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
Updated to include the new hire notice provisions of the state paid family and medical leave law, effective September 30, 2019.
Updated to reflect new hire notice provisions with respect to noncompete restrictions, effective September 19, 2019.
Updated to reflect amended penalty provisions in Minnesota, effective July 1, 2019.
Updated to reflect a changed filing deadline in Iowa for tax year 2019 returns.
Updated to include emergency rules amending Missouri withholding, effective April 26, 2019, and forthcoming rate reductions in Arkansas, effective January 1, 2020, and January 1, 2021.
Updated to include a new IRC reference date in Hawaii.
The IRS has published a draft of the 2020 Form W-4, Employee's Withholding Allowance Certificate, which incorporates changes made by the 2017 Tax Cuts and Jobs Act.
An explanation of the process of payroll withholding of federal, state and local income taxes and Social Security and Medicare (FICA) taxes.