Thursday, December 2, 2021

What Payroll Taxes Do Employers Pay In New York

Do I Need To Have A Written Contract With My Employee

Clearing up New York State wages on the W-2

New York household employers are required to provide employees with a written notice at the time of hire stating: 1) the regular rate of pay, 2) the overtime rate of pay, and 3) the frequency of pay. The notice must be given both in English and in the employee’s primary language . The Department currently offers translations in Spanish, Chinese, Haitian Creole, Korean, Polish and Russian.

Employers must have each employee sign and date the completed notice and provide them with a copy. Household employers must also provide written notice of their policies on sick leave, vacation, personal leave, holidays and hours of work.

You are not otherwise required by law to have a written employment agreement with your nanny or household employee. Still, it is a really good idea to have a written employment agreement with your employee.

A written employment agreement spells out the obligations of both parties, including hours, compensation, duties, benefits and PTO. This is really important if the relationship doesnt work out, and there is ever a dispute. Just as important, it helps you discuss the important issues with your employee at the outset. This way you make sure you have a good relationship and understanding before you even start.

If you decide to go this route, weve put together a Sample Nanny Contract. This should give you a good idea of the issues that are usually covered.

Federal And State Tax Accounts

Federal Tax Accounts:

  • The Employer Identification Number , is a unique nine-digit number assigned by the IRS to identify your business.
  • Register for an EIN if you do not already have one.
  • To read more about applying for an EIN, read our help article, Your Step-by-step Guide on How to Apply for EIN.
  • Although it is not required, we recommend you enroll in the Electronic Federal Tax Payment System . You can easily register online. You can use this account to view any tax deposits made on your behalf by Patriot Software or to make tax payments yourself online.
  • To find out more about the EFTPS, read our article, What Is EFTPS?

State of New York Tax Accounts:

  • New York new employers can use one online registration via the Department of Labor for both state income tax account and state unemployment insurance .
  • If you have any questions, you can call New York at 899-8810.
  • When reporting taxes to NY State, you can report by using Web File for Form NYS-1, Return of Tax Withheld, and Form NYS-45, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return, through the Online Services. You must create an Online Services account before you can Web File or have Patriot Web File on your behalf. Electronic filing of taxes is mandatory.
  • Note that New York will use your FEIN as for your state income tax identification number. This is entered in our software as nine digits with no dash.

How To Do Payroll In New York State

Charlette has over 10 years of experience in accounting and finance and 2 years of partnering with HR leaders on freelance projects. She uses this extensive experience to answer your questions about payroll.

This article is part of a larger series on How to Do Payroll.

  • 12Bottom Line
  • Doing payroll in New York can be more tedious and costly than handling it in other states. Its minimum wage rate is steadily increasing, so you could find yourself required to pay employees a minimum of $15 an hour, more than twice as much as the federal requirement. And in addition to paying regular federal payroll taxes, unemployment insurance, and possibly the Metropolitan Commuter Transportation Mobility Tax, you have to withhold federal, state, and local income taxes from employee paychecks.

    Because New York is a progressive state, youll quickly realize that payroll rules change often and are challenging to stay abreast of without payroll software. With Gusto, however, state compliance rules, like overtime pay and tax rates plus tax filing deadlines, are easy to follow theyre built into the software and populate according to the location you designated during setup. You can also pay your employees via direct deposit at no additional cost, and health insurance for New York is available. Click below to start a 30-day free trial.

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    File Quarterly Ui Tax Reports And Payments

    Unlike other states, New York combines its UI tax and withholding tax reporting and payments. Reports and payments are due the last day of the month following the end of the quarter, as follows:

    Quarter

    When the due date falls on a Saturday, Sunday, or legal holiday, you are permitted to file on the next business day.

    You must file your reports electronically. More specifically, you have the following three electronic filing options:

    • Web File
    • Web Upload, or
    • FSET-compatible software program to file your quarterly return information).

    For more information about each of these methods, check the tax filing methods page on the New York Department of Taxation and Finance website. In some cases, you can file a report online but then print out a payment voucher and pay by paper check.

    As a New York employer, you must file reporting forms even if you had no payroll in the quarter. Late payment of contributions results in interest assessments and may increase your UI tax rate in future years.

    How Much Tax Is Deducted From A Paycheck In Ny

    Pay Statement Explained

    Unlike the rest of the countries federal minimum wage, New York State introduced a statewide $15 per hour minimum wage plan. The state had plans to increase the minimum wage ever since 2016, making it so that the minimum wage would be increasing every year until it is $15 per hour statewide. The Commissioner of Labor will publish the annual wage increase before or on October 1st every year.

    However, this plan only included general workers. Meanwhile, service workers and other tipped employees are still under the threshold outlined by that legislation. Simply put there are different hourly rates for workers in the fast-food industry and those who receive tips.

    This article will cover all of the information you need to know about taxes in detail, starting from different income types to types of taxes and the deduction percentage.

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    New York Payroll Tax And Registration Guide

    Account Number Needed:

    NY companies must register online with the NYS Department of Labor to receive both a Withholding ID and an Employer Registration Number within 2 weeks. Registration requires a Federal EIN. Employers should also register Zenefits Payroll as a third party administrator to allow Zenefits Payroll to file and pay NY taxes.

    New York Department of Taxation and Finance Withholding ID: 99-9999999

    • Register for an account number online.
    • Find an existing Withholding ID:
    • On Form CT-198, Corporation Tax Account Information
    • On Form NYS-45, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return

    Consequences Of Not Making Or Being Late On Employment Tax Payments

    If employers fail to remit payroll tax payments or send them in late, it could have the following impact:

    • Employers may face criminal and civil sanctions
    • Employees may lose access to future Social Security or Medicare benefits
    • Employees may lose access to future unemployment benefits

    If youre late making deposits for FICA or federal income taxes, youll be charged penalties.

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    Dont Let The Complexity Of Payroll And Taxes Stop You

    Hiring remotely can get complicated because of all the edge cases and legal gray areas.

    While the best structure for your business to hire, manage taxes, and pay remote employees depends on the unique characteristics of your business, there are a few guidelines every business should follow:

    • Look for simplicity: Paying a few dollars for a service that saves hours of your time and thousands in taxes and fines is worth it.
    • Make sure the arrangement is beneficial to both sides: You dont want to put your employees into a situation where they have to pay thousands in fees and/or taxes.
    • Dont optimize at the cost of violating laws: It is guaranteed to come back and bite you when you least expect it.

    Compared to the benefits you can get, hiring remotely is definitely worth the hassle. Nothing can give your business the same advantage as having access to global talent.

    The best people dont live in one place, even if that place is called Silicon Valley.

    Being able to pick the best team from a pool of talent that spans the whole world will give you benefits that far offset the costs you have to make to find out the best ways to set up your team.

    All it takes is courage and a bit of research.

    Ilia Markov

    Ilia used to run Groove’s content and SEO. He consults brands about content marketing and blogs on his website.

    How You Can Affect Your New York Paycheck

    Are New Jersey Residents Working From Home Still Required To Pay New York Income Taxes?

    If you find yourself always paying a big tax bill in April, take a look at your W-4. One option that you have is to ask your employer to withhold an additional dollar amount from your paychecks. For example, you can have an extra $25 in taxes taken out of each paycheck by writing that amount on the corresponding line of your W-4. This paycheck calculator will help you determine how much your additional withholding should be.

    Another way to manipulate the size of your paycheck – and save on taxes in the process – is to increase your contributions to employer-sponsored retirement accounts like a 401 or 403. The money you put into these accounts is taken out of your paycheck prior to its taxation. By putting money away for retirement, you are actually lowering your current taxable income, which can help you save in taxes right now. Another option is to put money in a spending account like a health savings account or a flexible spending account if your employer offers them. The money you put in these accounts is also taken from your paycheck before taxes, and you can use those pre-tax dollars to pay for medical-related expenses like copays or certain prescriptions. Just keep in mind that only $500 in an FSA will roll over from year to year. If you contribute more than that and then dont use it, you’re out of luck.

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    Accrued Paid Time Off

    Neither federal nor New York State law has stringent rules on how you should handle paid time off . When an employee leaves your company, you can opt to pay it out or take it back. The caveat to this rule is that you need to have your process outlined in a policy that the employee receives at the time of hire. If you dont lay down the ground rules regarding how you will handle paying accrued time off, you will be obligated to pay it out should they have a balance when they leave the company.

    New York State Disability Insurance Taxes

    Employers in New York are required by law to provide SDI coverage for eligible employees to cover Off-the-Job Injury or Illness. Employers can choose to cover the entire cost or withhold $ 0 .60/ week of eligible employees’ wages to share the cost of coverage.

    Example: $ 0 .60/ week x 52 weeks = $31. 20

    Monthly: $31. 20 /12 = $ 2 .60

    Biweekly: $31. 20 /26= $ 1 .20

    Semi Monthly: $31.20/ 24 = $ 1 .30

    Employers who use Zenefits Payroll can choose to withhold 0.5% of eligible employees wages in each payroll for NY SDI. However, Zenefits Payroll will only withhold, but not pay or file NY state disability taxes for employers. Employers are responsible for remitting these taxes to their NY SDI carrier. Learn more.

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    Setting Up Payroll And Taxes For Remote Employees

    CIC Plus Tax Withholding Services automate the tax withholding process for employees, by providing all required tax forms based on their work and home addresses. These addresses are checked against applicable locality tax requirements to determine the correct forms. The CIC Plus solution also integrates with Workday, ServiceNow and Cornerstone to provide a seamline onboarding and payroll process.

    It simplifies life for both employees and employers, helping them avoid tax time surprises and manage the growth of telecommuting, respectively. With more companies shifting to long-time remote work, its critical to have a reliable platform for determining proper tax withholding no matter where employees work.

    So What Are My Tax Obligations As A New York Household Employer

    How to Do Payroll in New York State

    As a household employer, you must comply with certain tax obligations, commonly referred to as the nanny taxes or household payroll taxes. Its complicated, but generally, after you have registered as an employer with all the appropriate agencies, you must:

    You can find all the information about your federal obligations in the IRSs Publication 926 Household Employers Tax Guide and your New York obligations in the New York Employers Guide to Unemployment Insurance, Wage Reporting, and Withholding Tax.

    The IRS estimates that it would take you 60 hours to comply with the federal nanny tax regulations. That does sound, well, taxing. Poppins can take care of all of it for $45 a month! That includes all your state and federal registrations, new hire reporting, payroll calculations and direct deposit, quarterly state and federal filings and the year-end documents for you and your employee. This first month is even FREE!

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    Paying International Remote Workers

    Most of the options available for local employees also apply to your international crewusing bank wires to pay them is certainly an option, however, you may find the cost exorbitant.

    ~$30 is a standard fee for a single wiremultiply this by the number of employees you have who live abroad and the times you pay them in a year and you could easily be paying thousands of dollars just in bank fees.

    Some companies choose to use platforms like Upwork to pay their employees, even if they dont hire through them.

    Many of these services provide additional benefits such as escrow accounts that provide security to both employers and workers, but the cost they charge tend to offset the advantages.

    Exchange rates and remote employees

    Another thing you should consider when hiring internationally is how exchange rates affect your remote employees.

    Most banks and many money transfer services incur a hidden cost in the form of an unfavorable exchange rate. Services like TransferWise and TransferMate allow you to send money at the market exchange rate and pay a low flat commission on it.

    Additionally, TransferMate integrates with the most popular accounting and payroll software, so its even easier and faster to pay your remote team with it.

    Weve looked at some payment options, however, no discussion of payroll for remote employees would be complete without looking at how taxes even work for them.

    Add Your New York Ui Tax Rate To Square Payroll

    You must provide your UI Tax Rate when signing up for Square Payroll so we can accurately withhold this tax. This is the total of your normal and subsidiary tax rates. The Re-employment Service Fund Rate is a fixed 0.075% for all employers and is not included in the UI Tax Rate. To locate your UI Tax Rate:

    • If you are a new employer, you will receive your UI Tax Rate after you complete the online registration with the Department of Labor and the Department of Taxation and Finance.

    • If you are a registered employer switching to Square Payroll, look up your rate online.

    • Find your rate on the Notice of Unemployment Tax Rate mailed by the Department of Labor each March. The UI Tax Rate is the sum of the normal and subsidiary tax rates.

    You are responsible for ensuring Square Payroll has the correct UI Tax Rate for your business. Please contact us if you need to update your rate.

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    What Taxes Do You Pay If You Live In New York City & Work In New Jersey

    If you live in New York City and started a daily westbound commute across the Hudson River, your tax life just got a little more complicated. Both New York and New Jersey levy state income tax, and both states may require you to file an annual tax return. Fortunately, taxes paid in one jurisdiction can be offset as tax credits in the other, thus preventing the dreaded double taxation. For federal taxes, the tax rate remains the same no matter where you live, but you do need to declare a current address.

    Tip

    The Supreme Court ruled in May 2015 that two states cannot tax the same income. One state must provide a tax credit for income earned and taxed in another.

    Statutory Payroll Tax Deductions

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    The law requires that payroll taxes must be withheld from an employee’s paycheck each pay period. Employers must then transmit these withholdings to various tax agencies. Payroll tax deductions include the following:

    • Federal income tax withholding based on the withholding tables in Publication 15
    • Social Security tax withholding of 6.2% in 2020 and 2021, up to the annual maximum taxable earnings or wage base of $137,700 for 2020 and $142,800 for 2021
    • Medicare tax withholding of 1.45%
    • Additional Medicare tax withholding of 0.9% for employees earning over $200,000
    • State income tax withholding
    • Various local tax withholdings, such as city, county, or school district taxes state disability or unemployment insurance

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