Fundamentals and Best Practices for Handling Taxation of Multistate Employees
Please see below for additional instructions and information regarding this program.
This webinar discusses the handling of state taxes, wage and hour law, and garnishments when an employee lives in one state and works in another, or works in two or more states simultaneously. Includes determining liability as an employer, reciprocal agreements, resident and nonresident taxation, Form W-4 equivalents, state unemployment insurance, wage and hour law requirements and garnishment withholding.
Complying with the tax code, tax withholding requirements and deposit schedules for the IRS and one state is complicated enough. But for the multistate employer, multiply this by 5, 10, or 20 or even 50 and it can turn into a payroll department's worse nightmare. Not only are there more rules and regulations to comply with, but the penalties can multiply if mistakes are made.
All payroll professional must know the taxation and reporting requirements for all states where the company has employees working or in the case of reciprocal agreements, living. But for the payroll department that must handle employees who work in multiple states simultaneously or who travel to different states at different times for the employer the taxing and reporting requirements can become an arduous task at best and at worse a total fiasco. Questions must be answered, sometimes on an employee by employee or even tougher on a case by case basis for an individual employee. Which state income tax is withheld? Does it matter if the employee is a resident or a nonresident of the state? Are there any reciprocal agreements in effect that must be taken into consideration? Which state do we pay the SUI to and what happens if one of the states has disability insurance but the other doesn’t? Or worse yet what if both states require disability insurance to be deducted?
Some employers may even think they have solved this logistics and regulations nightmare by simply withholding the income for and paying the SUI over to the state where the employee lives. And this might appear to be good in theory but in actual practice it is an audit disaster waiting to happen and happen it will. Only if the employee is performing some work in the state in which they live would the employer have a hope of passing the audit for paying the SUI. But when it comes to state income tax audits it won’t even come close. Most states require state income tax withholding for wages paid for work performed in the state. The only ground given in this area is usually for reciprocal agreements and nonresident employees who may be in the state for a limited time. No, the only way to determine the proper taxation for multiple state employees is by researching and apply the requirements for each state. And this is where this webinar will help. This webinar will cover the intricacies and requirements that must be addressed by the multistate employer.
Also, an employer with employees working in multiple states doesn’t just have taxes to deal with. Now there are also wage and hour laws to contend with! In a different (read: higher) minimum wage? Are the overtime rules different? Would that employee still be exempt?
Areas covered in this webinar:
•How to determine state withholding liability
•Who is a resident
•How reciprocal agreements affect taxation of wages
•Resident and nonresident taxation policies
•The four factor test for state unemployment insurance
•Income and unemployment taxation of Fringe benefits
•What wage and hour laws must be followed
•How to handle income and unemployment insurance taxation for employees working in multiple states
•How working in multiple states could affect withholding for garnishments
•Withholding requirements when an employee is in a state temporarily
•Which states require the use of their own Withholding Allowance Certificate, which states allow either theirs or the Form W-4, and which states don’t have a form
•Reporting wages for multistate employees on Form W-2
By the end of this webinar the attendee will have:
•Gained knowledge of the requirements under wage and hour laws when an employee works in two or more states
•Learned how to handle garnishment withholding for a multistate employee
•Understand how to determine state withholding liability and how it is affected by the residency of the employee
•Gained knowledge in reciprocal agreements and the difference between taxing residents on their worldwide income and nonresidents on the income earned within the state
•A better knowledge of the three calculation methods permitted to determine taxable wages for state income tax including the volume of business ratio method and the time basis method
•A clear understanding of the basics of the four factor test used to determine the payment of state unemployment insurance
- Our Focus For Today 00:00:45
- Our Example For Today 00:06:27
- Are You an Employer? 00:07:29
- Are You an Employer? (cont’d) 00:07:38
- State Income Tax 00:10:49
- Examples of Local Employee Withholding Taxes 00:13:16
- Examples of Local Employer Taxes 00:15:34
- Status of IRC Conformity 00:16:36
- 2020 Supplemental Taxation Methods by State 00:19:18
- Determining State Withholding Liability - Are You an Employer? 00:21:01
- In Other Words 00:22:44
- To Determine Withholding 00:24:35
- Making the Determination on Taxation 00:25:14
- Resident vs. Nonresident 00:26:58
- Definition of Resident 00:29:34
- Example: Withholding in NJ for SIT 00:30:18
- Are You an Employer in NY for SIT or City Income Tax? 00:31:17
- Are You an Employer in CT for SIT? 00:32:01
- Are You an Employer in NJ for SUI/TDI? 00:32:32
- Are You an Employer in NY for TDI? 00:34:22
- Are There Any Local Taxes? 00:35:36
- Telecommuting 00:36:36
- Telecommuting (cont’d) 00:38:32
- Reciprocal Agreements 00:43:56
- Reciprocal Agreements (cont’d) 00:44:09
- Reciprocal Agreements Chart 00:44:55
- For Example 00:45:33
- Form W-220 00:46:58
- Wisconsin Requires 00:47:48
- Arizona Example 00:49:13
- Arizona 00:50:04
- Arizona (cont’d) 00:50:52
- Arizona Example That Meets the Criteria for Not Withholding AZ SIT 00:52
- Another Example: Nebraska 00:52:33
- Connecticut Example 00:54:21
- Maine Example 00:54:36
- Maine Example (cont’d) 00:55:00
- The Forms 01:00:44
- Employee Withholding Certificates - The States 01:01:13
- Examples 01:01:51
- Form W-4 Equivalents 01:02:35
- Possible Other Forms on State Level 01:06:32
- Example of Exempt Form for Military Spouse 01:06:52
- Example of Nonresident Form-CT 01:09:26
- So What Do We Need for Our HR Manager? 01:10:03
- Taxable Wages 01:11:27
- Guidelines - Employees Working in 2 or More States 01:12:00
- Volume of Business Ratio 01:12:52
- Time Basis 01:15:57
- Mileage Basis 01:19:03
- Reporting 01:19:15
- Our HR Manager Example 01:19:28
- Form W-2 Reporting Resident of NJ 01;20:08
- For NJ We Would See 01:20:24
- NY Example - Nonresident 01:20:41
- For NY We Would See 01:21:52
- Connecticut Nonresident Example 01:22:33
- For CT We Would See 01:22:42
- HR Manager’s Form W-2 01:22:49
- State Unemployment Insurance 01:23:13
- Four Factor Test for SUI 01:23:25
- Four Factor Test for SUI (cont’d) 01:23:35
- Localization of Services 01:24:00
- Example 01:24:14
- Base of Operations 01:24:42
- Example 01:25:03
- Place of Direction or Control 01:26:04
- Example 01:26:08
- Place of Residence 01:26:33
- Example 01:27:19
- Reciprocal Coverage Agreements 01:27:46
- Example 01:29:41
- And Finally 01:30:40
- Common Mistakes 01:30:46
- Wage and Hour Law 01:31:18
- Minimum Wage 01:31:28
- Minimum Wage By State 01:31:36
- Current State Minimum Wages as of 01-01-2020 01:32:04
- Tip Credit Against Minimum Wage 01:34:33
- Tip Credit Against Minimum Wage Map 01:35:06
- Meals and Lodging Credits Against Minimum Wage 01:35:37
- Meals and Lodging Credits Against Minimum Wage Map 01:35:44
- State Requirements 01:36:23
- Mandatory Paid Sick Leave 01:37:03
- Mandatory Sick Leave 01:38:08
- Meals and Rest Periods 01:39:59
- Meals and Rest Periods (cont’d) 01:40:06
- Meal Period by State 01:40:16
- Rest Periods 01:40:29
- Frequency of Wage Payments 01:40:45
- Frequency of Wage Payments (cont’d) 01:40:49
- Permitted Payroll Frequencies 01:41:03
- Max Period Permitted for Nonexempt Employees for Private Sectors 01:41:12
- Exempt Employee Regs 01:41:30
- Where the States Stand 01:41:35
- Where the States Stand - Current Rules for EAP Employees 01:41:57
- Where the States Stand - Current Rules for EAP Employees Chart 01:42:12
- Follow FLSA Rules Chart 01:42:39
- For Example: Washington - Effective 07-01-2020 01:43:40
- Wage Garnishment 01:43:52
- Creditor Garnishment Limits by State 01:43:55
- States with Unique State Rules 01:44:22
- Limits on Child Support 01:45:04
- Child Support Limits by State 01:45:25
- Useful Links 01:45:32
- Attendee Questions 01:46:06
- Speaker Closing 01:46:24
- Presentation Closing 01:47:29
- Arizona Form A-4 01:01:54
- California DE4 Form 01:02:02
- Form CT-W4 01:09:43
- Form CT-W4NA 01:10:27
- Form IT-2104 01:10:19
- Form W-2 01:19:22
- Form W-220 00:46:58
- Form W-4 01:00:46
- Garnishments 00:05:14
- Internal Revenue Code (IRC) 00:16:51
- Nexus 00:22:48, 00:25:22
- Payroll Expense Tax 00:16:17
- Reciprocal Agreements 00:05:27, 00:26:43, 00:43:58
Arizona Form A-4: Arizona law requires your employer to withhold Arizona income tax from your wages for work done in Arizona. The amount withheld is applied to your Arizona income tax due when you file your tax return. The amount withheld is a percentage of your gross taxable wages from every paycheck. You may also have your employer withhold an extra amount from each paycheck.
California DE4 Form: This certificate, DE 4, is for California Personal Income Tax (PIT) withholding purposes only. The DE4 is used to compute the amount of taxes to be withheld from your wages, by your employer, to accurately reflect your state tax withholding obligation.
Form CT-W4: Employee's Withholding Certificate, provides your employer with the necessary information to withhold the correct amount of Connecticut income tax from your wages to ensure that you will not be underwithheld or overwithheld.
Form CT-W4NA: Form CT-W4NA, in addition to Form CT-W4, Employee's Withholding Certificate, will assist your employer in withholding the correct amount of Connecticut income tax from your wages for services performed in Connecticut.
Form IT-2104: This certificate, Form IT-2104, is completed by an employee and given to the employer to instruct the employer how much New York State (and New York City and Yonkers) tax to withhold from the employee's pay. The more allowances claimed, the lower the amount of tax withheld.
Form W-2: Form W-2 is an Internal Revenue Service tax form used in the United States to report wages paid to employees and the taxes withheld from them. Employers must complete a Form W-2 for each employee to whom they pay a salary, wage, or other compensation as part of the employment relationship. - Wikipedia (https://en.wikipedia.org/)
Form W-220: NONRESIDENT EMPLOYEE’S WITHHOLDING RECIPROCITY DECLARATION - THIS DECLARATION MAY ONLY BE USED BY A NONRESIDENT WORKING IN WISCONSIN WHO IS A LEGAL RESIDENT OF ILLINOIS, INDIANA, KENTUCKY, OR MICHIGAN.
Form W-4: Form W-4 (otherwise known as the "Employee's Withholding Allowance Certificate") is an Internal Revenue Service (IRS) tax form completed by an employee in the United States to indicate his or her tax situation (exemptions, status, etc.) to the employer.
Garnishment: A legal summons or warning concerning the attachment of property to satisfy a debt
Internal Revenue Code (IRC): The Internal Revenue Code, formally the Internal Revenue Code of 1986, is the domestic portion of federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code.
Nexus: The term nexus is used in tax law to describe a situation in which a business has a "nexus" or tax presence in a particular state or states. A nexus is basically a connection between a taxing jurisdiction, like a state, and an entity like a business that must collect or pay the tax.
Payroll Expense Tax : Payroll expense is the amount of salaries and wages paid to employees in exchange for services rendered by them to a business. The term may also be assumed to include the cost of all related payroll taxes, such as the employer's matching payments for Medicare and social security.
Reciprocal Agreements: A reciprocal agreement, also called reciprocity, is an agreement between two states that allows residents of one state to request exemption from tax withholding in the other (reciprocal) state. This can save you the trouble of having to file multiple state returns.
Vicki M. Lambert, CPP, is President and Academic Director of The Payroll Advisor™, a firm specializing in payroll education and training. The company offers a payroll news service which keeps payroll professionals up-to-date on the latest rules and regulations.With over 35 years of hands-on experience in all facets of payroll functions as well as over 20 years as a trainer and author, Ms. Lambert has become the most sought-after and respected voice in the practice and management of payroll issue... View Full Profile
Aurora Training Advantage is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.
For more information regarding administrative policies such as complaint and refund, and cancellation please contact our offices at 407-542-4317 or firstname.lastname@example.org.
You must answer all questions during the webinar, view the recording completely and pass the test at the end with 70% correct answers to receive CPE credit.
This program has been approved for credit hours through the HR Certification Institute. For more information about certification or recertification, please visit the HR Certification Institute website at www.hrci.org.
Aurora Training Advantage is an approved provider through the American Payroll Association. To receive credit through the American Payroll Association for this program you MUST attend the program in its entirety.
Aurora Training Advantage is recognized by SHRM to offer Professional Development Credits (PDCs) for the SHRM-CPSM or SHRM-SCPSM. For more information about certification or recertification, please visit www.shrmcertification.org.