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The New York Department of Taxation and Finance has released revised wage bracket and percentage method income tax withholding tables for the state and the City of Yonkers, reflecting the proposed tables released earlier this year and effective with wages paid on or after January 1, 2020. (EY Payroll Newsflash Vol. 20, #162, 10-10-2019.)

Publication NYS-50-T-NYS, New York State Withholding Tax Tables and Methods

Publication NYS-50-T-Y, Yonkers Withholding Tax Tables and Methods

For the first time in several years, the Department has also recently released an updated Publication NYS-50, Employer’s Guide to Unemployment Insurance, Wage Reporting, and Withholding Tax.

New York State and City of Yonkers withholding

The 2020 New York State and City of Yonkers personal income tax rate schedules are revised to reflect certain income tax rate reductions enacted under Chapter 60 of the Laws of 2016 (Part TT). Accordingly, effective for wages paid on or after January 1, 2020, employers must use the revised withholding tax tables and methods to compute the amount of New York State and City of Yonkers taxes to withhold from employees’ wages.

The Yonkers nonresident earnings tax rate has not changed.

Supplemental withholding rates

Effective January 1, 2020, if you pay supplemental wages (bonuses, commissions, overtime pay, sales awards, etc.), the following withholding rates apply:

New York State ........................................................9.62% (unchanged)

Yonkers Resident .....................................................1.61135% (unchanged)

Yonkers Nonresident ................................................0.50% (unchanged)

New York City ..........................................................4.25% (unchanged)

If you pay supplemental wages (bonuses, commissions, overtime pay, sales awards, etc.) with regular wages but do not specify the amount of each, withhold income tax as if the total were a single payment for a regular payroll period.

If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the income tax withholding method depends partly on whether or not you withhold income tax from your employee’s regular wages.

If you withhold income tax from an employee’s regular wages, you may use one of the following methods for the supplemental wages:

1. Withhold at the supplemental rates.
2. Add the supplemental and regular wages for the most recent payroll period this year. Then figure the income tax withholding as if the total were a single payment. Subtract the tax already withheld from the regular wages. Withhold the remaining tax from the supplemental wages.

If you did not withhold income tax from the employee’s regular wages, use method b. (This would occur, for example, when the value of the employee’s withholding allowances claimed on the Form W-4 is more than the wages.)

Also see federal Publication 15, Circular E, for a list of other payments that may be considered supplemental wages.

Form IT-2104, Employee’s Withholding Allowance Certificate, to be revised

The updated Publications NYS-50-T-NYS and NYS-50-T-Y explain that New York State Form IT-2104, Employee’s Withholding Allowance Certificate, for use by New York and the City of Yonkers employers will be revised effective January 1, 2020 to account for additional allowances taxpayers may claim under the Article 24 employee credit and who made contributions to certain New York State and New York City funds.

The revised form has not yet been posted to the Tax Department website but, once available, can be downloaded here.

The revised withholding tables and methods in these 2020 publications should assist in arriving at the proper amount of tax to be withheld for 2020. However, employers should encourage employees to complete a revised Form IT-2104 if they completed a Form IT-2104 prior to January 1, 2020, using the worksheet to compute withholding allowances, or the charts in Part 6 or Part 7 to enter an additional dollar amount of New York State withholding on line 3.

Employees should also be reminded that if they file a change to their federal Form W-4 on or after January 1, 2020, personal allowances will no longer apply.  Accordingly, New York employees wishing to claim allowances for New York state or local income tax withholding should be sure to file a Form IT-2014.

New York employers must report income tax withholding on a quarterly, not cumulative, basis

As we reported (EY Payroll Newsflash Vol. 20, #173, 10-29-2019), the New York Department of Taxation and Finance reminds employers that effective first quarter 2019, withholding tax information per employee must be reported on a quarterly basis, not annually on the fourth quarter wage report. The amounts to be reported are those applicable to the quarter being reported, not cumulative amounts for the year. (Department tax professional newsletter, 10-25-2019.)

After reviewing first and second quarter 2019 wage reporting filings on Form NYS-45, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return, the Department noticed that some filings reflect cumulative amounts for gross wages and tax withheld (columns d and e), rather than the amount applicable to the quarter.

Beginning on or after January 1, 2019:

• Employers must complete all of Part C,Employee wage and withholding information, including columns d and e, each calendar quarter for all employees paid during the quarter being reporting. The total amount for all employees in column e should equal the amount reported on Form NYS-45, Part B, line 15, for the same quarter.
• The penalty for failing to complete Part C, columns d and e, was amended to allow imposition on a quarterly basis.

For more information, see the Department’s website.

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EY Payroll News Flash