Page 212 - Essentials of Payroll: Management and Accounting

Payr oll Taxes and Remittances
paperwork involved, a company that remits its own state taxes should
construct a calendar of remittances, which the payroll manager can use
to ensure that payments are always made,thereby avoiding late-payment
penalties and interest charges.

If an employer has nonresident employees, and the state in which
it does business has an income tax, the employer will usually withhold
income for each employee’s state of residence.Alternatively, an employer
can withhold income on behalf of the state in which it does business
and let the employee claim a credit on his or her state tax return to avoid
double taxation. The ability to do this will vary by individual state law.

Payroll Taxes for Employees Working Abroad

Special withholding rules apply if an employee works in other countries.
The first consideration is the duration: If an employee works abroad for
only part of the year,in general normal withholdings must be made,with
the employer matching Social Security and Medicare taxes in the normal
percentages. However, an employer is not required to withhold Social
Security or Medicare taxes if its employees work in any of the following
countries:

Austria Korea
Belgium Luxembourg
Canada The Netherlands
Finland Norway
France Portugal
Germany Spain
Greece Sweden
Ireland Switzerland
Italy United Kingdom
These countries all have totalization agreements with the United States,

whereby an employee only has to pay Social Security taxes to the country
in which he or she is working. This makes a person exempt from U.S.
Social Security and Medicare taxes while working in the listed countries.

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