Well first, what is a withholding tax under Virginia Tax Law?
The withholding tax is a state income tax. Employers must deduct it from the wages of employees and remit it to Virginia’s Department of Taxation (VDOT). The goal of this tax is to cover the employees’ personal income tax liabilities.
What are the rules for Virginia’s withholding tax?
There are quite a few rules around this tax, about who must pay it, how you pay, and how often you must pay.
Who must pay the withholding tax?
Any employer who is paying wages to one or more employees. This is for employees in Virginia, the employer does not have to be based in Virginia, just the employees.
A sole proprietor does not have to pay a withholding tax because they are not considered an employee of their own business. However, they have to pay self-employment taxes instead.
How do you pay this tax?
You have to pay this tax electronically, as paper forms are no longer accepted. Our payroll software can do this for you.
How often do you have to pay the withholding tax?
That depends on your average monthly withholding tax liability. You can calculate this based on the withholding tax liability you as an employer have accrued in the past 12 months. The higher the liability, the more frequent you need to pay.
If your withholding liability is less than $100 per month then you must pay quarterly.
You have to file out form VA-16. And you must submit it by the last day of the immediate month following the quarter. That’s April 30, July 31, October 31, or January 31.
If your liability is between $100 and $1000, then you pay monthly.
Fill out Form VA-5 by the 25th of the following month. So submit January’s form by the 25th of February.
If it is more than $1,000 per month, then you pay semi-weekly.
Fill out Form VA-15. You should then submit it with the federal deposit schedule, which are Wednesdays and Fridays, depending on payday.
We also recommend you keep all these wages and withholding taxes on file for at least 3 years. This is to protect yourself in case the IRS ever wants to double check your work.
So, how can small Virginia employers stay compliant with the mandatory electronic filing of withholding taxes under the VA Tax?
If all that sounded complicated, that’s because it is. But we make compliance easy!
