Withholding Taxes: New Jersey
The below content should be reviewed in conjunction with the in-depth federal coverage of this topic provided above.
Author: Vicki M. Lambert, The Payroll Advisor
- Income tax withholding in New Jersey depends on whether an employee is a resident or nonresident of the state. An employee's residency status depends on where the employee is domiciled and where he or she maintains a permanent place of abode during the tax year. All compensation paid to a resident of New Jersey is subject to withholding, even if some or all of the services were performed outside New Jersey. There are special provisions for New Jersey residents who are employed in Pennsylvania based on a reciprocal agreement between the two states. Expatriates of New Jersey are subject to withholding on their worldwide income. See Withholding on Residents, Nonresidents and Expatriates.
- Employers can accept from employees either a federal Form W-4, Employee's Withholding Allowance Certificate, or the state equivalent Form NJ-W4. See Employee Withholding Allowance Certificates.
- The method of withholding on supplemental wages, such as bonuses, commissions, overtime pay, sales awards, tips, etc. depends on whether they are paid at the same time as regular wages or separately. See Supplemental Wages.
- Employers must provide all employees with a federal Form W-2, Wage and Tax Statement, for a calendar year, and any corrected statements made for that year, no later than February 15 following the end of the year. See Form W-2 Requirements.
- All public and private employers are required to give written notice to potentially eligible employees of the availability of both the federal and New Jersey earned income tax credits when they give employees their annual federal Forms W-2, Wage and Tax Statement. See Earned Income Tax Credit Notices.
- The City of Newark imposes a Payroll Tax on certain types of employers which is based on an employer's total taxable payroll. The tax is due quarterly, by the last day of the month following the end of the quarter. Penalties are imposed for noncompliance. See City of Newark Payroll Tax.