Ó£»¨ÊÓƵ

Withholding Income Taxes

Employee Compensation

Generally, when someone works for you and that person is considered to be your employee for federal income tax purposes, they are also your employee for Ó£»¨ÊÓƵ Income Tax purposes.

Employee compensation, including salaries, wages, tips, fees, commissions and bonuses are subject to Ó£»¨ÊÓƵ Income Tax withholding. In most cases, compensation that is considered wages for federal income tax purposes is subject to Ó£»¨ÊÓƵ withholding. There are, however, benefits that are not subject to federal withholding that are subject to withholding in Ó£»¨ÊÓƵ.

As a Ó£»¨ÊÓƵ employer, you are required to withhold Ó£»¨ÊÓƵ Income Tax from wages paid to all Ó£»¨ÊÓƵ residents unless you are withholding another jurisdiction's income tax at a rate equal to or greater than Ó£»¨ÊÓƵ's rate. You must also withhold Ó£»¨ÊÓƵ Income Tax for nonresident employees physically working in this Ó£»¨ÊÓƵ and some employees who work outside of Ó£»¨ÊÓƵ (telework) for their convenience. Under a Reciprocal Income Tax Agreement, Pennsylvania residents are the only out-of-state residents exempt from Ó£»¨ÊÓƵ withholdings. Compensation earned in Ó£»¨ÊÓƵ by a Pennsylvania resident is not subject to Ó£»¨ÊÓƵ Gross Income Tax. If you employ a Pennsylvania resident in New Jersey, that employee should complete an Employee's Certificate of Nonresidence in Ó£»¨ÊÓƵ (Form NJ-165 ) and file it with you. Once an employee has provided you with a completed Certificate of Nonresidence, you must stop withholding Ó£»¨ÊÓƵ Income Tax.

To determine the amount of Ó£»¨ÊÓƵ Income Tax to be withheld from employees' wages, use the withholding tables or percentage methods contained in the New Jersey Gross Income Tax Instructions for Employers (Form NJ-WT ) and Supplemental Withholding Tables (Form NJ-WT Supplemental ). Information is also available on Reporting and Remitting Employer Withholding Tax.

Withholding Requirement for Payments to Contractors

Beginning January 1, 2018, any person (other than a governmental entity, a homeowner, or a tenant) who maintains an office or transacts business in New Jersey is required to withhold Ó£»¨ÊÓƵ Gross Income Tax at the rate of 6.625% from payments made to unregistered, unincorporated contractors for services performed in this State. See Withholding Requirements for Construction Contractor Services.

Electronic Filing Mandate

Electronic filing is mandatory for all employer year-end filings and statements (Forms NJ-W-3, W-2, W-2G, 1099-MISC, 1099-R, 1094/1095, etc.).