Payroll Rhode Island, Unique Aspects of Rhode Island Payroll Law and Practice
If you are an employer or an employee with a Rhode Island income tax withholding obligation, this is likely the blog post for you. In this post, we’re going to take a look at some of the unique aspects of Rhode Island payroll law and practice. We’ll touch on topics like wage withholding, unemployment insurance regulation and taxes in general. Of course, there are many other specific details of Rhode Island payroll law that could go into any given blog post on the subject matter; our goal here is to offer readers an enticing overview of what they can expect if they decide to dive deeper into this area by consulting additional sources.
At the outset, it should be noted that while there are many different locations out there that offer specific payroll guidance related to Rhode Island’s tax and wage laws, this blog post by no means offers a complete treatise on those issues. It is simply meant to serve as a jump off point for those readers who may be looking for more information than what they can find available elsewhere. If you are familiar with Rhode Island payroll law and practice, you know plenty about the basic framework of how that works. If you need help navigating the waters of specific laws and regulations in order to determine whether or not a particular payroll practice is something that you intend to do in your own business, check out our other resource posts here. If you are interested in learning more about wage withholding in Rhode Island, consider checking out this post on state and federal wage withholding.
Some of the highlights of state payroll law that frequently come up in conversations and blog posts about the topic include:
Unemployment Insurance – The Rhode Island Unemployment Insurance system is administered by the Rhode Island Department of Labor and Training. A portion of unemployment insurance claims may be paid from a separate fund administered by the AGI Fund, a special interest revenue fund for Rhode Island. For employers with high rates of benefit denials, it may be worthwhile to check into whether or not your business would qualify for this special percentage; you can find information on how to go about this at the AGI Fund website .
Wage Withholding – Each state has its own system for withholding income and other tax amounts from employee paychecks. Some of the basic concepts you will find in Rhode Island are:
The federal government determines the percentage you must withhold from each paycheck; this is called the Federal Rate. For employers whose employees are subject to Social Security, Medicare and federal income taxes, they must also factor in the share of taxes paid by their employees into the total amount they should withhold. This is called the Employee Share.
Each state sets its own wage withholding rate, which may be lower or higher than the federal rate – known as the State Excise Tax Rate. For example, Rhode Island's wage withholding rate is 4% less than the federal rate; California's is 3% lower. Many states have separate rates for agricultural workers and domestic employees as well.
The IRS sets the rules by which you are permitted to deduct tax payments from your employee paycheck before sending those funds to a government financial institution, or bank account. This is called the method of payment.
For each method of wage withholding, there are rules that determine how much money you can withhold from your employee’s wages and send to a state or federal government financial institution to satisfy their tax withholding requirements. This amount is known as the AGI Exempt Amount. It may be more or less than the amount you withhold for Social Security and Medicare taxes depending upon how much of an employee's wages are being withheld for these purposes. Every employer business must know its AGI EXEMPT AMOUNT so that it can withhold the correct amount from employee paychecks and deposit it in a state or federal government financial institution on behalf of its employees.
When you take a look at the federal withholding amounts for calendar year 2018, for example, what you’ll notice is that the AGI Exempt Amount is a variable amount: it is dependent upon salary level and achieves its highest value at $128,400.00 of annual salary. Once an employee’s annual income exceeds $128,400.00, the AGI Exempt Amount goes down. In other words, once someone makes $128,000 or more in any given year the full withholding amount no longer applies to them. You can see this illustrated graphically with this link here .
K-1’s – Payments of federal income tax by an employer to the IRS are documented and filed with the IRS by way of what is known as a Form K-1, for “k” being an abbreviation for “tax return.” In Rhode Island, employers must issue their employees with Form RA (for “R” being another abbreviation for “Rhode Island”) to document those payments of income taxes; this form is filed with the state in a similar manner to the Form K-1.
Married Taxpayers – The IRS considers married taxpayers to be a couple in the eyes of the law whenever both individuals have their own individual SSN’s. In other words, if you are married and your spouse does not work outside of your home, you can file as a single taxpayer on all your state and federal income tax documents. You should check with your tax professional to confirm this information though because some states may require you to file as a couple even if only one spouse is working outside of the home.
The final thing to note about Rhode Island payroll law is that workers living in certain cities and townships may be subject to additional taxes and reporting requirements. This is not something we would attempt to cover in this post, but if you find yourself operating in one of these places you should definitely consult with a professional payroll service provider or a tax professional to confirm your responsibilities and how best to handle them.
Rhode Island Payroll Service Provider – To help you navigate the maze of rules and regulations that govern state and federal income, Social Security and Medicare withholding, the types of workers needed to file on your behalf, local taxes and reporting requirements and so on, consider hiring an experienced payroll service provider. If you’d like to learn more, visit the links below:
State Payroll Service Provider – In addition to taking care of your Rhode Island payroll needs, consider hiring a state payroll service provider if you want to work with an agency that can actually assist you in dealing with state taxes and reporting requirements as well as other related details. If you’d like to learn more about this option, visit the links below:
Federal Payroll Service Provider – If you would like to hire a federal payroll service provider for your Rhode Island business, you’ll need an EIN.
Conclusion – Rhode Island tax laws are complex and you’ll need to be well informed about how they all work together to successfully manage your business payroll. If you do not already have a professional tax & accounting firm on staff, consider hiring them to help you with your payroll needs.
Payroll Taxes for Rhode Island Businesses – Rhode Island withholding taxes are based on the value of each employee's annual wages (wages plus tips).
Connecticut Payroll Service Provider – To help you navigate the maze of rules and regulations that govern state and federal income, Social Security and Medicare withholding, the types of workers needed to file on your behalf, local taxes and reporting requirements and so on, consider hiring an experienced payroll service provider.