“Withholding Taxes: Are You Compliant?”

Terry Barrett, Keiter Tax Senior Manager and Leader in Keiter’s State and Local Tax team, shared her insights on withholding taxes in the January/February 2018 issue of VSCPA’s Disclosures Magazine article, “Withholding Taxes: Are you compliant?” This includes withholding federal, state and sometimes local income tax and an overview of reciprocal agreements and the withholding threshold.

Excerpt:

By law, employers generally are required to withhold income taxes — federal, state and sometimes local — for their employees. While state laws vary as to how they define employers subject to withholding requirements, withholding is generally required if an entity has one or more employees performing services in the state and is deriving income from doing business in the state.

Think about that: Withholding may be required in a state if services are performed in that state. So if you have a workforce that travels, such as accountants, attorneys, contractors, engineers, salespeople, human resource personnel, to name a few, you may have withholding requirements in states other than Virginia (and your employees may be subject to income tax filing requirements in those other states).

There is no uniformity among the states’ withholding requirements, which complicates the issue. As such, one cannot easily make reasonable generalizations in determining their withholding requirements. Fortunately, though, there are exceptions to withholding requirements, but these, too, vary by state. These exceptions include reciprocal agreements among states and state withholding thresholds.

Questions on this topic? Contact your Keiter representative or our State and Local Tax team | 804.747.0000 | Email.

Additional State and Local Tax Resources:

Sales and Use Tax Rules Facing Potential Changes

State and Local Tax Obligations of Emerging Businesses

“Merging or acquiring? Don’t forget state and local taxes”

Federal Tax Reform: State and Local Implications

Tax Cuts and Jobs Act Overview