Multi-State Employee Tax Withholding
Learn about state taxes, withholding liability, resident vs nonresident status, reciprocal agreements, and reporting wages for multistate employees. Ideal for finance, accounting, and tax professionals.
What you’ll learn
- Explore the various taxes required by different states including income tax, disability insurance and the plethora of local taxes that may apply to wages paid.
- Discover how to determine state withholding liability.
- Recognize the difference between a resident and a nonresident of a state and how that affects state income tax withholding.
- Explore which states require the use of their own Withholding Allowance Certificate and which state allows either theirs or the Form W-4 to be used and which states do not have a form.
- Identify which states follow the Internal Revenue Code and which version.
- Explore the requirements for reporting wages for multistate employees on Form W-2.
- Identify the four factors that are used to determine state unemployment insurance liability.
- Identify the states that have reciprocal agreements and explore how those agreements affect taxation.
This course discusses the handling of state taxes when an employee lives in one state and works in another, or works in two or more states simultaneously.
We start with what taxes to be on the lookout for including state income tax, disability insurance, unemployment insurance, and the various local taxes. From this point we discuss the conformity with the Internal Revenue Code for the states as well as the proper handling of supplemental taxation. Working with these basics we then discuss how to determine if the company is an employer in the state and therefore required to withhold or pay taxes.
Next we work through the definitions of resident and nonresident and how that affects the withholding or payment of taxes by the company. But the proper withholding of taxes also depends on whether or not there are any agreements between the various states in question so at this point we will begin to discuss reciprocal agreements and how they affect the withholding of state income tax. To ensure proper tax withholding we briefly discuss employee withholding certificates or what is commonly known as the Form W-4 equivalent for the states.
This discussion also includes other forms that would need to be completed including nonresident forms and military spouse exemption forms. From this point we concentrate on how to determine the taxable wages for each date if the employee works in two or more states. We discuss the three methods available for the allocation of wages. Withholding of taxes is not the only compliance issue when it comes to multistate employees because it is imperative that the employees’ wages be reported correctly.
We work through examples of how to report on Form W-2 for an employee who lives in one state and works in three separate states. Income tax withholding however is not the only tax that needs to be determined when handling multistate taxation, the state unemployment insurance must also be determined. We conclude the course with a discussion of how to determine which state to pay SUI or state unemployment insurance to when an employee lives and works in two or more states.
Who this course is for:
- Anyone interested in finance, accounting, taxes or related fields.
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