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State Taxes

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State Taxes

State taxes Publication 15 - Main Content Table of Contents 1. State taxes Employer Identification Number (EIN) 2. State taxes Who Are Employees?Relief provisions. State taxes Business Owned and Operated by Spouses 3. State taxes Family Employees 4. State taxes Employee's Social Security Number (SSN)Registering for SSNVS. State taxes 5. State taxes Wages and Other CompensationAccountable plan. State taxes Nonaccountable plan. State taxes Per diem or other fixed allowance. State taxes 50% test. State taxes Health Savings Accounts and medical savings accounts. State taxes Nontaxable fringe benefits. State taxes When fringe benefits are treated as paid. State taxes Valuation of fringe benefits. State taxes Withholding on fringe benefits. State taxes Depositing taxes on fringe benefits. State taxes 6. State taxes TipsOrdering rule. State taxes 7. State taxes Supplemental Wages 8. State taxes Payroll Period 9. State taxes Withholding From Employees' WagesIncome Tax Withholding Social Security and Medicare Taxes Part-Time Workers 10. State taxes Required Notice to Employees About the Earned Income Credit (EIC) 11. State taxes Depositing TaxesWhen To Deposit How To Deposit Deposit Penalties 12. State taxes Filing Form 941 or Form 944 13. State taxes Reporting Adjustments to Form 941 or Form 944Current Period Adjustments Prior Period Adjustments Wage Repayments 14. State taxes Federal Unemployment (FUTA) TaxSuccessor employer. State taxes Household employees. State taxes When to deposit. State taxes Household employees. State taxes Electronic filing by reporting agents. State taxes 16. State taxes How To Use the Income Tax Withholding TablesWage Bracket Method Percentage Method Alternative Methods of Income Tax Withholding How To Get Tax Help 1. State taxes Employer Identification Number (EIN) If you are required to report employment taxes or give tax statements to employees or annuitants, you need an EIN. State taxes The EIN is a nine-digit number the IRS issues. State taxes The digits are arranged as follows: 00-0000000. State taxes It is used to identify the tax accounts of employers and certain others who have no employees. State taxes Use your EIN on all of the items you send to the IRS and SSA. State taxes For more information, see Publication 1635, Employer Identification Number: Understanding Your EIN. State taxes If you do not have an EIN, you may apply for one online. State taxes Go to the IRS. State taxes gov and click on the Apply for an EIN Online link under Tools. State taxes You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. State taxes Do not use an SSN in place of an EIN. State taxes You should have only one EIN. State taxes If you have more than one and are not sure which one to use, call 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). State taxes Give the numbers you have, the name and address to which each was assigned, and the address of your main place of business. State taxes The IRS will tell you which number to use. State taxes If you took over another employer's business (see Successor employer in section 9), do not use that employer's EIN. State taxes If you have applied for an EIN but do not have your EIN by the time a return is due, file a paper return and write “Applied For” and the date you applied for it in the space shown for the number. State taxes 2. State taxes Who Are Employees? Generally, employees are defined either under common law or under statutes for certain situations. State taxes See Publication 15-A for details on statutory employees and nonemployees. State taxes Employee status under common law. State taxes   Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. State taxes This is so even when you give the employee freedom of action. State taxes What matters is that you have the right to control the details of how the services are performed. State taxes See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. State taxes   Generally, people in business for themselves are not employees. State taxes For example, doctors, lawyers, veterinarians, and others in an independent trade in which they offer their services to the public are usually not employees. State taxes However, if the business is incorporated, corporate officers who work in the business are employees of the corporation. State taxes   If an employer-employee relationship exists, it does not matter what it is called. State taxes The employee may be called an agent or independent contractor. State taxes It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time. State taxes Statutory employees. State taxes   If someone who works for you is not an employee under the common law rules discussed earlier, do not withhold federal income tax from his or her pay, unless backup withholding applies. State taxes Although the following persons may not be common law employees, they are considered employees by statute for social security, Medicare, and FUTA tax purposes under certain conditions. State taxes An agent (or commission) driver who delivers food, beverages (other than milk), laundry, or dry cleaning for someone else. State taxes A full-time life insurance salesperson who sells primarily for one company. State taxes A homeworker who works by guidelines of the person for whom the work is done, with materials furnished by and returned to that person or to someone that person designates. State taxes A traveling or city salesperson (other than an agent-driver or commission-driver) who works full time (except for sideline sales activities) for one firm or person getting orders from customers. State taxes The orders must be for merchandise for resale or supplies for use in the customer's business. State taxes The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging. State taxes    Statutory nonemployees. State taxes   Direct sellers, qualified real estate agents, and certain companion sitters are, by law, considered nonemployees. State taxes They are generally treated as self-employed for all federal tax purposes, including income and employment taxes. State taxes H-2A agricultural workers. State taxes   On Form W-2, do not check box 13 (Statutory employee), as H-2A workers are not statutory employees. State taxes Treating employees as nonemployees. State taxes   You will generally be liable for social security and Medicare taxes and withheld income tax if you do not deduct and withhold these taxes because you treated an employee as a nonemployee. State taxes You may be able to calculate your liability using special section 3509 rates for the employee share of social security and Medicare taxes and the federal income tax withholding. State taxes The applicable rates depend on whether you filed required Forms 1099. State taxes You cannot recover the employee share of social security, or Medicare tax, or income tax withholding from the employee if the tax is paid under section 3509. State taxes You are liable for the income tax withholding regardless of whether the employee paid income tax on the wages. State taxes You continue to owe the full employer share of social security and Medicare taxes. State taxes The employee remains liable for the employee share of social security and Medicare taxes. State taxes See Internal Revenue Code section 3509 for details. State taxes Also see the Instructions for Form 941-X. State taxes   Section 3509 rates are not available if you intentionally disregard the requirement to withhold taxes from the employee or if you withheld income taxes but not social security or Medicare taxes. State taxes Section 3509 is not available for reclassifying statutory employees. State taxes See Statutory employees , earlier in this section. State taxes   If the employer issued required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. State taxes 2% plus 20% of the employee rate (see the Instructions for Form 941-X). State taxes For Medicare taxes; employer rate of 1. State taxes 45% plus 20% of the employee rate of 1. State taxes 45%, for a total rate of 1. State taxes 74% of wages. State taxes For Additional Medicare Tax; 0. State taxes 18% (20% of the employee rate of 0. State taxes 9%) of wages subject to Additional Medicare Tax. State taxes For income tax withholding, the rate is 1. State taxes 5% of wages. State taxes   If the employer did not issue required information returns, the section 3509 rates are: For social security taxes; employer rate of 6. State taxes 2% plus 40% of the employee rate (see the Instructions for Form 941-X). State taxes For Medicare taxes; employer rate of 1. State taxes 45% plus 40% of the employee rate of 1. State taxes 45%, for a total rate of 2. State taxes 03% of wages. State taxes For Additional Medicare Tax; 0. State taxes 36% (40% of the employee rate of 0. State taxes 9%) of wages subject to Additional Medicare Tax. State taxes For income tax withholding, the rate is 3. State taxes 0% of wages. State taxes Relief provisions. State taxes   If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. State taxes To get this relief, you must file all required federal tax returns, including information returns, on a basis consistent with your treatment of the worker. State taxes You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. State taxes See Publication 1976, Do You Qualify for Relief Under Section 530. State taxes IRS help. State taxes   If you want the IRS to determine whether a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. State taxes Voluntary Classification Settlement Program (VCSP). State taxes   Employers who are currently treating their workers (or a class or group of workers) as independent contractors or other nonemployees and want to voluntarily reclassify their workers as employees for future tax periods may be eligible to participate in the VCSP if certain requirements are met. State taxes To apply, use Form 8952, Application for Voluntary Classification Settlement Program (VCSP). State taxes For more information visit IRS. State taxes gov and enter “VCSP” in the search box. State taxes Business Owned and Operated by Spouses If you and your spouse jointly own and operate a business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. State taxes See Publication 541, Partnerships, for more details. State taxes The partnership is considered the employer of any employees, and is liable for any employment taxes due on wages paid to its employees. State taxes Exception—Qualified joint venture. State taxes   For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are spouses filing a joint income tax return, can elect not to be treated as a partnership for federal tax purposes. State taxes A qualified joint venture conducts a trade or business where: The only members of the joint venture are spouses who file a joint income tax return, Both spouses materially participate (see Material participation in the Instructions for Schedule C (Form 1040), line G) in the trade or business (mere joint ownership of property is not enough), Both spouses elect to not be treated as a partnership, and The business is co-owned by both spouses and is not held in the name of a state law entity such as a partnership or limited liability company (LLC). State taxes   To make the election, all items of income, gain, loss, deduction, and credit must be divided between the spouses, in accordance with each spouse's interest in the venture, and reported on separate Schedules C or F as sole proprietors. State taxes Each spouse must also file a separate Schedule SE to pay self-employment taxes, as applicable. State taxes   Spouses using the qualified joint venture rules are treated as sole proprietors for federal tax purposes and generally do not need an EIN. State taxes If employment taxes are owed by the qualified joint venture, either spouse may report and pay the employment taxes due on the wages paid to the employees using the EIN of that spouse's sole proprietorship. State taxes Generally, filing as a qualified joint venture will not increase the spouses' total tax owed on the joint income tax return. State taxes However, it gives each spouse credit for social security earnings on which retirement benefits are based and for Medicare coverage without filing a partnership return. State taxes    Note. State taxes If your spouse is your employee, not your partner, see One spouse employed by another in section 3. State taxes   For more information on qualified joint ventures, visit IRS. State taxes gov and enter “qualified joint venture” in the search box. State taxes Exception—Community income. State taxes   If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U. State taxes S. State taxes possession, you can treat the business either as a sole proprietorship (of the spouse who carried on the business) or a partnership. State taxes You may still make an election to be taxed as a qualified joint venture instead of a partnership. State taxes See Exception—Qualified joint venture , earlier. State taxes 3. State taxes Family Employees Child employed by parents. State taxes   Payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to social security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child. State taxes If these payments are for work other than in a trade or business, such as domestic work in the parent's private home, they are not subject to social security and Medicare taxes until the child reaches age 21. State taxes However, see Covered services of a child or spouse , later in this section. State taxes Payments for the services of a child under age 21 who works for his or her parent, whether or not in a trade or business, are not subject to FUTA tax. State taxes Payments for the services of a child of any age who works for his or her parent are generally subject to income tax withholding unless the payments are for domestic work in the parent's home, or unless the payments are for work other than in a trade or business and are less than $50 in the quarter or the child is not regularly employed to do such work. State taxes One spouse employed by another. State taxes   The wages for the services of an individual who works for his or her spouse in a trade or business are subject to income tax withholding and social security and Medicare taxes, but not to FUTA tax. State taxes However, the payments for services of one spouse employed by another in other than a trade or business, such as domestic service in a private home, are not subject to social security, Medicare, and FUTA taxes. State taxes Covered services of a child or spouse. State taxes   The wages for the services of a child or spouse are subject to income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for: A corporation, even if it is controlled by the child's parent or the individual's spouse; A partnership, even if the child's parent is a partner, unless each partner is a parent of the child; A partnership, even if the individual's spouse is a partner; or An estate, even if it is the estate of a deceased parent. State taxes Parent employed by son or daughter. State taxes   When the employer is a son or daughter employing his or her parent the following rules apply. State taxes Payments for the services of a parent in the son’s or daughter’s (the employer’s) trade or business are subject to income tax withholding and social security and Medicare taxes. State taxes Payments for the services of a parent not in the son’s or daughter’s (the employer’s) trade or business are generally not subject to social security and Medicare taxes. State taxes    Social security and Medicare taxes do apply to payments made to a parent for domestic services if all of the following apply: The parent is employed by his or her son or daughter; The son or daughter (the employer) has a child or stepchild living in the home; The son or daughter (the employer) is a widow or widower, divorced, or living with a spouse who, because of a mental or physical condition, cannot care for the child or stepchild for at least 4 continuous weeks in a calendar quarter; and The child or stepchild is either under age 18 or requires the personal care of an adult for at least 4 continuous weeks in a calendar quarter due to a mental or physical condition. State taxes   Payments made to a parent employed by his or her child are not subject to FUTA tax, regardless of the type of services provided. State taxes 4. State taxes Employee's Social Security Number (SSN) You are required to get each employee's name and SSN and to enter them on Form W-2. State taxes This requirement also applies to resident and nonresident alien employees. State taxes You should ask your employee to show you his or her social security card. State taxes The employee may show the card if it is available. State taxes Do not accept a social security card that says “Not valid for employment. State taxes ” A social security number issued with this legend does not permit employment. State taxes You may, but are not required to, photocopy the social security card if the employee provides it. State taxes If you do not provide the correct employee name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. State taxes See Publication 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs, for information on the requirement to solicit the employee's SSN. State taxes Applying for a social security card. State taxes   Any employee who is legally eligible to work in the United States and does not have a social security card can get one by completing Form SS-5, Application for a Social Security Card, and submitting the necessary documentation. State taxes You can get Form SS-5 at SSA offices, by calling 1-800-772-1213, or from the SSA website at www. State taxes socialsecurity. State taxes gov/online/ss-5. State taxes html. State taxes The employee must complete and sign Form SS-5; it cannot be filed by the employer. State taxes You may be asked to supply a letter to accompany Form SS-5 if the employee has exceeded his or her yearly or lifetime limit for the number of replacement cards allowed. State taxes Applying for a social security number. State taxes   If you file Form W-2 on paper and your employee applied for an SSN but does not have one when you must file Form W-2, enter “Applied For” on the form. State taxes If you are filing electronically, enter all zeros (000-00-000) in the social security number field. State taxes When the employee receives the SSN, file Copy A of Form W-2c, Corrected Wage and Tax Statement, with the SSA to show the employee's SSN. State taxes Furnish copies B, C, and 2 of Form W-2c to the employee. State taxes Up to 25 Forms W-2c for each Form W-3c, Transmittal of Corrected Wage and Tax Statements, may now be filed per session over the Internet, with no limit on the number of sessions. State taxes For more information, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. State taxes socialsecurity. State taxes gov/employer. State taxes Advise your employee to correct the SSN on his or her original Form W-2. State taxes Correctly record the employee's name and SSN. State taxes   Record the name and number of each employee as they are shown on the employee's social security card. State taxes If the employee's name is not correct as shown on the card (for example, because of marriage or divorce), the employee should request a corrected card from the SSA. State taxes Continue to report the employee's wages under the old name until the employee shows you an updated social security card with the new name. State taxes If the SSA issues the employee a replacement card after a name change, or a new card with a different social security number after a change in alien work status, file a Form W-2c to correct the name/SSN reported for the most recently filed Form W-2. State taxes It is not necessary to correct other years if the previous name and number were used for years before the most recent Form W-2. State taxes IRS individual taxpayer identification numbers (ITINs) for aliens. State taxes   Do not accept an ITIN in place of an SSN for employee identification or for work. State taxes An ITIN is only available to resident and nonresident aliens who are not eligible for U. State taxes S. State taxes employment and need identification for other tax purposes. State taxes You can identify an ITIN because it is a nine-digit number, beginning with the number “9” with either a “7” or “8” as the fourth digit and is formatted like an SSN (for example, 9NN-7N-NNNN). State taxes    An individual with an ITIN who later becomes eligible to work in the United States must obtain an SSN. State taxes If the individual is currently eligible to work in the United States, instruct the individual to apply for an SSN and follow the instructions under Applying for a social security number, earlier. State taxes Do not use an ITIN in place of an SSN on Form W-2. State taxes Verification of social security numbers. State taxes   Employers and authorized reporting agents can use the Social Security Number Verification Service (SSNVS) to instantly verify up to 10 names and SSNs (per screen) at a time, or submit an electronic file of up to 250,000 names and SSNs and usually receive the results the next business day. State taxes Visit www. State taxes socialsecurity. State taxes gov/employer/ssnv. State taxes htm for more information. State taxes Registering for SSNVS. State taxes   You must register online and receive authorization from your employer to use SSNVS. State taxes To register, visit SSA's website at www. State taxes ssa. State taxes gov/employer and click on the Business Services Online link. State taxes Follow the registration instructions to obtain a user identification (ID) and password. State taxes You will need to provide the following information about yourself and your company. State taxes Name. State taxes SSN. State taxes Date of birth. State taxes Type of employer. State taxes EIN. State taxes Company name, address, and telephone number. State taxes Email address. State taxes   When you have completed the online registration process, SSA will mail a one-time activation code to your employer. State taxes You must enter the activation code online to use SSNVS. State taxes 5. State taxes Wages and Other Compensation Wages subject to federal employment taxes generally include all pay you give to an employee for services performed. State taxes The pay may be in cash or in other forms. State taxes It includes salaries, vacation allowances, bonuses, commissions, and fringe benefits. State taxes It does not matter how you measure or make the payments. State taxes Amounts an employer pays as a bonus for signing or ratifying a contract in connection with the establishment of an employer-employee relationship and an amount paid to an employee for cancellation of an employment contract and relinquishment of contract rights are wages subject to social security, Medicare, and FUTA taxes and income tax withholding. State taxes Also, compensation paid to a former employee for services performed while still employed is wages subject to employment taxes. State taxes More information. State taxes   See section 6 for a discussion of tips and section 7 for a discussion of supplemental wages. State taxes Also, see section 15 for exceptions to the general rules for wages. State taxes Publication 15-A provides additional information on wages, including nonqualified deferred compensation, and other compensation. State taxes Publication 15-B provides information on other forms of compensation, including: Accident and health benefits, Achievement awards, Adoption assistance, Athletic facilities, De minimis (minimal) benefits, Dependent care assistance, Educational assistance, Employee discounts, Employee stock options, Employer-provided cell phones, Group-term life insurance coverage, Health Savings Accounts, Lodging on your business premises, Meals, Moving expense reimbursements, No-additional-cost services, Retirement planning services, Transportation (commuting) benefits, Tuition reduction, and Working condition benefits. State taxes Employee business expense reimbursements. State taxes   A reimbursement or allowance arrangement is a system by which you pay the advances, reimbursements, and charges for your employees' business expenses. State taxes How you report a reimbursement or allowance amount depends on whether you have an accountable or a nonaccountable plan. State taxes If a single payment includes both wages and an expense reimbursement, you must specify the amount of the reimbursement. State taxes   These rules apply to all ordinary and necessary employee business expenses that would otherwise qualify for a deduction by the employee. State taxes Accountable plan. State taxes   To be an accountable plan, your reimbursement or allowance arrangement must require your employees to meet all three of the following rules. State taxes They must have paid or incurred deductible expenses while performing services as your employees. State taxes The reimbursement or advance must be paid for the expense and must not be an amount that would have otherwise been paid by the employee. State taxes They must substantiate these expenses to you within a reasonable period of time. State taxes They must return any amounts in excess of substantiated expenses within a reasonable period of time. State taxes   Amounts paid under an accountable plan are not wages and are not subject to income, social security, Medicare, and FUTA taxes. State taxes   If the expenses covered by this arrangement are not substantiated (or amounts in excess of substantiated expenses are not returned within a reasonable period of time), the amount paid under the arrangement in excess of the substantiated expenses is treated as paid under a nonaccountable plan. State taxes This amount is subject to income, social security, Medicare, and FUTA taxes for the first payroll period following the end of the reasonable period of time. State taxes   A reasonable period of time depends on the facts and circumstances. State taxes Generally, it is considered reasonable if your employees receive their advance within 30 days of the time they incur the expenses, adequately account for the expenses within 60 days after the expenses were paid or incurred, and return any amounts in excess of expenses within 120 days after the expenses were paid or incurred. State taxes Also, it is considered reasonable if you give your employees a periodic statement (at least quarterly) that asks them to either return or adequately account for outstanding amounts and they do so within 120 days. State taxes Nonaccountable plan. State taxes   Payments to your employee for travel and other necessary expenses of your business under a nonaccountable plan are wages and are treated as supplemental wages and subject to income, social security, Medicare, and FUTA taxes. State taxes Your payments are treated as paid under a nonaccountable plan if: Your employee is not required to or does not substantiate timely those expenses to you with receipts or other documentation, You advance an amount to your employee for business expenses and your employee is not required to or does not return timely any amount he or she does not use for business expenses, You advance or pay an amount to your employee regardless of whether you reasonably expect the employee to have business expenses related to your business, or You pay an amount as a reimbursement you would have otherwise paid as wages. State taxes   See section 7 for more information on supplemental wages. State taxes Per diem or other fixed allowance. State taxes   You may reimburse your employees by travel days, miles, or some other fixed allowance under the applicable revenue procedure. State taxes In these cases, your employee is considered to have accounted to you if your reimbursement does not exceed rates established by the Federal Government. State taxes The 2013 standard mileage rate for auto expenses was 56. State taxes 5 cents per mile. State taxes The rate for 2014 is 56 cents per mile. State taxes   The government per diem rates for meals and lodging in the continental United States are listed in Publication 1542, Per Diem Rates. State taxes Other than the amount of these expenses, your employees' business expenses must be substantiated (for example, the business purpose of the travel or the number of business miles driven). State taxes   If the per diem or allowance paid exceeds the amounts substantiated, you must report the excess amount as wages. State taxes This excess amount is subject to income tax withholding and payment of social security, Medicare, and FUTA taxes. State taxes Show the amount equal to the substantiated amount (for example, the nontaxable portion) in box 12 of Form W-2 using code “L. State taxes ” Wages not paid in money. State taxes   If in the course of your trade or business you pay your employees in a medium that is neither cash nor a readily negotiable instrument, such as a check, you are said to pay them “in kind. State taxes ” Payments in kind may be in the form of goods, lodging, food, clothing, or services. State taxes Generally, the fair market value of such payments at the time they are provided is subject to federal income tax withholding and social security, Medicare, and FUTA taxes. State taxes   However, noncash payments for household work, agricultural labor, and service not in the employer's trade or business are exempt from social security, Medicare, and FUTA taxes. State taxes Withhold income tax on these payments only if you and the employee agree to do so. State taxes Nonetheless, noncash payments for agricultural labor, such as commodity wages, are treated as cash payments subject to employment taxes if the substance of the transaction is a cash payment. State taxes Moving expenses. State taxes   Reimbursed and employer-paid qualified moving expenses (those that would otherwise be deductible by the employee) paid under an accountable plan are not includible in an employee's income unless you have knowledge the employee deducted the expenses in a prior year. State taxes Reimbursed and employer-paid nonqualified moving expenses are includible in income and are subject to employment taxes and income tax withholding. State taxes For more information on moving expenses, see Publication 521, Moving Expenses. State taxes Meals and lodging. State taxes   The value of meals is not taxable income and is not subject to income tax withholding and social security, Medicare, and FUTA taxes if the meals are furnished for the employer's convenience and on the employer's premises. State taxes The value of lodging is not subject to income tax withholding and social security, Medicare, and FUTA taxes if the lodging is furnished for the employer's convenience, on the employer's premises, and as a condition of employment. State taxes    “For the convenience of the employer” means you have a substantial business reason for providing the meals and lodging other than to provide additional compensation to the employee. State taxes For example, meals you provide at the place of work so that an employee is available for emergencies during his or her lunch period are generally considered to be for your convenience. State taxes   However, whether meals or lodging are provided for the convenience of the employer depends on all of the facts and circumstances. State taxes A written statement that the meals or lodging are for your convenience is not sufficient. State taxes 50% test. State taxes   If over 50% of the employees who are provided meals on an employer's business premises receive these meals for the convenience of the employer, all meals provided on the premises are treated as furnished for the convenience of the employer. State taxes If this 50% test is met, the value of the meals is excludable from income for all employees and is not subject to federal income tax withholding or employment taxes. State taxes For more information, see Publication 15-B. State taxes Health insurance plans. State taxes   If you pay the cost of an accident or health insurance plan for your employees, including an employee's spouse and dependents, your payments are not wages and are not subject to social security, Medicare, and FUTA taxes, or federal income tax withholding. State taxes Generally, this exclusion also applies to qualified long-term care insurance contracts. State taxes However, for income tax withholding, the value of health insurance benefits must be included in the wages of S corporation employees who own more than 2% of the S corporation (2% shareholders). State taxes For social security, Medicare, and FUTA taxes, the health insurance benefits are excluded from the wages only for employees and their dependents or for a class or classes of employees and their dependents. State taxes See Announcement 92-16 for more information. State taxes You can find Announcement 92-16 on page 53 of Internal Revenue Bulletin 1992-5. State taxes Health Savings Accounts and medical savings accounts. State taxes   Your contributions to an employee's Health Savings Account (HSA) or Archer medical savings account (MSA) are not subject to social security, Medicare, or FUTA taxes, or federal income tax withholding if it is reasonable to believe at the time of payment of the contributions they will be excludable from the income of the employee. State taxes To the extent it is not reasonable to believe they will be excludable, your contributions are subject to these taxes. State taxes Employee contributions to their HSAs or MSAs through a payroll deduction plan must be included in wages and are subject to social security, Medicare, and FUTA taxes and income tax withholding. State taxes However, HSA contributions made under a salary reduction arrangement in a section 125 cafeteria plan are not wages and are not subject to employment taxes or withholding. State taxes For more information, see the Instructions for Form 8889, Health Savings Accounts (HSAs). State taxes Medical care reimbursements. State taxes   Generally, medical care reimbursements paid for an employee under an employer's self-insured medical reimbursement plan are not wages and are not subject to social security, Medicare, and FUTA taxes, or income tax withholding. State taxes See Publication 15-B for an exception for highly compensated employees. State taxes Differential wage payments. State taxes   Differential wage payments are any payments made by an employer to an individual for a period during which the individual is performing service in the uniformed services while on active duty for a period of more than 30 days and represent all or a portion of the wages the individual would have received from the employer if the individual were performing services for the employer. State taxes   Differential wage payments are wages for income tax withholding, but are not subject to social security, Medicare, or FUTA taxes. State taxes Employers should report differential wage payments in box 1 of Form W-2. State taxes For more information about the tax treatment of differential wage payments, visit IRS. State taxes gov and enter “employees in a combat zone” in the search box. State taxes Fringe benefits. State taxes   You generally must include fringe benefits in an employee's gross income (but see Nontaxable fringe benefits next). State taxes The benefits are subject to income tax withholding and employment taxes. State taxes Fringe benefits include cars you provide, flights on aircraft you provide, free or discounted commercial flights, vacations, discounts on property or services, memberships in country clubs or other social clubs, and tickets to entertainment or sporting events. State taxes In general, the amount you must include is the amount by which the fair market value of the benefits is more than the sum of what the employee paid for it plus any amount the law excludes. State taxes There are other special rules you and your employees may use to value certain fringe benefits. State taxes See Publication 15-B for more information. State taxes Nontaxable fringe benefits. State taxes   Some fringe benefits are not taxable (or are minimally taxable) if certain conditions are met. State taxes See Publication 15-B for details. State taxes The following are some examples of nontaxable fringe benefits. State taxes Services provided to your employees at no additional cost to you. State taxes Qualified employee discounts. State taxes Working condition fringes that are property or services the employee could deduct as a business expense if he or she had paid for it. State taxes Examples include a company car for business use and subscriptions to business magazines. State taxes Certain minimal value fringes (including an occasional cab ride when an employee must work overtime and meals you provide at eating places you run for your employees if the meals are not furnished at below cost). State taxes Qualified transportation fringes subject to specified conditions and dollar limitations (including transportation in a commuter highway vehicle, any transit pass, and qualified parking). State taxes Qualified moving expense reimbursement. State taxes See Moving expenses , earlier in this section, for details. State taxes The use of on-premises athletic facilities, if substantially all of the use is by employees, their spouses, and their dependent children. State taxes Qualified tuition reduction an educational organization provides to its employees for education. State taxes For more information, see Publication 970, Tax Benefits for Education. State taxes Employer-provided cell phones provided primarily for a noncompensatory business reason. State taxes   However, do not exclude the following fringe benefits from the income of highly compensated employees unless the benefit is available to other employees on a nondiscriminatory basis. State taxes No-additional-cost services. State taxes Qualified employee discounts. State taxes Meals provided at an employer operated eating facility. State taxes Reduced tuition for education. State taxes  For more information, including the definition of a highly compensated employee, see Publication 15-B. State taxes When fringe benefits are treated as paid. State taxes   You may choose to treat certain noncash fringe benefits as paid by the pay period, by the quarter, or on any other basis you choose as long as you treat the benefits as paid at least once a year. State taxes You do not have to make a formal choice of payment dates or notify the IRS of the dates you choose. State taxes You do not have to make this choice for all employees. State taxes You may change methods as often as you like, as long as you treat all benefits provided in a calendar year as paid by December 31 of the calendar year. State taxes See Publication 15-B for more information, including a discussion of the special accounting rule for fringe benefits provided during November and December. State taxes Valuation of fringe benefits. State taxes   Generally, you must determine the value of fringe benefits no later than January 31 of the next year. State taxes Before January 31, you may reasonably estimate the value of the fringe benefits for purposes of withholding and depositing on time. State taxes Withholding on fringe benefits. State taxes   You may add the value of fringe benefits to regular wages for a payroll period and figure withholding taxes on the total, or you may withhold federal income tax on the value of the fringe benefits at the optional flat 25% supplemental wage rate. State taxes However, see Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages during the calendar year in section 7. State taxes   You may choose not to withhold income tax on the value of an employee's personal use of a vehicle you provide. State taxes You must, however, withhold social security and Medicare taxes on the use of the vehicle. State taxes See Publication 15-B for more information on this election. State taxes Depositing taxes on fringe benefits. State taxes   Once you choose when fringe benefits are paid, you must deposit taxes in the same deposit period you treat the fringe benefits as paid. State taxes To avoid a penalty, deposit the taxes following the general deposit rules for that deposit period. State taxes   If you determine by January 31 you overestimated the value of a fringe benefit at the time you withheld and deposited for it, you may claim a refund for the overpayment or have it applied to your next employment tax return. State taxes See Valuation of fringe benefits , earlier. State taxes If you underestimated the value and deposited too little, you may be subject to a failure-to-deposit penalty. State taxes See section 11 for information on deposit penalties. State taxes   If you deposited the required amount of taxes but withheld a lesser amount from the employee, you can recover from the employee the social security, Medicare, or income taxes you deposited on his or her behalf, and included in the employee's Form W-2. State taxes However, you must recover the income taxes before April 1 of the following year. State taxes Sick pay. State taxes   In general, sick pay is any amount you pay under a plan to an employee who is unable to work because of sickness or injury. State taxes These amounts are sometimes paid by a third party, such as an insurance company or an employees' trust. State taxes In either case, these payments are subject to social security, Medicare, and FUTA taxes. State taxes Sick pay becomes exempt from these taxes after the end of 6 calendar months after the calendar month the employee last worked for the employer. State taxes The payments are always subject to federal income tax. State taxes See Publication 15-A for more information. State taxes 6. State taxes Tips Tips your employee receives from customers are generally subject to withholding. State taxes Your employee must report cash tips to you by the 10th of the month after the month the tips are received. State taxes The report should include tips you paid over to the employee for charge customers, tips the employee received directly from customers, and tips received from other employees under any tip-sharing arrangement. State taxes Both directly and indirectly tipped employees must report tips to you. State taxes No report is required for months when tips are less than $20. State taxes Your employee reports the tips on Form 4070, Employee's Report of Tips to Employer, or on a similar statement. State taxes The statement must be signed by the employee and must include: The employee's name, address, and SSN, Your name and address, The month or period the report covers, and The total of tips received during the month or period. State taxes Both Forms 4070 and 4070-A, Employee's Daily Record of Tips, are included in Publication 1244, Employee's Daily Record of Tips and Report to Employer. State taxes You are permitted to establish a system for electronic tip reporting by employees. State taxes See Regulations section 31. State taxes 6053-1(d). State taxes Collecting taxes on tips. State taxes   You must collect income tax, employee social security tax, and employee Medicare tax on the employee's tips. State taxes The withholding rules for withholding an employee's share of Medicare tax on tips also apply to withholding the Additional Medicare Tax once wages and tips exceed $200,000 in the calendar year. State taxes If an employee reports to you in writing $20 or more of tips in a month, the tips are also subject to FUTA tax. State taxes   You can collect these taxes from the employee's wages or from other funds he or she makes available. State taxes See Tips treated as supplemental wages in section 7 for more information. State taxes Stop collecting the employee social security tax when his or her wages and tips for tax year 2014 reach $117,000; collect the income and employee Medicare taxes for the whole year on all wages and tips. State taxes You are responsible for the employer social security tax on wages and tips until the wages (including tips) reach the limit. State taxes You are responsible for the employer Medicare tax for the whole year on all wages and tips. State taxes File Form 941 or Form 944 to report withholding and employment taxes on tips. State taxes Ordering rule. State taxes   If, by the 10th of the month after the month for which you received an employee's report on tips, you do not have enough employee funds available to deduct the employee tax, you no longer have to collect it. State taxes If there are not enough funds available, withhold taxes in the following order. State taxes Withhold on regular wages and other compensation. State taxes Withhold social security and Medicare taxes on tips. State taxes Withhold income tax on tips. State taxes Reporting tips. State taxes   Report tips and any collected and uncollected social security and Medicare taxes on Form W-2 and on Form 941, lines 5b, 5c, and 5d (Form 944, lines 4b, 4c, and 4d). State taxes Report an adjustment on Form 941, line 9 (Form 944, line 6), for the uncollected social security and Medicare taxes. State taxes Enter the amount of uncollected social security tax and Medicare tax on Form W-2, box 12, with codes “A” and “B. State taxes ” Do not include any uncollected Additional Medicare Tax in box 12 of Form W-2. State taxes See section 13 and the General Instructions for Forms W-2 and W-3. State taxes   Revenue Ruling 2012-18 provides guidance for employers regarding social security and Medicare taxes imposed on tips, including information on the reporting of the employer share of social security and Medicare taxes under section 3121(q), the difference between tips and service charges, and the section 45B credit. State taxes See Revenue Ruling 2012-18, 2012-26 I. State taxes R. State taxes B. State taxes 1032, available at www. State taxes irs. State taxes gov/irb/2012-26_IRB/ar07. State taxes html. State taxes Allocated tips. State taxes   If you operate a large food or beverage establishment, you must report allocated tips under certain circumstances. State taxes However, do not withhold income, social security, or Medicare taxes on allocated tips. State taxes   A large food or beverage establishment is one that provides food or beverages for consumption on the premises, where tipping is customary, and where there were normally more than 10 employees on a typical business day during the preceding year. State taxes   The tips may be allocated by one of three methods—hours worked, gross receipts, or good faith agreement. State taxes For information about these allocation methods, including the requirement to file Forms 8027 electronically if 250 or more forms are filed, see the Instructions for Form 8027. State taxes For information on filing Form 8027 electronically with the IRS, see Publication 1239. State taxes Tip Rate Determination and Education Program. State taxes   Employers may participate in the Tip Rate Determination and Education Program. State taxes The program primarily consists of two voluntary agreements developed to improve tip income reporting by helping taxpayers to understand and meet their tip reporting responsibilities. State taxes The two agreements are the Tip Rate Determination Agreement (TRDA) and the Tip Reporting Alternative Commitment (TRAC). State taxes A tip agreement, the Gaming Industry Tip Compliance Agreement (GITCA), is available for the gaming (casino) industry. State taxes To get more information about TRDA and TRAC agreements, see Publication 3144, Tips on Tips. State taxes Additionally, visit IRS. State taxes gov and enter “MSU tips” in the search box to get more information about GITCA, TRDA, or TRAC agreements. State taxes 7. State taxes Supplemental Wages Supplemental wages are wage payments to an employee that are not regular wages. State taxes They include, but are not limited to, bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay, retroactive pay increases, and payments for nondeductible moving expenses. State taxes Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. State taxes How you withhold on supplemental wages depends on whether the supplemental payment is identified as a separate payment from regular wages. State taxes See Regulations section 31. State taxes 3402(g)-1 for additional guidance for wages paid after January 1, 2007. State taxes Also see Revenue Ruling 2008-29, 2008-24 I. State taxes R. State taxes B. State taxes 1149, available at www. State taxes irs. State taxes gov/irb/2008-24_IRB/ar08. State taxes html. State taxes Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages from you during the calendar year. State taxes   Special rules apply to the extent supplemental wages paid to any one employee during the calendar year exceed $1 million. State taxes If a supplemental wage payment, together with other supplemental wage payments made to the employee during the calendar year, exceeds $1 million, the excess is subject to withholding at 39. State taxes 6% (or the highest rate of income tax for the year). State taxes Withhold using the 39. State taxes 6% rate without regard to the employee's Form W-4. State taxes In determining supplemental wages paid to the employee during the year, include payments from all businesses under common control. State taxes For more information, see Treasury Decision 9276, 2006-37 I. State taxes R. State taxes B. State taxes 423, available at www. State taxes irs. State taxes gov/irb/2006-37_IRB/ar09. State taxes html. State taxes Withholding on supplemental wage payments to an employee who does not receive $1 million of supplemental wages during the calendar year. State taxes   If the supplemental wages paid to the employee during the calendar year are less than or equal to $1 million, the following rules apply in determining the amount of income tax to be withheld. State taxes Supplemental wages combined with regular wages. State taxes   If you pay supplemental wages with regular wages but do not specify the amount of each, withhold federal income tax as if the total were a single payment for a regular payroll period. State taxes Supplemental wages identified separately from regular wages. State taxes   If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold income tax from your employee's regular wages. State taxes If you withheld income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages. State taxes Withhold a flat 25% (no other percentage allowed). State taxes If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. State taxes If there are no concurrently paid regular wages, add the supplemental wages to alternatively, either the regular wages paid or to be paid for the current payroll period or the regular wages paid for the preceding payroll period. State taxes Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. State taxes Subtract the tax withheld from the regular wages. State taxes Withhold the remaining tax from the supplemental wages. State taxes If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, calculate the tax on the total, subtract the tax already withheld from the regular wages and the previous supplemental wage payments, and withhold the remaining tax. State taxes If you did not withhold income tax from the employee's regular wages in the current or immediately preceding calendar year, use method 1-b. State taxes This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages. State taxes Regardless of the method you use to withhold income tax on supplemental wages, they are subject to social security, Medicare, and FUTA taxes. State taxes Example 1. State taxes You pay John Peters a base salary on the 1st of each month. State taxes He is single and claims one withholding allowance. State taxes In January he is paid $1,000. State taxes Using the wage bracket tables, you withhold $50 from this amount. State taxes In February, he receives salary of $1,000 plus a commission of $2,000, which you combine with regular wages and do not separately identify. State taxes You figure the withholding based on the total of $3,000. State taxes The correct withholding from the tables is $338. State taxes Example 2. State taxes You pay Sharon Warren a base salary on the 1st of each month. State taxes She is single and claims one allowance. State taxes Her May 1 pay is $2,000. State taxes Using the wage bracket tables, you withhold $188. State taxes On May 14 she receives a bonus of $1,000. State taxes Electing to use supplemental wage withholding method 1-b, you: Add the bonus amount to the amount of wages from the most recent base salary pay date (May 1) ($2,000 + $1,000 = $3,000). State taxes Determine the amount of withholding on the combined $3,000 amount to be $338 using the wage bracket tables. State taxes Subtract the amount withheld from wages on the most recent base salary pay date (May 1) from the combined withholding amount ($338 – $188 = $150). State taxes Withhold $150 from the bonus payment. State taxes Example 3. State taxes The facts are the same as in Example 2, except you elect to use the flat rate method of withholding on the bonus. State taxes You withhold 25% of $1,000, or $250, from Sharon's bonus payment. State taxes Example 4. State taxes The facts are the same as in Example 2, except you elect to pay Sharon a second bonus of $2,000 on May 28. State taxes Using supplemental wage withholding method 1-b, you: Add the first and second bonus amounts to the amount of wages from the most recent base salary pay date (May 1) ($2,000 + $1,000 + $2,000 = $5,000). State taxes Determine the amount of withholding on the combined $5,000 amount to be $781 using the wage bracket tables. State taxes Subtract the amounts withheld from wages on the most recent base salary pay date (May 1) and the amounts withheld from the first bonus payment from the combined withholding amount ($781 – $188 – $150 = $443). State taxes Withhold $443 from the second bonus payment. State taxes Tips treated as supplemental wages. State taxes   Withhold income tax on tips from wages earned by the employee or from other funds the employee makes available. State taxes If an employee receives regular wages and reports tips, figure income tax withholding as if the tips were supplemental wages. State taxes If you have not withheld income tax from the regular wages, add the tips to the regular wages. State taxes Then withhold income tax on the total. State taxes If you withheld income tax from the regular wages, you can withhold on the tips by method 1-a or 1-b discussed earlier in this section under Supplemental wages identified separately from regular wages. State taxes Vacation pay. State taxes   Vacation pay is subject to withholding as if it were a regular wage payment. State taxes When vacation pay is in addition to regular wages for the vacation period, treat it as a supplemental wage payment. State taxes If the vacation pay is for a time longer than your usual payroll period, spread it over the pay periods for which you pay it. State taxes 8. State taxes Payroll Period Your payroll period is a period of service for which you usually pay wages. State taxes When you have a regular payroll period, withhold income tax for that time period even if your employee does not work the full period. State taxes No regular payroll period. State taxes   When you do not have a regular payroll period, withhold the tax as if you paid wages for a daily or miscellaneous payroll period. State taxes Figure the number of days (including Sundays and holidays) in the period covered by the wage payment. State taxes If the wages are unrelated to a specific length of time (for example, commissions paid on completion of a sale), count back the number of days from the payment period to the latest of: The last wage payment made during the same calendar year, The date employment began, if during the same calendar year, or January 1 of the same year. State taxes Employee paid for period less than 1 week. State taxes   When you pay an employee for a period of less than one week, and the employee signs a statement under penalties of perjury indicating he or she is not working for any other employer during the same week for wages subject to withholding, figure withholding based on a weekly payroll period. State taxes If the employee later begins to work for another employer for wages subject to withholding, the employee must notify you within 10 days. State taxes You then figure withholding based on the daily or miscellaneous period. State taxes 9. State taxes Withholding From Employees' Wages Income Tax Withholding Using Form W-4 to figure withholding. State taxes   To know how much federal income tax to withhold from employees' wages, you should have a Form W-4 on file for each employee. State taxes Encourage your employees to file an updated Form W-4 for 2014, especially if they owed taxes or received a large refund when filing their 2013 tax return. State taxes Advise your employees to use the IRS Withholding Calculator on the IRS website at www. State taxes irs. State taxes gov/individuals for help in determining how many withholding allowances to claim on their Forms W-4. State taxes   Ask all new employees to give you a signed Form W-4 when they start work. State taxes Make the form effective with the first wage payment. State taxes If a new employee does not give you a completed Form W-4, withhold income tax as if he or she is single, with no withholding allowances. State taxes Form in Spanish. State taxes   You can provide Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, in place of Form W-4, to your Spanish-speaking employees. State taxes For more information, see Publicación 17(SP), El Impuesto Federal sobre los Ingresos (Para Personas Físicas). State taxes The rules discussed in this section that apply to Form W-4 also apply to Formulario W-4(SP). State taxes Electronic system to receive Form W-4. State taxes   You may establish a system to electronically receive Forms W-4 from your employees. State taxes See Regulations section 31. State taxes 3402(f)(5)-1(c) for more information. State taxes Effective date of Form W-4. State taxes   A Form W-4 remains in effect until the employee gives you a new one. State taxes When you receive a new Form W-4 from an employee, do not adjust withholding for pay periods before the effective date of the new form. State taxes If an employee gives you a Form W-4 that replaces an existing Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4. State taxes For exceptions, see Exemption from federal income tax withholding , IRS review of requested Forms W-4 , and Invalid Forms W-4 , later in this section. State taxes A Form W-4 that makes a change for the next calendar year will not take effect in the current calendar year. State taxes Successor employer. State taxes   If you are a successor employer (see Successor employer , later in this section), secure new Forms W-4 from the transferred employees unless the “Alternative Procedure” in section 5 of Revenue Procedure 2004-53 applies. State taxes See Revenue Procedure 2004-53, 2004-34 I. State taxes R. State taxes B. State taxes 320, available at www. State taxes irs. State taxes gov/irb/2004-34_IRB/ar13. State taxes html. State taxes Completing Form W-4. State taxes   The amount of any federal income tax withholding must be based on marital status and withholding allowances. State taxes Your employees may not base their withholding amounts on a fixed dollar amount or percentage. State taxes However, an employee may specify a dollar amount to be withheld in addition to the amount of withholding based on filing status and withholding allowances claimed on Form W-4. State taxes Employees may claim fewer withholding allowances than they are entitled to claim. State taxes They may wish to claim fewer allowances to ensure they have enough withholding or to offset the tax on other sources of taxable income not subject to withholding. State taxes See Publication 505, Tax Withholding and Estimated Tax, for more information about completing Form W-4. State taxes Along with Form W-4, you may wish to order Publication 505 for use by your employees. State taxes Do not accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. State taxes If they require additional withholding, they should submit a new Form W-4 and, if necessary, pay estimated tax by filing Form 1040-ES, Estimated Tax for Individuals, or by using the Electronic Federal Tax Payment System (EFTPS) to make estimated tax payments. State taxes Exemption from federal income tax withholding. State taxes   Generally, an employee may claim exemption from federal income tax withholding because he or she had no income tax liability last year and expects none this year. State taxes See the Form W-4 instructions for more information. State taxes However, the wages are still subject to social security and Medicare taxes. State taxes See also Invalid Forms W-4 , later in this section. State taxes   A Form W-4 claiming exemption from withholding is effective when it is filed with the employer and only for that calendar year. State taxes To continue to be exempt from withholding in the next calendar year, an employee must give you a new Form W-4 by February 15. State taxes If the employee does not give you a new Form W-4 by February 15, begin withholding based on the last Form W-4 for the employee that did not claim an exemption from withholding or, if one was not filed, then withhold tax as if he or she is single with zero withholding allowances. State taxes If the employee provides a new Form W-4 claiming exemption from withholding on February 16 or later, you may apply it to future wages but do not refund any taxes already withheld. State taxes Withholding income taxes on the wages of nonresident alien employees. State taxes   In general, you must withhold federal income taxes on the wages of nonresident alien employees. State taxes However, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for exceptions to this general rule. State taxes Also see section 3 of Publication 51 (Circular A), Agricultural Employer's Tax Guide, for guidance on H-2A visa workers. State taxes Withholding adjustment for nonresident alien employees. State taxes   For 2014, apply the procedure discussed next to figure the amount of income tax to withhold from the wages of nonresident alien employees performing services within the United States. State taxes Nonresident alien students from India and business apprentices from India are not subject to this procedure. State taxes Instructions. State taxes   To figure how much income tax to withhold from the wages paid to a nonresident alien employee performing services in the United States, use the following steps. State taxes Step 1. State taxes   Add to the wages paid to the nonresident alien employee for the payroll period the amount shown in the chart below for the applicable payroll period. State taxes    Amount to Add to Nonresident Alien Employee's Wages for Calculating Income Tax Withholding Only   Payroll Period Add Additional     Weekly $ 43. State taxes 30     Biweekly 86. State taxes 50     Semimonthly 93. State taxes 80     Monthly 187. State taxes 50     Quarterly 562. State taxes 50     Semiannually 1,125. State taxes 00     Annually 2,250. State taxes 00     Daily or Miscellaneous (each day of the payroll period) 8. State taxes 70   Step 2. State taxes   Use the amount figured in Step 1 and the number of withholding allowances claimed (generally limited to one allowance) to figure income tax withholding. State taxes Determine the value of withholding allowances by multiplying the number of withholding allowances claimed by the appropriate amount from Table 5. State taxes Percentage Method—2014 Amount for One Withholding Allowance shown on page 41. State taxes If you are using the Percentage Method Tables for Income Tax Withholding, provided on pages 43–44, reduce the amount figured in Step 1 by the value of withholding allowances and use that reduced amount to figure the income tax withholding. State taxes If you are using the Wage Bracket Method for Income Tax Withholding, provided on pages 45–64, use the amount figured in Step 1 and the number of withholding allowances to figure income tax withholding. State taxes The amounts from the chart above are added to wages solely for calculating income tax withholding on the wages of the nonresident alien employee. State taxes The amounts from the chart should not be included in any box on the employee's Form W-2 and do not increase the income tax liability of the employee. State taxes Also, the amounts from the chart do not increase the social security tax or Medicare tax liability of the employer or the employee, or the FUTA tax liability of the employer. State taxes This procedure only applies to nonresident alien employees who have wages subject to income tax withholding. State taxes Example. State taxes An employer using the percentage method of withholding pays wages of $500 for a biweekly payroll period to a married nonresident alien employee. State taxes The nonresident alien has properly completed Form W-4, entering marital status as “single” with one withholding allowance and indicating status as a nonresident alien on Form W-4, line 6 (see Nonresident alien employee's Form W-4 , later in this section). State taxes The employer determines the wages to be used in the withholding tables by adding to the $500 amount of wages paid the amount of $86. State taxes 50 from the chart under Step 1 ($586. State taxes 50 total). State taxes The employer then applies the applicable tables to determine the income tax withholding for nonresident aliens (see Step 2 ). State taxes Reminder: If you use the Percentage Method Tables for Income Tax Withholding, reduce the amount figured in Step 1 by the value of withholding allowances and use that reduced amount to figure income tax withholding. State taxes The $86. State taxes 50 added to wages for calculating income tax withholding is not reported on Form W-2, and does not increase the income tax liability of the employee. State taxes Also, the $86. State taxes 50 added to wages does not affect the social security tax or Medicare tax liability of the employer or the employee, or the FUTA tax liability of the employer. State taxes Supplemental wage payment. State taxes   This procedure for determining the amount of income tax withholding does not apply to a supplemental wage payment (see section 7) if the 39. State taxes 6% mandatory flat rate withholding applies or if the 25% optional flat rate withholding is being used to calculate income tax withholding on the supplemental wage payment. State taxes Nonresident alien employee's Form W-4. State taxes   When completing Forms W-4, nonresident aliens are required to: Not claim exemption from income tax withholding, Request withholding as if they are single, regardless of their actual marital status, Claim only one allowance (if the nonresident alien is a resident of Canada, Mexico, or South Korea, or a student or business apprentice from India, he or she may claim more than one allowance), and Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4. State taxes   If you maintain an electronic Form W-4 system, you should provide a field for nonresident aliens to enter nonresident alien status in lieu of writing “Nonresident Alien” or “NRA” above the dotted line on line 6. State taxes A nonresident alien employee may request additional withholding at his or her option for other purposes, although such additions should not be necessary for withholding to cover federal income tax liability related to employment. State taxes Form 8233. State taxes   If a nonresident alien employee claims a tax treaty exemption from withholding, the employee must submit Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with respect to the income exempt under the treaty, instead of Form W-4. State taxes See Publication 515 for details. State taxes IRS review of requested Forms W-4. State taxes   When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. State taxes You may also be directed to send certain Forms W-4 to the IRS. State taxes You may receive a notice from the IRS requiring you to submit a copy of Form W-4 for one or more of your named employees. State taxes Send the requested copy or copies of Form W-4 to the IRS at the address provided and in the manner directed by the notice. State taxes The IRS may also require you to submit copies of Form W-4 to the IRS as directed by Treasury Decision 9337, 2007-35 I. State taxes R. State taxes B. State taxes 455, which is available at www. State taxes irs. State taxes gov/irb/2007-35_IRB/ar10. State taxes html. State taxes When we refer to Form W-4, the same rules apply to Formulario W-4(SP), its Spanish translation. State taxes After submitting a copy of a requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4 , later in this section). State taxes However, if the IRS later notifies you in writing the employee is not entitled to claim exemption from withholding or a claimed number of withholding allowances, withhold federal income tax based on the effective date, marital status, and maximum number of withholding allowances specified in the IRS notice (commonly referred to as a "lock-in letter
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The State Taxes

State taxes Index A Absence, temporary, Temporary absence from work. State taxes , Temporary absence from work. State taxes Accountable plans, Accountable Plans Address, change of, Reminders Adequate accounting, Adequate accounting. State taxes Armed Forces, Retirees, survivors, and Armed Forces members. State taxes , Members of the Armed Forces Distance test, special rule, Armed Forces. State taxes Form 3903, how to complete, How to complete Form 3903 for members of the Armed Forces. State taxes Services or reimbursements provided by government, Services or reimbursements provided by government. State taxes Spouse and dependents, Spouse and dependents. State taxes Assistance (see Tax help) C Change of address, Reminders Closely related in place, Closely related in place. State taxes Closely related in time, Closely related in time. State taxes D Deductible moving expenses, Deductible Moving Expenses, Moving expenses allocable to excluded foreign income. State taxes Household goods, Household goods and personal effects. State taxes Moving to and from storage, Moving goods and effects to and from storage. State taxes Member of your household, Member of your household. State taxes Moves in U. State taxes S. State taxes , Moves to Locations in the United States Moves outside U. State taxes S. State taxes , Moves to Locations Outside the United States Moving expenses allocable to excluded foreign income, Moving expenses allocable to excluded foreign income. State taxes Personal effects, Household goods and personal effects. State taxes Moving to and from storage, Moving goods and effects to and from storage. State taxes Reasonable expenses, Reasonable expenses. State taxes Storage expenses, Storage expenses. State taxes , Storage expenses. State taxes Travel by car, Travel by car. State taxes Travel expenses, Travel expenses. State taxes Distance test, Distance Test Armed Forces, special rule, Armed Forces. State taxes First job, First job or return to full-time work. State taxes Illustration of (Figure A), Main job location, Main job location. State taxes Return to full-time work, First job or return to full-time work. State taxes Worksheet 1, Distance Test E Employees Time test for, Time Test for Employees Estimated tax, Tax Withholding and Estimated Tax, Estimated tax. State taxes Excess reimbursements, Excess reimbursement. State taxes Excluded foreign income Moving expenses allocable to, Moving expenses allocable to excluded foreign income. State taxes F Figures (see Tables and figures) First job, First job or return to full-time work. State taxes Form 1040 Moving expense deduction, Where to deduct. State taxes Form 3903 Armed Forces members, how to complete, How to complete Form 3903 for members of the Armed Forces. State taxes Completing form, Completing Form 3903. State taxes Moving expense deduction calculation, Form 3903 Form W-2 Reimbursements, You meet accountable plan rules. State taxes , Expenses deducted in earlier year. State taxes Government provided for Armed Forces members, Services or reimbursements provided by government. State taxes Form W-4 Withholding allowance, Amount of income tax withheld. State taxes Free tax services, Free help with your tax return. State taxes Full-time work, defined, Full-time work. State taxes H Help (see Tax help) Home, defined, Home defined. State taxes Household goods, Household goods and personal effects. State taxes Moving to and from storage, Moving goods and effects to and from storage. State taxes I Important reminders, Reminders J Joint returns, Joint Return M Main job location Defined, Main job location. State taxes More than one job, More than one job. State taxes Union members, Union members. State taxes Member of household, Member of your household. State taxes Members of Armed Forces (see Armed Forces) Mileage rate, What's New Missing children, photographs of, Reminders Moves In U. State taxes S. State taxes , Moves to Locations in the United States Outside U. State taxes S. State taxes , Moves to Locations Outside the United States To and from storage, Moving goods and effects to and from storage. State taxes Moving expenses, Who Can Deduct Moving Expenses, Deductible Moving Expenses (see also Deductible moving expenses) (see also Who can deduct) N Nonaccountable plans, Nonaccountable Plans Nondeductible expenses, Nondeductible Expenses Reimbursements of, Reimbursement of nondeductible expenses. State taxes , Reimbursement for deductible and nondeductible expenses. State taxes P Permanently retired, defined, Retirees who were working abroad. State taxes Personal effects, Household goods and personal effects. State taxes Moving to and from storage, Moving goods and effects to and from storage. State taxes Publications (see Tax help) R Reasonable expenses, Reasonable expenses. State taxes Reasonable period of time, Reasonable period of time. State taxes Reimbursements, Reimbursements, Estimated tax. State taxes Accountable plans, Accountable Plans Adequate accounting, Adequate accounting. State taxes Armed Forces members, Services or reimbursements provided by government. State taxes Estimated tax, Estimated tax. State taxes Excess, Excess reimbursement. State taxes Excluded from income, Reimbursements excluded from income. State taxes Included in income, Reimbursements included in income. State taxes Nonaccountable plans, Nonaccountable Plans Nondeductible expenses, Reimbursement of nondeductible expenses. State taxes , Reimbursement for deductible and nondeductible expenses. State taxes Reasonable period of time, Reasonable period of time. State taxes Reporting moving expenses and reimbursements (Table 2), How and When To Report Types of plans, Types of Reimbursement Plans Reporting expenses, How and When To Report Expenses equal to or less than reimbursement, Expenses equal to or less than reimbursement. State taxes Expenses greater than reimbursement, Expenses greater than reimbursement. State taxes Form 3903, deduction calculation, Form 3903 Moving expenses and reimbursements (Table 2), How and When To Report Retirees who move to U. State taxes S. State taxes , Retirees, survivors, and Armed Forces members. State taxes , Retirees or survivors. State taxes Permanently retired, defined, Retirees who were working abroad. State taxes Return to full-time work, First job or return to full-time work. State taxes S Seasonal trade or business, Seasonal trade or business. State taxes Seasonal work, Seasonal work. State taxes Self-employed persons Time test, Time Test for Self-Employed Persons, Self-employment. State taxes Table 1, Time Test for Employees Spouse of Armed Forces member, Spouse and dependents. State taxes Standard mileage rate, What's New Storage expenses, Storage expenses. State taxes , Storage expenses. State taxes Survivors who move to U. State taxes S. State taxes , Retirees, survivors, and Armed Forces members. State taxes , Retirees or survivors. State taxes , Retirees or Survivors Who Move to the United States, Survivors of decedents who were working abroad. State taxes When move begins, When a move begins. State taxes T Tables and figures Distance test, Distance Test Nonmilitary move within U. State taxes S. State taxes , can you deduct expenses (Figure B), Seasonal work. State taxes Reporting moving expenses and reimbursements (Table 2), How and When To Report Time test, satisfying for employees and self-employed persons (Table 1), Time Test for Employees Tax help, How To Get Tax Help Temporary absence, Temporary absence from work. State taxes , Temporary absence from work. State taxes Time test, Time Test Employees, Time Test for Employees Exceptions to, Exceptions to the Time Test Full-time work, Full-time work. State taxes Joint return, Joint Return Not yet met, Time Test Not Yet Met Satisfying for employees and self-employed persons (Table 1), Time Test for Employees Seasonal trade or business, Seasonal trade or business. State taxes Seasonal work, Seasonal work. State taxes Self-employed persons, Time Test for Self-Employed Persons, Self-employment. State taxes Temporary absence from work, Temporary absence from work. State taxes , Temporary absence from work. State taxes Travel by car, Travel by car. State taxes Travel expenses, Travel expenses. State taxes TTY/TDD information, How To Get Tax Help U Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 Unions Main job location of member, Union members. State taxes W When to deduct expenses, When To Deduct Expenses, Illustrated Example Choosing when to deduct, Choosing when to deduct. State taxes Expenses not reimbursed, Expenses not reimbursed. State taxes Expenses reimbursed, Expenses reimbursed. State taxes How to make choice, How to make the choice. State taxes Who can deduct, Who Can Deduct Moving Expenses, When a move begins. State taxes Armed Forces, members of, Retirees, survivors, and Armed Forces members. State taxes Distance test, Distance Test Nonmilitary move within U. State taxes S. State taxes (Figure B), Seasonal work. State taxes Related to start of work, Move Related to Start of Work Retirees who move to U. State taxes S. State taxes , Retirees, survivors, and Armed Forces members. State taxes , Retirees or survivors. State taxes , Retirees or Survivors Who Move to the United States Survivors who move to U. State taxes S. State taxes , Retirees, survivors, and Armed Forces members. State taxes , Retirees or survivors. State taxes , Retirees or Survivors Who Move to the United States, Survivors of decedents who were working abroad. State taxes Time test, Time Test Withholding, Tax Withholding and Estimated Tax Worksheet Distance test (Worksheet 1), Distance Test Prev  Up     Home   More Online Publications