Wage Withholding Woes: Payroll Prepares for a New Year as States Release 2015 Information


The end of the year is an eventful time in payroll, and 2014 is no exception, with income tax withholding across the states seeing several changes in the coming year. Three states are decreasing their flat withholding rates, a change that affects not only withholding on wages but also on supplemental pay, such as bonuses.

Indiana’s rate falls to 3.3 percent from 3.4 percent, Illinois’s rate falls to 3.75 percent from 5 percent, and North Carolina’s rate falls to 5.75 from 5.8 percent.

Along with its income tax rate, Illinois also changed the due date for filing Form W-2. For 2014 forms filed in 2015, Form W-2 must be filed electronically by Feb. 15, according to an emergency rule effective Dec. 22. Employers that file more than 250 Form W-2, and all payroll services companies, must file the forms electronically. The previous filing deadline was March 31.

Ohio also updated filing guidance by providing that state income and school-district taxes must be paid electronically and associated returns must be filed electronically. The rule (5703-7-19) was finalized Nov. 13, a Department of Taxation official said.

Virginia changed a year-end filing date: for 2014 forms filed in 2015, employers must file Form VA-6, Employer's Annual or Final Summary of Virginia Income Tax Withheld, by Jan. 31. This form is due Feb. 2, 2015. All employers must file the form electronically.

West Virginia is to decrease its electronic funds transfer threshold for 2015. Effective Jan. 1, employers that make at least $10,000 in combined payments of any tax type in the preceding year must make payments through EFT. Previously, the threshold was at least $25,000 in combined payments of any tax type.

New York is instituting a filing change as well, albeit a little later than the other states. Effective starting with payroll tax and withholding reports due April 30, 2015, all employers must electronically file Forms NYS-45, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return; and NYS-1, Return of Tax Withheld.

For more information, such as many newly released state income tax withholding tables, see the Payroll Administration Guide

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