The District of Columbia's Office of Tax and Revenue (OTR) released the 2018 Publication FR-230, Income Tax Withholding Instructions and Tables, to its website. See page 2 of the attached PDF for a reproduction of the annual percentage method table.

Withholding booklets are not mailed to employers and are only available online.

New developments

— The OTR will no longer accept CDs or any media for filing W-2s or 1099s. Employers must use the bulk upload or online data entry via MyTax.DC.gov.

— The personal exemption for the tax year 2018 has increased to $4,150.

— Dishonored payments — employers will be charged a $65 fee if their check or electronic payment is not honored by their financial institution and returned to OTR.

— Reminder — a Federal Employer Identification Number (FEIN) is required and is the only acceptable tax identification number beginning with tax year 2017. A Social Security Number (SSN) is no longer allowed, even for household employers.

Supplemental rate of income tax withholding

The OTR makes no provision for a supplemental rate of income tax withholding.

Withholding rules for distributions from retirement plans

Effective for distributions paid on or after January 1, 2012, payers of distributions from retirement plans or accounts must withhold District of Columbia income tax at the highest income tax rate in effect as of the date of distribution.

For 2018, the OTR will continue to require withholding at the highest state income tax rate of 8.95% on distributions from retirement accounts or retirement plans.

The terms "retirement account" or "retirement plan" mean:

a. A qualified employee plan
b. A qualified employee annuity plan
c. A defined contribution plan
d. A tax-sheltered annuity plan
e. An individual retirement account
f. Any combination of the plans and accounts listed in a through e above, or
g. Any similarly situated plan as defined by the Internal Revenue Code.

2017 Form W-2 filing reminders

A copy of every Form W-2 or 1099 issued by the employer or payor to a District of Columbia resident must be submitted by January 31 of each year to the OTR. The deadline for filing calendar-year 2017 Forms W-2/1099 is January 31, 2018.

Employers filing 25 or more calendar-year 2017 Forms W-2 continue to be required to file electronically via the OTR's web portal, MyTax.DC.gov, through bulk filing or online data entry. Once released, go here for the 2017 Form W-2 specifications. If filing 24 or fewer Forms W-2, the employer may file electronically (on-line data entry) or on paper forms with Form WT, Transmittal for Paper Forms W-2 and 1099.

Withholding tax reporting changes

As we previously reported, the OTR made changes to its withholding filing requirements and tax returns beginning with the 2017 filing year. To reduce the paperwork burden for withholding filers, the OTR closely aligned its forms with the federal process. Similar to the IRS 941 quarterly withholding filing, all existing monthly filers were converted to filing their returns quarterly. Existing quarterly and annual filers remained the same. The quarterly returns are due by the end of the month following the end of the quarter (i.e., the fourth quarter Form FR900Q, Employer/Payer Withholding Tax Quarterly Return, is due by January 31, 2018).

Withholding payments must still be deposited by the 20th of each month for the amount of tax withheld in the previous month. For example, the January 2018 tax withheld must be paid by February 20, 2018, and the February 2018 tax withheld must be paid by March 20, 2018.

The 2016 FR-900B, Employer/Payor Withholding Tax Annual Reconciliation and Report, due January 31, 2017, was the last reconciliation form filed. The due date for the 2017 FR-900A, Employer/Payor Withholding Tax — Annual Return, and new Form FR-900NP, Annual Return for Withholding Reported on Forms 1099 and/or W-2G, is January 31, 2018. An FR-900P Payment Voucher is available for paper payments.

These forms are available on the OTR website.

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