last November increased income tax rates while at the same time decreasing sales tax rates on certain items. Because of these changes, the state’s withholding tax tables were revised. Revenue Secretary Cynthia Bridges says some companies did not begin using the new withholding tables on January 1, 2003, but will implement the changes on July 1, 2003, the beginning of their fiscal year. This means that some taxpayers who normally get a refund may not see that refund unless they increase their withholding to make up the difference.
To use the calculator, taxpayers should go to the Department’s website and click on “Calculate Your Withholding Tax” under the “Hot Topics” heading. The taxpayer enters his filing status, number of dependents, exemptions, and 2003 tax information. The calculator will then provide an unofficial estimate of the proper amount of withholding tax for the taxpayer.
Another reason it is important for taxpayers to check their withholding is to avoid being required to file quarterly declarations of estimated tax. A taxpayer must make a declaration of estimated tax if their estimated Louisiana income tax after credits and taxes withheld can reasonably be expected to exceed $1,000 for an individual and $2,000 in the case of a joint declaration of husband and wife. These payments must be made in full with a declaration or in four equal installments on or before April 15, June 15, and September 15 of the tax year, and January 15 of the following year. The penalty for underpayment of any installment is 12 percent per year for the period of underpayment on the difference between the installment payment made and 90 percent (66-2/3% in the case of farmers) of the installment due on the basis of the tax for the year. If a taxpayer’s withholding amount is too low, there exists a possibility that the taxpayer could be required to file declarations of estimated tax and not know it, resulting in the penalty.
The federal tax decrease recently passed by Congress may also necessitate a change in a taxpayer’s withholding. Federal taxes are deductible on the state income tax return and paying less federal tax means a lower deduction on the state return. This could result in an increase of the state tax liability.
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