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 Guidelines
EFFECTIVE 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.

Overwhelmed by all this? We're not! Kelly Oakes, CPA LLC offers reasonable, flat fee/no surprises payroll pricing. We can even provide your employees secure on line access to pay stubs! For pricing information, click here.





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