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Paying employees in Kentucky
When hiring employees in new states, you will need to register for relevant state tax accounts to facilitate their payment. In Kentucky, you must be registered with the Kentucky Department of Revenue (income tax withholding), Kentucky Office of Employment and Training (unemployment tax) and, if applicable, Local Kentucky tax agencies.
Alternatively, Justworks Payroll can handle the registration process for you. We offer state tax registration services to assist with registering your business in new states. To request registration, please contact us at support@payroll.justworks.com.
Kentucky Accounts Registration and Rate Info
Registering for a Withholding Tax Account:
Check the Kentucky Department of Revenue website to find out what you'll need for registration. Complete the process online through the Kentucky Business OneStop portal by clicking "Create new Account."
- It's recommended to review the One Stop Overview for guidance on the registration process (sign-in required).
- During registration, if prompted about using a “common paymaster” or “pay agent,” select "No."
You should receive your account number and tax deposit schedule within 1–2 days after registering online. For assistance with registration, contact the agency directly at (502) 564-3306. After registering, enter your tax account information into Justworks Payroll.
Registering for an Unemployment Tax Account:
Register online with the Kentucky Office of Employment and Training to obtain your Kentucky Employer Identification Number (KEIN).
- The KEIN should consist of nine digits (e.g., "12 123456 1"), but some accounts may include a letter between the eighth and ninth digits (e.g., "12 123456A 1").
- If your letter from the agency only includes eight digits, call them at (502) 564-2272 to get the missing digit.
- You will also receive your adjusted UI (unemployment insurance) tax rate.
- When asked if you'll be filing electronically or using a Third-Party Administrator, select "Yes," but provide your company’s mailing address to stay updated on account changes.
Complete the remaining steps, and once registered, input the tax account information into Justworks Payroll. If you encounter any issues during registration or have questions, contact the agency directly at (502) 564-2272.
Registering for Local Tax Accounts:
City Taxes (Occupational License Fees)
Employers must withhold local city or county taxes, commonly known as Occupational License Fees (OLP), in the cities where their employees work.
The OLP is charged for the privilege of conducting any business, professional occupation, or trade within city limits, regardless of the employee's legal residence. Tax rates differ depending on the location of the business activity. For specific city requirements, contact the relevant local agency.
Visit the Kentucky OneStop website for more information on Occupational Licenses.
School District Taxes
Certain counties, such as Boone, Cumberland, Fayette, Marshall, Scott, and Warren, impose a school tax for work performed by residents within the county.
For the latest information on affected areas, refer to the localities list on the Kentucky Department of Education website.
County Taxes
Several counties in Kentucky require taxes for all work performed within any city in the county, regardless of the employee's legal residence.
If the business operates within the city limits of a city that imposes a tax, the employer may only need to pay city license fees and not the county's. However, if the business is outside the city limits, it must register for and pay county taxes.
For a full list of Kentucky districts and localities, click here. For specific company requirements, contact the relevant agency directly.
Already Registered? Locate This Information
Locate Your Withholding Tax Account Number:
If you've previously processed payroll in Kentucky, you can find your withholding tax account number on:
- Any returns (K-1, K-1E, K-3, K-3E) received from the agency. Your Kentucky Department of Revenue (DOR) account number is a six-digit number.
- If your account number is nine digits with three leading zeroes, simply omit the zeroes.
The agency will also assign you one of the following tax deposit schedules:
- Twice monthly
- Monthly
- Quarterly
- Annually
If you're unsure of your filing frequency, contact the agency to confirm your correct filing schedule at (502) 564-3306.
Locate Your Unemployment Account Number (Kentucky Employer Identification Number) and Rate:
Your unemployment account number (KEIN) can be found on your Quarterly Unemployment Report (Form UI-3).
- It consists of nine digits (XX-XXXXXX-X), typically with two leading zeros—make sure to include the zeros when entering it in your Justworks Payroll account.
Your adjusted unemployment insurance (UI) tax rate is listed next to the "UI Rate" section on the Notice of Contribution Rate from the Kentucky Division of Unemployment Insurance. If you are unsure of your KEIN or tax rate, contact the agency at (502) 564-2168.
Entering State Tax Info in Justworks Payroll
Once you registered with the State and have a valid KY address added to your company’s offices, you can add your account info in Justworks Payroll by navigating to:
- Company > Settings in the left navigation bar
- Under ‘Company tax info’ click into “Kentucky” to edit the state tax information
In your Justworks Payroll account, you’ll want to enter your KY Withholding Tax Account Number, Unemployment Account Number (KEIN) and Tax Rate, and, if applicable, any local tax account information.
Third-party admin access
As your payroll provider, Justworks Payroll will utilize the provided account information to manage and report your KY tax liabilities. Occasionally, the state may issue notices related to payroll taxes.
Justworks Payroll can examine these notices if granted Third-party admin access to your KY state tax account. During onboarding, we will request that you sign state specific TPA forms, which authorizes us to handle and report your taxes to the state.
Why is this important?
Justworks Payroll calculates tax liabilities as part of payroll processing. If we cannot access your KY state tax accounts, we must return any unremitted tax liabilities to your company bank account, requiring you to remit and file your company’s state taxes manually.
Disclaimer
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.