Payroll Information
When paying employees, there are significant number of tax requirements. Penalties for late filing or payment and/or failure to file or pay can be very costly. The following guide is general, and when a taxing authority issues you a notice indicating a shorter filing or payment time frame, you are required to abide by it.
Federal 941 Tax
Federal 941 tax includes federal income tax withheld from your employees, Social Security and Medicare taxes withheld from your employees, PLUS your required employer contribution to Social Security and Medicare taxes for your employees.
Federal 940 Tax (FUTA)
Federal 940 tax is the employer's required payment based on employees' total payroll. The current rate is .6% of the first $7,000.00 paid to each employee.
State Unemployment (SUTA)
State unemployment is typically paid quarterly and is calculated by multiplying your employer rate by the taxable wages paid for the quarter to each employee. Employer rates vary widely based on many factors and are assigned annually to each employer by their state. Taxable wages for SUTA purposes vary by state. Wage base by state can be found here.
Workers' Compensation
In Indiana and Kentucky, like most states, workers' compensation is a part of your general business insurance. In Ohio, however, it is a state administered fund. It is based on the total payroll by classification and is billed as due, with an annual true-up (reconciliation) due August 15.
State, Local, and School District Withholding
State, local, and school district withholding are simply the amount withheld from all of your employees. You must be careful to withhold the correct tax amount and type of tax for each employee.
General Payroll Filing Guidelines
All federal payments are required to be made through EFTPS.
Federal 941 Tax
If you expect to have LESS THAN $1,000.00 per year of 941 tax (Federal W/H + SS W/H + Medicare W/H + Employer SS + Employer Medicare), you may file an annual Form 944 and pay with the return. If you expect to have LESS THAN $2,500.00 per quarter of 941 tax, you can generally pay your 941 tax with your quarterly return. For employers with more than $2,500.00 per quarter but LESS THAN $50,000.00 per year of 941 tax, you are required to pay your 941 tax MONTHLY, by the 15th day of the month following the liability. For employers with GREATER THAN $50,000.00 per year of 941 tax, you are a semi-monthly depositor. This means that if your pay day is on a Wednesday, Thursday, or Friday, your 941 payment is due the following Wednesday. If your pay day is on a Saturday, Sunday, Monday, or Tuesday, your 941 payment is due the following Friday. Unless you have less than $1,000.00 per year of 941 tax, you are required to file a Form 941 with the IRS quarterly. They are due January 31, April 30, July 31, and October 31 each year.
Federal 940 Tax
If your 940 (Federal Unemployment Tax, FUTA) is less than $500.00 per year, you may pay it with your annual return. Otherwise, FUTA payments are due on the 15th day of the month following the quarter your FUTA liability reaches $500.00. An annual Form 940 is due for all employers by January 31 each year.
Ohio Withholding Tax
Employers with LESS THAN $2,000.00 of annual Ohio withholding are required to remit form IT-501 with payment by the last day of the month following the quarter. Form IT-501 is required to be filed electronically through the Ohio Business Gateway (OBG). Employers with between $2,000.00 and $84,000.00 of annual Ohio withholding are required to file form IT-501 with payment by the 15th day of the month following the month of withholding. For employers with greater than $84,000.00 per year of Ohio withholding, payment is due via EFT within 3 banking days of the pay period. All Ohio withholding forms and payments are required to be submitted via the Ohio Business Gateway (OBG).
All Ohio employers are required to file form IT-941 via OBG by January 31 each year and form IT-3 by the last day of February each year.
Indiana Withholding Tax
Employers subject to Indiana withholding are required to file form WH-1 with their payments. Employers with LESS THAN $10 per month of Indiana withholding are annual filers, with the WH-1 due January 31 of each year. Employers with more than $10 up to $1,000 per month of withholding are monthly filers. Payments and forms WH-1 are due by the end of the month following the month of withholding. Employers with GREATER THAN $1,000.00 per month of Indiana withholding are early filers. Their form WH-1 and payment are due by the 20th day of the month of the withholding.
All Indiana employers are required to file form WH-3 with copies of W-2's by February 28 each year.
An easy way to file these forms and remit payments is on line via INTAX.
Kentucky Withholding Tax
Employer information about Kentucky withholding can be found here.
New Employee Forms
Federal (independent contractors): W-9
Ohio: IT-4
Indiana: WH-4
Kentucky: K-4
In addition, if you offer direct deposit, you will need a direct deposit authorization completed by each employee.
Overwhelmed by all of this?
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