Overview: The most important payroll process for all employers is undoubtedly withholding for federal, state and local income and employment taxes and timely remitting the amounts collected to the appropriate government agencies. In turn, proper withholding leads to correct employee paychecks, and timely remitting of withheld taxes avoids serious employer penalties.
The income and employment tax withholding process requires an employer to understand: the importance of obtaining and correctly recording employee Social Security Numbers; how to determine the amount of federal income and Social Security and Medicare (FICA) tax to withhold; the various federal income tax withholding and payment methods; federal recordkeeping requirements; and the penalties that are imposed for noncompliance.
Author: Rena Pirsos, JD, Legal Editor
Updated to reflect notice requirements under Montgomery County's Earned Sick and Safe Leave Law, effective October 1, 2016.
Updated to include information on the forthcoming change in the local income tax structure and rates.
Updated to include information on the forthcoming termination of the reciprocal withholding agreement with Pennsylvania.
Updated to include information on the forthcoming termination of the reciprocal withholding agreement with New Jersey.
On September 2, New Jersey Governor Chris Christie gave 120 days' required notice of intent to end the state's 40-year-old reciprocal income tax withholding agreement with Pennsylvania. If New Jersey follows through, the agreement will terminate at the end of 2016, and will affect employers and employees in both states.
Updated to reflect notice requirements under New York City's commuter benefits law, enforced as of July 1, 2016.
Updated to reflect a reduction in the Waterfront of New York Harbor Commission Assessment rate, effective July 1, 2016.
Updated to include important new information on automatic Form W-2 filing extensions, effective July 1, 2016.
HR departments should get ready now to comply with a wide variety of employment law requirements that are changing on July 1. Depending on the employer's presence in various jurisdictions, a number of workplace practices may be affected by legislative changes, ranging from employment contracts to payroll.
An explanation of the process of payroll withholding of federal, state and local income taxes and Social Security and Medicare (FICA) taxes.