If you’re hiring new employees, you want to make sure you’re handling their Illinois taxes correctly. That includes understanding tax requirements and complying with those requirements every time, for every employee.
HR professionals and employers must make sure they’re creating a payroll system that’s fair and compliant, so everything operates the way it should. Here’s what to know about payroll compliance, HR management, and other specifics of your Illinois employees’ taxes.
There are Several Taxes Employers Must Pay
The first thing you’ll want to do, to make sure you’re compliant with tax withholding and other HR management requirements, is to be clear on the specific taxes you’ll have to pay. Illinois employees are required to pay several different taxes, including:
- Federal income tax
- Illinois income tax
- Social security tax
- Medicare tax
If you’re hiring employees you’ll be responsible for taking each one of the taxes out of those employees’ paychecks in the right amount, and remitting the payments to the proper taxing authorities. It’s understandable if you are feeling apprehensive or uncertain about how to proceed. Working with a payroll compliance service is one of the best ways to give yourself peace of mind.
Illinois Income Tax is a Requirement
Illinois taxes income at a flat rate, which is 4.95%. As an employer you have to hold this tax out of your employees’ paychecks. Then you’ll remit it to the Illinois Department of Revenue.
Following the schedule for remitting this tax and making sure you pay the right amount are both very important. Failing to do that could put you at risk of fines and other penalties.
Don’t Forget Social Security and Medicare
Employees have to pay into the Social Security and Medicare systems. To stay in payroll compliance as an employer, you have to withhold these payments from your employees checks and send them to the federal government.
For Medicare the tax rate is 1.45%, and for Social Security the tax rate is higher, at 6.2%. You can be penalized if you don’t hold out this money and send it to the right place, on the right schedule.
Keeping Up-to-Date Reduces the Risk of Problems
Employers need to stay up-to-date on any changes being made to how Illinois taxes are handled. Whether you use payroll software to keep everything in one place or have a company handle it for you, it’s still your responsibility to report your employees’ wages and other information correctly. If tax withholding rates or other changes occur, employers and HR professionals have to make sure they’re adjusting their payroll practices.
The Main Takeaways of Understanding Illinois Income Tax
There are nuances to taxation and payroll concerns, of course, but the most important takeaways for employers who need to handle Illinois income tax are:
- Illinois employees have to pay federal and state taxes, along with taxes for Medicare and Social Security.
- The tax rate for income in Illinois is 4.95% for every employee.
- Employers have to hold taxes out of employees’ paychecks and make sure the payments are sent to the right agency.
- HR professionals and employers need to stay informed regarding changes to tax rates and laws.
There’s a lot to think about when trying to make sure all your employees’ taxes are covered. If you make a mistake it would mean penalties for your business, but it could also cause tax problems for your employees, too. You want to avoid both of those situations, and that’s much easier to do when you have the right help and support.
Looking for an HR and Payroll Solution?
If you’re looking for solutions for HR management and payroll compliance, you’re definitely not the only employer concerned about those things. These solutions can make it easier for you to stay compliant with tax requirements for all your Illinois employees. To get the right solution for your needs, get in touch with us at ASAP Payroll.
Our HR software and payroll software options will help streamline your HR and payroll processes, to ensure you stay on top of your tax obligations. Contact us today to learn about all the ways we can help you get your employees’ taxes paid and have increased peace of mind.
