This article is part of a larger series on How to Do Payroll. Most states have state income taxes, supplemental taxes, or taxes like workers’ compensation, disability, or local taxes. The IRS and state tax agencies also require monies to be paid for unemployment insurance, referred to as the Federal Unemployment Tax Act (FUTA) and State Unemployment Tax Act (SUTA), respectively, when doing payroll. The software is always updated with the most current tax information, and you will never be penalized for mistakes QuickBooks representatives make. Choose a smarter path with Paychex. New York, NY 10017. While Form 940 is used to pay FUTA and Form 941 for FICA, each state has its own form names. It provides partial wage replacement to unemployed workers, while they look for jobs. Also, consider using a payroll service like QuickBooks Payroll to pay the contractor. 2019, Named one of The World's Most Innovative Companies by Forbes, Brandon Hall Group Read our story. You’ll need to familiarize yourself with the requirements as to when you can pay a worker as a contractor vs an employee. To help, we’ve compiled a few of the most commonly asked questions small business owners have about payroll taxes. SUI, which stands for State Unemployment Insurance, is an employer-funded tax that offers short-term benefits to employees who lost their jobs through a layoff or a firing that is not misconduct related. However, states like New Mexico, Oregon, and Washington require it to be paid as a tax. For instance, in California, employees are taxed 6.6% for most supplemental pay but are taxed at 10.23% if the supplemental pay is received from a bonus or stock option. Auto-suggest helps you quickly narrow down your search results by suggesting possible matches as you type. !function(e,t,n,s){var i="InfogramEmbeds",o=e.getElementsByTagName(t)[0],d=/^http:/.test(e.location)? Tax rates change from year to year, especially state payroll tax rates, and you must keep track of them to calculate your business and your employees’ tax obligations accurately. 2019, Named one of The World's Most Innovative Companies by Forbes, Brandon Hall Group You’ll also find a government link to learn more about your state’s employment taxes. *Available in certain states. Help monitoring improper claims and erroneous charges, Assistance with unemployment benefit issues. Some states have an income tax while others don’t. If you outsource your payroll to a third party, you will retain liability for any tax mistakes. Our SUI service will reduce your administrative burden, and our Paychex compliance professionals constantly monitor the latest SUI regulations to help us keep you up-to-date. Below is a state-by-state map showing tax rates, including supplemental taxes and workers’ compensation. When you click on links to those sites, our company makes money. Other states like Kentucky, Ohio, and Pennsylvania collect local income taxes in many cities. ** Our SUI service can help you continually monitor for improper claims and erroneous charges with an in-depth benefit charge audit. Payroll Taxes notes that the maximum SUI taxable wage base per employee in Pennsylvania increases by $250 per employee every year until 2018, when the amount reaches $10,000. For example, South Dakota has no state income taxes, North Dakota does and uses the Federal W-4 to track withholdings. Use Form 940 to report your annual FUTA tax.