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 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. A current complicating factor with 940 tax is that several states are in default on their payments to the Federal government. This affects all employers in the affected states.
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.
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
is is paid semi-annually in July (for January - June wages) and January
(for July - December wages) each year.
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 GuidelinesEFFECTIVE JANUARY 1, 2011 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. Foe 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.
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 employers are required to file form IT 941 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-1with their
payments. Employers with LESS THAN $25 per month of Indiana withholding
are semi-annual filers, with the WH-1 due July 31 and January 31 of
each year. Employers with more than $25.00 but LESS THAN $75.00 per
month of withholding are quarterly filers, with the WH-1 due April 30,
July 31, October 31, and January 31 each year. For employers with more
than $75.00 but LESS THAN $1,000.00 per month of Indiana withholding,
monthly 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 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 - Kentucky
employers with LESS THAN $400.00 per year of Kentucky Withholding are
required to file form K-3 and pay all Kentucky tax withheld for the
year by January 31 each year. Employers with $400.00 to $1,999.00 of
Kentucky withholding for the year are required to pay the tax and file
a form K-1 quarterly by April 30, July 31, and October 31 each year,
and a form K-3 by January 31 each year for the fourth quarter of the
previous year. Employers with $2,000.00 to $49,999.00 per year of
Kentucky withholding are monthly filers. They are required to file form
K-1 and pay the tax withheld for the months of January through
November by the 15th day of the following month. December tax
withheld is due with a form K-3 no later than January 15 of the
following year. Kentucky employers with GREATER THAN $50,000.00 in
annual tax withheld are required to file form K-1 and pay tax withheld
twice monthly. For pay periods from the first to the 15th of the month,
the K-1 and payment is due by the 25th of the month. For pay periods
from the 16th through the last day of the month, the K-1 and payment is
due by the 10th of the following month. For the FINAL pay period of the
year, the employer is required to file form K-3 instead of form K-1.
All Kentucky employers are required to file form 42A806 with copies of W-2s by January 31 each year.
New Employee Forms
Ohio - I-9, Federal W-4, Ohio IT-4
Indiana - I-9, Federal W-4, WH-4
Kentucky - I-9, Federal W-4, K-4
For Independent Contractors - W-9
In addition, if you offer direct deposit, you will need a direct deposit authorization completed by each employee.
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