Who is an employer ?

An employer is any entity for whom a person performs a service as an employee. An employer may be an individual, corporation, limited liability company, partnership, estate, trust, association, or joint venture. Religious, educational, charitable, government, and social organizations also qualify as employers.

Who is an employee ?

An employee is a person who performs services for an entity under the direction and control of that entity. The relationship of employee/employer exists when the person for whom services are performed controls wages and terms of employment.

What are taxable wages ?

Taxable wages include all compensation to an employee for services performed. Payments include salaries, tips, commissions, bonuses, fees, or any other item of value paid to an individual for services performed as an employee.

EMPLOYER RESPONSIBILITIES AND FILING REQUIREMENTS :

Registration of Employees :

To obtain registration, employer should make an application in specified form to the concerned state department. The relevent state department in turn would make necessary inquiry and after they are satisfied, the employer would receive notification of their assigned withholding number and filing frequency from the state department. A coupon book containing withholding tax forms should be received within four to six weeks after notification of the assigned number.

The amount of tax to withhold is based on wages, number of allowances, and additional withholding amounts as indicated on Employee's Withholding Allowance Certificate or Withholding Certificate for Pension and Annuity Payments. Employers can use the tax tables or the percentage method to determine the amount of tax to withhold.

How is Withholding determined ?

The amount of income tax withholding depends on :

• the employee's marital status,
• the number of withholding allowances claimed by the employee,
• any additional amount the employee wants to withhold, and
• any exemptions from withholding that the employee claims.

What is the difference between the tax tables and the percentage method ?

The tax tables calculate withholding tax based on an income range. Applicable standard deductions and personal allowances are factored into the tables. The percentage method calculates withholding tax based on a specific dollar amount. Taxable income is derived by reducing gross wages by the appropriate deductions. For this reason, tax amounts derived from one method will slightly differ from those derived from the other.