WV Withholding Tax: Employer Responsibilities
Learn the essential requirements for West Virginia employers to correctly manage employee state income tax withholding and ensure full compliance.
West Virginia’s personal income tax is collected through employer withholding. This system requires businesses with employees in the state to deduct a portion of each employee’s wages for state income tax. These collected funds are then periodically remitted to the West Virginia State Tax Department, ensuring a consistent flow of tax revenue to the state.
Initial Setup for Employers
Before an employer can legally withhold state income tax, they must register their business with the West Virginia State Tax Department. The application requires business information, such as the legal business name, address, and the Federal Employer Identification Number (FEIN). Upon successful processing, the department issues a West Virginia Tax Identification Number, authorizing the employer to begin withholding.
Registration is a prerequisite for managing state tax obligations. The state provides online portals and paper applications for registration. This step must be completed prior to issuing the first payroll to ensure all withholdings are properly accounted for.
Once registered, the employer must collect withholding information from each employee using Form WV/IT-104, the Employee’s Withholding Exemption Certificate. This document is the state-level equivalent of the federal Form W-4 for accurate tax calculation. Employers must provide this form to every new hire and retain the completed certificate in their payroll records.
The WV/IT-104 form gathers data that influences the amount of tax withheld. Employees must indicate their filing status and the number of personal allowances they claim. This information allows the payroll system to align the withholding amount with the employee’s anticipated annual tax liability. Blank copies of Form WV/IT-104 are available on the State Tax Department’s website.
Calculating the Withholding Amount
With a state withholding account active and completed WV/IT-104 forms on file, an employer can calculate the tax for each pay period. West Virginia provides two approved methods for this calculation: the Wage Bracket Method and the Percentage Method. The choice between these methods depends on the employer’s payroll software and preferences.
The Wage Bracket Method is often used by those who process payroll manually. The State Tax Department publishes detailed tax tables in document IT-100.2.B, categorized by pay period frequency and filing status. To use this method, an employer locates the table for the employee’s pay schedule, finds the wage range for the employee’s gross pay, and cross-references it with the number of allowances claimed to find the amount to withhold.
The Percentage Method, detailed in publication IT-100.2.A, is a formulaic approach commonly automated within payroll software. This calculation begins by subtracting the value of the employee’s claimed allowances from their gross wages for the pay period. The allowance value is determined by the state and varies by pay frequency. The resulting taxable wages are then multiplied by the applicable tax rate to determine the withholding amount.
Remitting Withholding Payments to the State
After deducting tax from employee paychecks, employers must remit these funds to the State Tax Department. The payment schedule is determined by the employer’s total tax liability during a lookback period, which is typically the previous calendar year. Based on this amount, employers are designated as either monthly or quarterly filers.
The primary method for submitting payments is electronically through the state’s MyTaxes online portal. Employers with a tax liability exceeding $50,000 in the prior year are required to pay electronically. Others may mail payments with Form WV/IT-101V, a payment voucher.
The due dates for these remittances are firm. For monthly filers, payment is due by the 15th day of the month following the month taxes were withheld. Quarterly payments are due by the last day of the month following the end of the quarter. Failure to remit payments by the deadline will result in interest on the underpaid amount.
Completing the Annual Reconciliation
At the end of the calendar year, every employer must perform an annual reconciliation of their withholding tax account. This procedure balances the total amount of state income tax reported and paid throughout the year with the income and withholding data reported for each employee. This ensures the employer’s records align with the state’s records.
This reconciliation is filed using Form WV/IT-103, the West Virginia Withholding Year End Reconciliation. On this form, the employer reports aggregate figures for the year, including total compensation paid and total West Virginia income tax withheld. These totals must match the sum of the individual employee data reported on the federal Form W-2.
The deadline for filing Form WV/IT-103 is January 31 of the following year, which coincides with the deadline for furnishing employees their Form W-2. Employers are required to submit copies of all employee W-2s to the State Tax Department along with the IT-103. For small employers who file annually, Form IT-101A combines the annual return and reconciliation and is also due by January 31.