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  • Some localities use local income tax to fund schools.

    What Is Local Income Tax?

    posted by Mike Kappel
    Newest Article
  • What Is Local Income Tax?

    Cities, counties, local governments, and school districts in 12 U.S. states impose a local income tax. This is in addition to state tax. You are required to withhold local income tax from employee wages as part of your tax withholding obligations. While most states impose a local income tax as a tax on wages, some levy it as a percentage of the state income tax.

    The 12 states that charge local income tax are:

    How Much Does an Employee Cost? Find Out on This Infographic.

    The greatest expense for small business owners is often payroll. Did you know that when you hire employees, you have to pay more than just their wages?

    Before you add to your staff, it is important for you to understand the true cost of hiring a new employee. An employee costs more than their salary or hourly wage. You also have to pay employer payroll taxes. You might have to pay portions of fringe benefits. And you might provide small extras for your employees, such as free coffee or snacks.

    So, can you accurately answer the question, “How much does an employee cost?”

    What does this infographic include?

    What to Do If an Employee’s Form W-2 Comes Back “Undeliverable”

    You are required to send a W-2 form to employees by January 31 for wages they earned the previous year. But, what happens when you find a W-2 returned undeliverable?

    Below are the steps you can take.

    Simple Guide to Payroll Tax Contribution

    It is already difficult enough to run your payroll program. On top of that, you have to figure out all the payroll tax liabilities.

    At Patriot, we want you to succeed. That’s why we created a free whitepaper that explains payroll taxes.

    What you will find in our free payroll tax whitepaper

    How the New York Women’s Equality Act Affects Your Small Business

    On Jan. 19, 2016, the New York Women’s Equality Act went into effect. The Act, which protects women’s equality, addresses some employment issues. If you are an employer located in New York state, you should examine the law. You might need to revisit your business’s employment policies.

    Below are the parts of the Act that might affect your small business.

    What Is Schedule A (Form 940)?

    States must always have significant funds on hand for the unemployment insurance benefits that they may need to pay out during the course of the year.  If a state does not have the funds, they must take out a loan from the federal government to meet its unemployment obligations.

    If a state has not repaid its loan after two years, then the employers in that state face a higher FUTA (Federal Unemployment Tax Act) rate when they complete Schedule A (Form 940).  The higher FUTA rate is due to the fact that the state is now considered a credit reduction state. The higher rate helps the state reduce its line of credit.

    To calculate your FUTA tax, employers must complete Schedule A (Form 940), Multi-state Employer and Credit Reduction Information, a worksheet listing the applicable tax rates in each state.

    What Are FUTA Credit Reduction States?

    In order to pay unemployment benefits, states require that employers pay a state unemployment tax or insurance. If a state cannot afford to pay unemployment benefits with the money generated from the tax, the state has to take out a federal loan.

    FUTA taxes

    The Federal Unemployment Tax Act (FUTA) is a payroll tax that helps fund the federal unemployment loans. Most employers have to pay FUTA tax based on their employees’ wages.

    The W-2 Form: What You Need to Know

    You are familiar with the Wage and Tax Statement (W-2 form) as the form you send to the IRS when you file your personal income taxes. As an employer, the W-2 form (accompanied by Form W-3) is your report to the government about the taxes you’ve withheld for each individual employee.

    The federal government relies on W-2 forms for an accurate record of each taxpayer’s wages/salary. The W-2 includes not only wages earned, but also tips received and other forms of compensation. Equally important, the W-2

    Which States Require an EITC Notice or IRS Notice 797 for Employees?

    Several states require that employers give tax notices to employees regarding their possible eligibility for the Earned Income Tax Credit (EITC, or EIC).

    EITC is a benefit for working people who make low to moderate income. The credit reduces these individuals’ tax liabilities. EITC is available as a lump sum when employees file their income tax return each year.

    What Is Bonus Pay?

    When you first start your business and hire employees, you might be worried about making payroll each pay period. But, once your business is firmly planted, you might be able to give more to your employees. One thing you might want to offer employees is bonus pay.

    Bonus pay is a type of supplemental compensation that you give to your employees. You give bonus pay over the existing base wages or salary that you give your employees.

    What Is Local Income Tax?

    Cities, counties, local governments, and school districts in 12 U.S. states impose a local income tax. This is in addition to state tax. You are required to withhold local income tax from employee wages as part of your tax withholding obligations. While most states impose a local income tax as a tax on wages, some levy it as a percentage of the state income tax.

    The 12 states that charge local income tax are:

    How Much Does an Employee Cost? Find Out on This Infographic.

    The greatest expense for small business owners is often payroll. Did you know that when you hire employees, you have to pay more than just their wages?

    Before you add to your staff, it is important for you to understand the true cost of hiring a new employee. An employee costs more than their salary or hourly wage. You also have to pay employer payroll taxes. You might have to pay portions of fringe benefits. And you might provide small extras for your employees, such as free coffee or snacks.

    So, can you accurately answer the question, “How much does an employee cost?”

    What does this infographic include?

    What to Do If an Employee’s Form W-2 Comes Back “Undeliverable”

    You are required to send a W-2 form to employees by January 31 for wages they earned the previous year. But, what happens when you find a W-2 returned undeliverable?

    Below are the steps you can take.

    Simple Guide to Payroll Tax Contribution

    It is already difficult enough to run your payroll program. On top of that, you have to figure out all the payroll tax liabilities.

    At Patriot, we want you to succeed. That’s why we created a free whitepaper that explains payroll taxes.

    What you will find in our free payroll tax whitepaper

    How the New York Women’s Equality Act Affects Your Small Business

    On Jan. 19, 2016, the New York Women’s Equality Act went into effect. The Act, which protects women’s equality, addresses some employment issues. If you are an employer located in New York state, you should examine the law. You might need to revisit your business’s employment policies.

    Below are the parts of the Act that might affect your small business.

    What Is Schedule A (Form 940)?

    States must always have significant funds on hand for the unemployment insurance benefits that they may need to pay out during the course of the year.  If a state does not have the funds, they must take out a loan from the federal government to meet its unemployment obligations.

    If a state has not repaid its loan after two years, then the employers in that state face a higher FUTA (Federal Unemployment Tax Act) rate when they complete Schedule A (Form 940).  The higher FUTA rate is due to the fact that the state is now considered a credit reduction state. The higher rate helps the state reduce its line of credit.

    To calculate your FUTA tax, employers must complete Schedule A (Form 940), Multi-state Employer and Credit Reduction Information, a worksheet listing the applicable tax rates in each state.

    What Are FUTA Credit Reduction States?

    In order to pay unemployment benefits, states require that employers pay a state unemployment tax or insurance. If a state cannot afford to pay unemployment benefits with the money generated from the tax, the state has to take out a federal loan.

    FUTA taxes

    The Federal Unemployment Tax Act (FUTA) is a payroll tax that helps fund the federal unemployment loans. Most employers have to pay FUTA tax based on their employees’ wages.

    The W-2 Form: What You Need to Know

    You are familiar with the Wage and Tax Statement (W-2 form) as the form you send to the IRS when you file your personal income taxes. As an employer, the W-2 form (accompanied by Form W-3) is your report to the government about the taxes you’ve withheld for each individual employee.

    The federal government relies on W-2 forms for an accurate record of each taxpayer’s wages/salary. The W-2 includes not only wages earned, but also tips received and other forms of compensation. Equally important, the W-2

    Which States Require an EITC Notice or IRS Notice 797 for Employees?

    Several states require that employers give tax notices to employees regarding their possible eligibility for the Earned Income Tax Credit (EITC, or EIC).

    EITC is a benefit for working people who make low to moderate income. The credit reduces these individuals’ tax liabilities. EITC is available as a lump sum when employees file their income tax return each year.

    What Is Bonus Pay?

    When you first start your business and hire employees, you might be worried about making payroll each pay period. But, once your business is firmly planted, you might be able to give more to your employees. One thing you might want to offer employees is bonus pay.

    Bonus pay is a type of supplemental compensation that you give to your employees. You give bonus pay over the existing base wages or salary that you give your employees.