Posts Tagged ‘Indiana’

Indiana County Income Tax Rules

January 5th, 2016
In Indiana, it’s important to review your employees’ county tax withholdings at the beginning of each year to ensure that accurate county taxes are withheld with each payroll.  A quick review of county income tax withholding rules is as follows:
  • Where did the employee reside and work on New Year’s Day? Answers to these questions on  Form WH-4 establish an employee’s county tax withholding rate for the entire year (moving from one county to another during the year does not change the county in which taxes are withheld.) Generally, county income tax should be withheld based on each employee’s county of residence on New Year’s Day of each year; 
  •  If an employee resides out-of-state on January 1, 2016, but works in an Indiana county on New Year’s Day, the employee’s county tax withholding should be based on the employer county’s “non-resident” tax rate, which is generally a lower rate (Indiana county income tax withholdings are required even if Indiana state tax is not withheld due to a reciprocity agreement with an adjoining state); and
  • If an employee both lives and works outside Indiana on New Year’s Day, they are not subject to county tax for the entire year even if they move to an Indiana county on January 2.
  • In addition to the federal form W-4, an employer should request a new Indiana Form WH-4 from every employee currently on the payroll who is living or working in Indiana. Make sure AccuPay receives a copy of Form WH-4 for every employee currently on your payroll or that you hire during 2016.
 To access the complete list of Indiana county tax rates, click here: County Tax Rate Table .

PayDay is an email communication of payroll news, legal updates and tax considerations intended to inform clients and colleagues of AccuPay about current payroll issues and planning techniques.  You should consult with your CPA or tax advisor before implementing any ideas, comments or planning techniques. 

Budget for Retro FUTA Tax

May 19th, 2015

Indiana employers have been paying extra or above normal Federal Unemployment Tax (FUTA) since the year 2010.
The additional FUTA tax is due to Indiana’s loan from the federal government in 2008 which was used to pay unemployment benefits from a depleted unemployment trust fund. (See attached January 21, 2015 memo here)
The Indiana Department of Workforce Development anticipates that the year 2015 will be the final “credit reduction state” year for Indiana, meaning that the “extra” FUTA tax will end January 31, 2016 for the year 2015.

Budgeting Extra 2015 FUTA Tax

AccuPay recently paid 2015 first quarter FUTA tax and has each employer’s actual FUTA tax amount for the first quarter of 2015.  If you would like to budget funds for the FUTA retroactive tax for 2015, your processor can provide you with your actual first quarter FUTA tax for 2015.  Since the 2015 “extra” FUTA tax rate is three times the “normal” FUTA tax rate, your additional 2015 FUTA tax due is exactly three times the amount of FUTA tax you paid for the first quarter of 2015.  This “three times multiplier” can also be used to calculate your extra FUTA tax for the next three quarters of 2015.  Some employers may choose to accrue this additional expense as a liability in their company financial statements.
AccuPay’s Pay Day from November 10, 2014 also explains the same FUTA tax matter. (More FUTA tax for 2014)  AccuPay can not impound or collect the additional FUTA tax from you since it does not become statutorily due until Indiana repays the Federal government loan on it’s November 10, 2015 due day.  As Indiana has advised, it does not anticipate repayment of the loan until the year 2016.

If you would like to know how much “extra” FUTA tax to accrue for the first quarter of 2015, any of AccuPay’s processors can provide you with your first quarter 2015 actual FUTA tax expense and simply multiply that amount by three.

 

PayDay is an email communication of payroll news, legal updates and tax considerations intended to inform clients and colleagues of AccuPay about current payroll issues and planning techniques.  You should consult with your CPA or tax advisor before implementing any ideas, comments or planning techniques.

Indiana County Withholding Tax Rules

February 16th, 2015

In Indiana, it’s important to review your employees’ county tax withholdings at the beginning of each year to ensure that accurate county taxes are withheld with each payroll. A quick review of county income tax withholding rules is as follows:

  • Where did the employee reside and work on New Year’s Day? Answers to these questions on Form Wh-4 establish an employee’s county tax withholding rate for the entire year (moving from one county to another during the year does not change the county in which taxes are withheld.) Generally, county income tax should be withheld based on each employee’s county of residence on New Year’s Day of each year;
  • If an employee resides out-of-state on January 1, 2015, but works in an Indiana county on New Year’s Day, the employee’s county tax withholding should be based on the employer county’s “non-resident” tax rate, which is generally a lower rate (Indiana county income tax withholdings are required even if Indiana state tax is not withheld due to a reciprocity agreement with an adjoining state); and
  • If an employee both lives and works outside Indiana on New Year’s Day, they are not subject to county tax for the entire year even if they move to an Indiana county on January 2.

An employer should request a new Indiana Form Wh-4 from every employee who is currently on payroll. Make sure AccuPay receives a copy of Form Wh-4 for every employee currently on your payroll or that you hire during 2015.

To access the complete list of Indiana county tax rates, click here: County Tax Rate Table.

 

This blog is a communication of payroll news, legal updates and tax considerations intended to inform clients and colleagues of AccuPay about current payroll issues and planning techniques. You should consult with your CPA or tax adviser before implementing any ideas, comments or planning techniques.