Search Results for: tax withholding

Navigate the challenges of state tax withholding for remote employees with our comprehensive guide, ensuring compliance amid the rapid growth of remote work.

Employers who have employees working in a large number of states have to manage a number of complexities to ensure tax withholding compliance. Employee Tax Withholding Allowances Over 40 states in the U.S. collect state income tax directly from workers’ paychecks. The Form W-4, used to determine the amount of tax to withhold, underwent significant changes in 2020, leading many states to develop their own forms or adjust their tax tables. Not all workers need to submit a new state form, but it’s recommended to check the state tax agency website for more information. Employer Responsibilities Employers must maintain federal and state tax forms for each worker. If a worker doesn’t provide a complete, signed federal Form W-4, the employer must withhold federal income tax as if the worker were single or married filing separately. Most states follow the same rule for state income tax. Exemptions Some workers may claim exemption from federal and state income tax withholding. Each state has its own rules about exemption from state income tax and the form a worker must file to support the exemption. Nonresident Military Spouses The federal Military Spouses Residency Relief Act (MSRRA) allows a servicemember’s spouse to designate a different state as their domicile and pay taxes to that state. The Veterans Benefits and Transitions Act of 2018 (VBTA) modified the law to allow spouses of servicemembers to choose to use the servicemember’s domicile for state taxation, irrespective of the marriage date. Recordkeeping Requirements Most state income tax withholding laws have similar recordkeeping requirements to those of the IRS for federal income tax withholding. These requirements typically include keeping track of returns and statements filed with the state revenue agency, dates and amounts of tax deposits, the total number of employees subject to withholding, and more. Compliance in these areas is crucial to avoid potential penalties and ensure accurate tax withholding. Employers should stay updated on changes to tax laws and forms, maintain thorough records, and ensure they’re withholding the correct amount of tax for each employee. It’s also important to respect exemptions and understand the specific rules for nonresident military spouses. By doing so, employers can ensure they’re meeting their legal obligations and providing accurate information to their employees. Here are some recent legislative updates regarding tax withholding that employers should be informed about. Updates effective 7/1/2024 Georgia G-4 Form Update:  The state of Georgia has released an updated version of the Georgia G-4 form. The update specifically affects Line H, where the value has been increased from $3,000 to $4,000. This change is effective from July 1, 2024. For more details, please refer to the official form. Learn more Addition of Blanchester Village, Ohio: Effective from July 1, 2024, Blanchester Village in Ohio has been added. For more information about this update, please visit the official page. Learn more Addition of College Corner Village, Ohio: College Corner Village in Ohio has been added effective from July 1, 2024. More details can be found on the official page. Learn more Addition of Glenmont Village, Ohio: Glenmont Village in Ohio has been added effective from July 1, 2024. For more information, please visit the official page. Learn more Addition of Holmesville Village, Ohio: Holmesville Village in Ohio has been added effective from July 1, 2024. More details can be found on the official page. Learn more Vermont Child Care Contribution Tax: The state of Vermont has added the Child Care Contribution tax effective from July 1, 2024. For more information about this new tax, please refer to the official document. Learn more Please note that it’s always a good idea to consult with a tax professional or the respective tax authorities for the most accurate and up-to-date information.

Stay compliant with state tax withholding rules for your multistate workforce. Learn the ins and outs of tax withholding with Experian Employer Services.

Are you managing tax withholding for a single employee working in multiple states? Get expert guidance from Experian Employer Services to stay compliant.

Understanding the differences between employer tax withholding and tax filing is key to compliance and delivering a high quality employee experience.

These key concepts of multistate payroll tax withholding can help your business stay compliant with regulations in different jurisdictions.

The IRS confirms for employers no changes to payroll forms or federal withholding tables for 2025 under the OBBBA.

Learn how to handle payroll taxes for out-of-state employees with this practical guide. Understand the challenges and get tips on staying compliant across state lines.

Manage year-end payroll effortlessly and explore our comprehensive checklist of what you need to keep in mind this year-end payroll tax season.

Learn the tax implications of return-to-office mandates. Get insights on deductions, benefits, and compliance issues for a smooth transition.

Learn about different payroll tax forms, when to use and file them, and ensure compliance with different payroll tax requirements to avoid penalties.

Find out which taxes are payroll taxes and how to report them to maintain compliance with regulations and IRS requirements.

Form 945, Annual Return of Withheld Federal Income Tax, is the cornerstone for reporting all “nonpayroll’ withheld taxes. Nonpayroll taxes encompass amounts withheld from various sources, including gambling winnings, retirement pay for service in the U.S. Armed Forces, pensions, annuities, IRAs, and certain other deferred income, and backup withholding concerning reportable payments. All income tax withholding reported on Forms 1099 or Form W-2G must be reported on Form 945. Form 945 may also be used to report backup withholding for compensation paid to H-2A visa holders who fail to furnish their taxpayer identification number. Who Must File Employers who withhold or are required to withhold federal income tax (including backup withholding) from nonpayroll payments must file Form 945. If an employer doesn't have a nonpayroll tax liability for a specific year, they are not required to file Form 945. Form 945 should not be used to report withholding required to be reported on Form 1042, the Annual Withholding Tax Return for U.S. Source Income of Foreign Persons. Form 945A Form 945A, Annual Record of Federal Tax Liability, serves as a daily log of federal tax obligations. Semiweekly and next-day depositors must complete and attach Form 945A to Form 945. Monthly depositors need not complete Form 945A unless they accrue a one-day tax liability of $100,000 or more, in which case they become semiweekly depositors for the remainder of the year. Facsimile Signature Corporate officers or duly authorized agents may sign Form 945 by rubber stamp, mechanical device, or computer software program. IRS Unveils Draft Instructions for the 2023 Annual Withholding Return In the ever-evolving landscape of tax regulations, businesses must stay ahead of the curve. The IRS has given us a glimpse into what the upcoming tax year holds with the release of the draft instructions for the 2023 Form 945, the Annual Return of Withheld Federal Income Tax. Let's delve into the specifics to ensure you're well-prepared for your tax obligations in the coming year. A Closer Look at the Form 945 Updates At its core, Form 945 serves as the linchpin for businesses, allowing them to report federal income tax withheld from nonpayroll payments. If you're an employer who withholds federal income tax, including backup withholding, from nonpayroll sources like pensions, military retirement, gambling winnings, specific government payments, or those subject to backup withholding, Form 945 is your annual record-keeper. It consolidates all federal income tax withholdings from these nonpayroll avenues into one comprehensive document. The filing deadline for the 2023 Form 945 is January 31, 2024. However, the IRS has shown understanding for diligent businesses. If you've consistently met your tax obligations throughout the year by making timely deposits, you gain a little breathing room. In this case, the deadline extends to February 12, 2024, providing you with a few extra days to ensure your records are in order. (Remember, the extension to February 12 is due to February 10 falling on a Saturday.) Filing Methods Demystified While the IRS strongly advocates for electronic filing due to its efficiency and speed, they recognize that some businesses still prefer the traditional paper route. If you're one of them, the method you choose depends on whether a payment accompanies Form 945. The details, including specific mailing addresses, can be found in the Form 945 instructions. The good news? These addresses remain unchanged, providing a familiar path for those accustomed to the paper trail. Addressing Errors with Form 945-X We're all human, and mistakes happen. If you find an error on a previously filed Form 945, fear not. The solution lies in Form 945-X, also known as the Adjusted Annual Return of Withheld Federal Income Tax or Claim for Refund. When errors rear their heads, this form allows you to make necessary corrections. It's crucial to note that Form 945-X is filed separately from the regular Form 945, ensuring clarity and accuracy in your tax records. Embracing Electronic Fund Deposits In our digital age, electronic transactions have become the norm, and federal tax deposits are no exception. Employers are mandated to utilize electronic funds transfer (EFT) for all federal tax deposits. The preferred method? Electronic Federal Tax Payment System (EFTPS) stands as the cornerstone of EFT. However, if EFTPS doesn't align with your preferences, alternatives exist. Businesses can delegate this responsibility to tax professionals, financial institutions, payroll services, or other trusted third parties. These entities can ensure your electronic deposits are made promptly and accurately. Peering into the Future As businesses, we thrive on foresight. The IRS granted us a glimpse into the future with the draft release of the 2023 Form 945 in June. While the final version has yet to see the light of day, this draft version equips businesses with invaluable insights. By familiarizing yourself with the draft instructions, you can prepare your financial records and processes for the year ahead, ensuring a smooth tax season. The IRS released a draft of the 2023 Form 945 in June. A final version has not yet been released.

Learn best practices to stay on top of IRS requirements and create a sound compliance strategy to prevent payroll tax penalties.

When committing to a hybrid workforce with remote workers, employers should consider the local tax incentives they may forfeit, and new ones to claim.

We help you avoid tax trouble, maintain company morale and stay efficient by maintaining tax compliance. Explore this employer payroll taxes guide.

Trust is tested in moments most organizations overlook. In this webinar, Hidden Moments That Build Employee Trust, experts from Experian Employer Services and H3HR Advisors explored how routine HR compliance and operational processes—such as onboarding, payroll accuracy, employment verification, and tax withholding—play a critical but often invisible role in shaping employee trust.  While employees rarely think about HR systems, they deeply feel the impact when these processes fail—especially during major life moments like starting a new job, securing housing, managing benefits, or ensuring timely pay. When organizations invest in reliable infrastructure and reduce friction in these hidden moments, they create stability, predictability, and confidence that carry forward into engagement, retention, and performance.  The key takeaway: Compliance isn't just about checking boxes—it's about showing up for employees when it matters most.   Why trust is built in the moments we don't talk about  Historically, compliance processes have been treated as back-office necessities—tasks that must be completed to avoid audits, fines, or legal exposure. But as the panel emphasized, employees don't experience compliance as a transaction. They experience it as support—or friction—during some of the most stressful moments of their lives.  Employees aren't thinking about systems. They're thinking about questions like:  Will I get paid correctly and on time?  Will my employment be verified so I can rent an apartment or buy a home?  Will my benefits work when my family needs them?  When HR processes are reliable, employees rarely notice. When they break down, trust erodes instantly—not only in HR, but in the organization.  The Hidden Infrastructure of Trust  The webinar highlighted a powerful truth: trust is built through consistency and dependability over time.  Research shared during the session underscores why this matters:  Only 61% of employees say they are very confident their payroll and withholdings are correct, meaning nearly 40% are unsure.  50% of employees would struggle to meet financial obligations if their paychecks were delayed by just one week.  Errors or delays in HR operations aren't just administrative inconveniences. They introduce stress into employees’ lives—and often into their families’ lives—at moments when stability matters most.  Where Trust Is Most at Risk  Trust is especially tested at the intersection of HR processes and real-life moments, when everyday administrative tasks carry real personal stakes for employees. From new‑hire onboarding and I‑9 verification—where first impressions are formed and early delays can undermine confidence—to payroll and tax withholding, where inaccurate or unpredictable pay can quickly erode trust, these processes shape how employees experience their employer.   Employment and income verification directly affect an employee’s ability to secure housing, loans, or transportation, while benefits enrollment tied to life events such as marriage, childbirth, or medical needs increases sensitivity to errors and miscommunications. Even programs like the Work Opportunity Tax Credit (WOTC) extend beyond compliance, opening doors to employment while delivering measurable business value. Many of these issues never escalate to leadership, yet they have a profound impact on individual employees—making their invisibility to executives precisely what makes them so risky.  Friction Is the Enemy of Trust  The panel consistently returned to one theme: reduce friction everywhere you can.  Friction shows up as:  Manual handoffs and workarounds  Delays caused by fragmented systems  Knowledge locked in one or two tenured team members  Rework, errors, and exception handling  Modern HR infrastructure—especially when paired with trusted partners—helps reduce this friction by improving accuracy, speed, and reliability for everyone involved: HR teams, employees, and third parties alike. The goal isn't more process. The goal is fewer steps, fewer errors, and greater confidence.  How to Measure Trust and Not Just Compliance  Traditional compliance metrics matter—but they don't tell the full story.  In addition to tracking accuracy, timeliness, and audit outcomes, organizations can measure trust by asking questions such as:  How confident are you in our HR processes?  Was this experience simple and predictable?  Did issues get resolved quickly and clearly?  Do you feel confident reaching out to HR again?  Short, well-timed feedback—embedded naturally at the end of key HR experiences—can surface powerful insights without overwhelming employees.  Over time, these signals connect directly to engagement, retention, and performance outcomes.  Key Takeaways Compliance is a powerful trust-building opportunity, because routine HR processes quietly shape how employees feel about their employer—often more than headline initiatives ever do. What may feel ordinary to HR teams, such as onboarding, payroll, or employment verification, can be life‑altering for employees and their families, especially during moments of financial or personal transition. When these processes are predictable and accurate, reliability creates calm—reducing stress and reinforcing confidence in the organization.   That reliability depends on strong infrastructure: the right technology and trusted partners allow HR to move from reactive problem‑solving to proactive support. Over time, trust compounds through these small, unseen moments; handled consistently and well, they create lasting credibility and a stronger, more resilient employee experience.  Reframing Compliance as Care The most powerful shift discussed in the webinar was a mindset change: Compliance isn’t just about risk mitigation—it’s about care, predictability, and partnership.  When organizations show employees they've thought ahead, invested in reliability, and designed systems around real life—not just regulations—trust follows naturally.  Download the Webinar On-Demand Want the full conversation, real-world examples, and additional insights from Experian Employer Services and H3HR Advisors?  Download the full webinar recording and slides to explore how modern HR infrastructure turns hidden compliance moments into lasting employee trust. 

By early 2027, employers will be preparing Forms W-2 for tax year 2026 under several updated IRS reporting requirements. The IRS finalized the 2026 General Instructions for Forms W-2 and W-3 on January 30, 2026, introducing new reporting codes, adjustments to certain fields, and clarifications tied to recent legislation.  At the same time, the 2026 Form W-4 was updated to reflect new federal deduction provisions affecting individual withholding calculations. While the overall structure of the form remains familiar, the updates may affect how employees complete withholding elections.  Below is a high-level overview of the most notable changes and what payroll, HR, and finance teams should understand before the 2026 reporting cycle. What Changed on the 2026 Form W-2  New Box 12 Codes: TP and TT  For tax year 2026, the IRS introduced new Box 12 reporting codes tied to recent individual tax provisions.  Code TP - Total amount of cash tips reported to the employer.  Code TT - Total amount of qualified overtime compensation.  These additions support reporting related to new deductions available to certain individuals under Public Law 119-21. Although these deductions may affect employees’ individual tax returns, tips and overtime compensation generally remain subject to federal income tax withholding and payroll taxes.  The instructions also clarify that only the premium portion of overtime pay qualifies for reporting under Code TT. For example, in a time-and-a-half scenario, only the additional half-rate portion of overtime compensation is reported under this code.  Another code introduced for 2026 is Code TA, which is used to report certain employer contributions to “Trump accounts,” a new type of individual retirement account created under Public Law 119-21.  Why this matters  The information reported in these fields may originate from multiple systems, including timekeeping platforms, point-of-sale systems, or payroll calculations. Ensuring consistency across these data sources will be important when preparing year-end reporting.  Box 14 Changes: Introduction of Box 14b  Historically, Box 14 served as a flexible field used to report miscellaneous payroll information. For 2026 reporting, the IRS revised this section by dividing it into two fields.  Box 14a - “Other,” which continues to allow employers to report various informational items.  Box 14b - Treasury Tipped Occupation Code(s).  Employers reporting tips using Code TP must also include the applicable Treasury Tipped Occupation Code in Box 14b.  Why this matters  Employers with tipped employees may need to confirm that their payroll or HR systems can associate the correct occupation codes with the employees receiving tips. This may require coordination between HRIS job coding and payroll reporting.  What Changed on the 2026 Form W-4  The basic five-step structure of the Form W-4 remains the same. However, the IRS updated the form and related instructions to reflect new federal deduction provisions enacted under Public Law 119-21.  Key updates include:  A new checkbox allowing employees to indicate exemption from withholding.  Updated language in Step 4(b) describing how employees may account for certain deductions when determining withholding.  An updated deductions worksheet reflecting recent legislative changes.  Why this matters These changes primarily affect employees completing the form rather than employers administering payroll. Employers should focus on ensuring the correct version of the form is used and that completed forms are properly maintained.  Operational Considerations  Although the IRS changes focus mainly on reporting fields and withholding forms, organizations may want to review how payroll data flows across systems. Data elements such as tips, overtime classifications, and job-based eligibility may originate outside payroll and should align with year-end reporting outputs.  Many organizations address this by periodically reviewing exception reports, validating data inputs, and reconciling payroll outputs with source systems.  Supporting 2026 Payroll Readiness  As reporting requirements become more detailed, many organizations look beyond payroll processing alone and evaluate how data flows across systems, including timekeeping, HRIS, and year-end reporting outputs.  This is particularly relevant for 2026, where new reporting elements such as Box 12 codes for tips and overtime, as well as Box 14b occupation codes, may depend on data that originates outside payroll.  Organizations may choose to work with external providers to support areas such as data validation, workflow management, and employment-related compliance processes. This can include confirming system readiness, aligning data mappings, and improving visibility into payroll outputs before year-end filing.  Experian Employer Services provides solutions across areas including I-9 management, tax withholding, employment verification, and W-2 reporting. These capabilities can help support broader workforce compliance processes that intersect with payroll reporting.  Regardless of provider, responsibility for accurate reporting remains with the employer. Many organizations address this by reviewing internal processes, coordinating across systems, and validating outputs throughout the year.  Preparing for Year-End Reporting  For many organizations, preparing for W-2 reporting is an ongoing process rather than a year-end activity. Reviewing payroll data periodically throughout the year can help identify inconsistencies early and reduce the need for corrections during filing season.  This may include reviewing exception reports, validating key data elements such as tips and overtime classifications, and confirming that reporting outputs align with source systems.  Taking a proactive approach can help organizations better understand how 2026 reporting requirements apply within their environment and support a smoother filing process in early 2027. Explore how your organization can improve year-end readiness by speaking with one of our experts.