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:
Author: Rena Pirsos, JD, Legal Editor
Some states that require employers to withhold income taxes from employees' wages tie their definitions of "wages" to the federal Internal Revenue Code (IRC). However, many states update their IRC references to a specific date every year or so, while others roll their references into the current version of the IRC. Even with IRC conformity, some states have important exceptions. This Quick Reference chart summarizes each state's IRC conformity reference.
Updated to include changes to Form IL-941 and the filing and payment schedules, effective January 1, 2017.
Updated to include changes in the local income tax structure and rates, effective January 1, 2017.
Updated to include increased deposit threshold amounts, effective January 1, 2017.
Updated to include information on the requirement to notify employees about the California EITC, effective January 1, 2017.
Updated to reflect forthcoming notice requirements under the state paid sick leave law.
Updated to reflect accelerated filing deadlines and new electronic filing threshold amounts for forms filed in 2017 and 2018.
Updated to reflect the extended deadline for furnishing ACA information reports to employees in 2017 and temporary penalty relief for 2017 reports filed in good faith.
An explanation of the process of payroll withholding of federal, state and local income taxes and Social Security and Medicare (FICA) taxes.