How do I withhold income tax from my employees?
Recent Regulations and Resources
Employers are required to withhold New Jersey State income tax from the wages of your employees (except Pennsylvania residents). New Jersey gross income tax withheld from employees' wages must be remitted electronically to the State on a weekly, monthly/quarterly, or annual basis. Withholding rates range from 1.5 percent to 7.0 percent.
All employers are required to file the Employer's Quarterly Report, Form NJ-927 or NJ-927-W, for each quarter, regardless of the amount of tax due. Forms NJ-927 and NJ-927-W must be filed on or before the 30th day of the month following the end of the quarter. Weekly payers are defined as employers with a prior year liability of $10,000 or more for employer income tax withholdings and must remit payment of withholdings by Electronic Funds Transfer (EFT).
Tax is due on or before the Wednesday of the week following the week containing the payday or paydays on which the taxes were withheld. Employers not classified as weekly payers must report and remit tax on a monthly or quarterly basis. Employers use the Form NJ-500 Monthly Remittance of Gross Income Tax Withheld to remit tax for either of the first two months of a quarter whenever the amount due for either month is $500 or more.
Amounts less than $500 may be included with the quarterly return. When required, payments are due by the 15th day of the month following the month in which the tax was withheld. Tax due for the third month of the quarter is remitted with the quarterly return. You will receive the necessary forms, withholding tables and instructions once you have registered.
Pennsylvania Residents Working in New Jersey
Employers are not required to withhold New Jersey income tax from an employee who is a Pennsylvania resident if that employee completes a Certificate of Non-residency in New Jersey (Form NJ-165). For information about withholding Pennsylvania personal income tax, write to:
Pennsylvania Department of Revenue Information Services Division
Harrisburg, PA 17128
or call 717-783-1405.
Wage and Tax Statements for Your Employees
Employers must furnish two copies of the Wage and Tax Statement (W-2) to each employee from whom any amount of income tax was withheld or would have been withheld under the withholding tables and methods issued by the Division of Taxation.
New Jersey law also requires the inclusion on the W-2 of the separate amounts deducted and withheld as worker contributions due for State Disability Insurance, Workforce Development and Healthcare.
In addition, employers must file a reconciliation of New Jersey Gross Income Tax Withheld (Form NJ-W-3), along with Copy 1 of the W-2, with the Division of Taxation on or before February 15th following the close of the calendar year.
Sole proprietors and partners must report the net income from their business on the New Jersey Gross Income Tax Return. Declarations of Estimated Tax (NJ-1040-ES) must be filed quarterly if you estimate your New Jersey income tax liability to be $100.
For forms or information, call New Jersey’s Taxation’s Automated Tax Information System at 800-323-4400. To speak to a Division representative, call the Tax Hotline at 609-292-6400 or write to:
New Jersey Division of Taxation Technical Services
PO Box 281 CSB/I&P
Trenton, NJ 08695-0281
You may also contact the Division of Taxation electronically through its website at www.state.nj.us/treasury/taxation/.
Tax Information Packet
A packet is available that includes the information needed to register your business with the New Jersey Division of Taxation. Descriptions of all state taxes are included. Employers can avoid future tax problems by knowing what the business tax responsibilities are and how to best meet them.For details or questions, call the Tax Hotline at 609-292-6400 or New Jersey’s Automated Tax Information System at 800-323-4400.