These responsibilities are the same as employer responsibilities for payroll taxes, including federal income taxes.
Overview of the State Income Tax Process
If you have employees working in a state which requires state income tax, there is a process you must follow. As you can see, the process for calculating, deducting, paying, and reporting these taxes is similar to the process for federal income tax withholding.
State Tax Agencies
To find out about state income taxes, sales taxes, and other state taxes, go to your state’s department of revenue and look for the business tax division.
Withholding State Income Taxes from Employee Paychecks
After you have gathered the information about state income taxes, you will need to include these taxes in your company’s payroll process. The process begins with your calculation of gross pay for each employee. From that amount, you will need to calculate the specific amount to be withheld for that employee for state income taxes. Remember that each withholding amount (including state income taxes, federal income taxes, and FICA taxes) is calculated against the gross pay amount. After all taxes and other withholding, you will end up with a net pay amount. Then, the withholding amounts for each employee and the total for each kind of withholding must be placed in a separate liability account, to be paid as required by your state.
