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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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I have a client that has an employee that works in PA but resides

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I have a client that has an employee that works in PA but resides in WV. The two states have a reciprocal agreement. I know the employee needs to fill out a REV-420 for PA, so that they do not have to pay state withholding for PA. Can you please tell me what other PA taxes need to be withheld? Do they withhold PAUC or WV? Does the employer pay their part to WV or PA? What is the withholding rate for WVSIT? Thank you!

LEV :

Hi and welcome to Just Answer!

LEV :

Under a reciprocal personal income tax agreement - wages earned from work performed in Pennsylvania by residents of West Virginia are not subject to Pennsylvania State Income Tax.

LEV :

The purpose of the form REV-420 is (1) to declare that the employee is exempt from PA income tax withholding (2)to authorize the employer to withhold the tax for the state where the employee lives.

LEV :

So - your client may withhold WV taxes on earnings.

LEV :

Employers do not pay income taxes for employees, but pay their portion of federal social security and Medicare taxes. Also employers pay FUTA and SUTA taxes.

LEV :

You will find more details in Employer Withholding Information Guide (REV-415) - http://www.portal.state.pa.us/portal/server.pt/document/635908/rev-415_pdf - see page 11

LEV :

Let me know if you need any help or clarification.

Customer :

Sorry it has taken me so long to respond. I have not been feeling well for the past few days. I recently had a kidney/pancreas transplant and it causes some issues at times. Anyway, what would help me is to know if the employees state income tax is the only tax monies that should be paid to West Virgina? And if the other taxes should all be paid to either the federal government or PA. I can't seem to find clear info on which state to pay which taxes to. Thank you!

LEV :

As I mentioned above - under a reciprocal personal income tax agreement - wages earned from work performed in Pennsylvania by residents of West Virginia are not subject to Pennsylvania State Income Tax.


So – no PA withholding – only WV withholding


Yes – there will be federal tax withholding – based on W-4 filed by an employee. See withholding tables in pub 15 - www.irs.gov/pub/irs-pdf/p15.pdf


 


In additional – there are FUTA and SUTA taxes.


SUTA is paid to the PA Department of Labor & Industry. State law determines individual state unemployment insurance tax rates. See more information here - http://www.portal.state.pa.us/portal/server.pt/community/uc_tax_rates/10348


 


The FUTA tax rate is 6.2% of taxable wages up to the first $7,000. If an employer timely pays SUTA taxes - up to 5.4% of FUTA may be claimed as a credit – so - the net FUTA tax rate is generally 0.8% (6.2% – 5.4%), for a maximum of $56 per each employee. FUTA tax is filed annually using Form 940 - www.irs.gov/pub/irs-pdf/f940.pdf

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