Justworks handles federal, state and local taxes
Justworks will calculate, file and remit payroll taxes to the government based on information provided by our customers. This means that tax funds will be debited from your company’s account, or withheld from your employee’s paycheck, at the time that salary or wages are paid.
Justworks manages all of your company's filings and reports electronically
In cases where certain forms are still required, you can sign them electronically from within the Justworks dashboard.
Justworks discourages payments to be made outside of Justworks, such as checks and cash bonuses. As a PEO, Justworks relies on the timeliness and accuracy of the information provided by the customer. Therefore, if you did make these payments outside of Justworks, you must report them right away in order to be taxed accurately and ensure we file Form W-2s correctly. Additionally, please note that for compliance and operational reasons, our policy is that Justworks does not open up a prior quarter’s tax return
Justworks handles payroll taxes, you are responsible for filing income tax returns
You are still responsible for filing any income tax returns, including Form 1120 and Schedule K-1. Consult with your accountant to get this paperwork filed.
Switching to Justworks mid-year
Your employees will get two W-2s if you switch to Justworks mid-year. If you have employees that you were previously paying with another provider and you switch mid-year to Justworks, then they will receive a W-2 from your previous provider for the first part of the year and a W-2 from Justworks for the second part of the year.
Justworks does not generate or file Schedule K-1
Schedule K-1 is filed specifically for LLCs and needs to be prepared by your company's accountant.
You can download a record of all payments, including owners' draws, which your accountant can use to prepare your K-1. For instructions on downloading all payments, see our article on reporting and invoices.
This article from our blog may be useful: Understanding Owner’s Draws
For Justworks companies, we file Form 941 and NYS-45 on your behalf
Please note: we don't file corporate income tax returns or franchise tax returns. These returns use the same information that would be on your 941/ NYS-45. You can find the relevant report here: [Your Company Name] > Invoice History > Download All Charges as CSV
Since Justworks is a PEO, we file your Form 941 and NYS-45 under our EIN and therefore cannot produce individual copies for your company.
An employee’s office dictates their tax jurisdiction
Each employee has a home address and a work address which are used to identify and calculate applicable state and local taxes. If an employee works at an office location then the address of that office location determines their work address. If an employee works from home then their home address is also used as their work address.
Some states require withholding regardless of where you work.
For example, if you live in NYC and work in California, you will have both NY and CA taxes taken out. NYC income tax is withheld from residents of New York City regardless of where you work. However, New York State allows a credit for income tax paid in another state. If your California state income tax exceeds New York state income tax, you will only pay California state income tax.
Your tax situation may be complicated if you are living and working in multiple states. When you file your returns (in our example, to both NY and CA) you will get a refund if any extra taxes were withheld. It should be noted that NY and CA are both aggressive when it comes to taxes.
Required tax information
For Justworks Premier users, we require only an EIN to make payments and file federal, state and local tax reports. A few states (like Pennsylvania) require each of our customers to have their own SUI registration number and rate.
SUI = State Unemployment Insurance
SUI stands for State Unemployment Insurance. Unemployment insurance is an employer-funded program required by both state and federal law. Unemployment insurance pays unemployed workers benefits while they are looking for work.
Unemployment Insurance can be a daunting task. We're here to help and you can read more about it in this article from our blog.
SUI tax is calculated based on several factors
There are two components to how SUI tax is calculated: “Wage base” and rate.
Wage base is the maximum amount of earnings that can be taxed in a given calendar year. This is established on a per-state basis and may change from year to year.
Your SUI tax rate is determined based on how many of your former employees have filed an unemployment claim in the past. New companies are taxed at a “new employer” rate and then the rate is updated on an annual basis by the state based on unemployment claim activity. New employer rates generally range from 2-4%.
Example: You have an employee in New York. Your company’s New York SUI rate is 3% and New York’s wage base is $10,000. If you pay an employee $10,000 in a calendar year then you will be taxed $300, which is 3% of the first $10,000 that the employee earns. If the same employee earned only $5000 in a calendar year then you would be taxed $150, which is 3% of $5000.
If you are on the Justworks Premier plan, your SUI rate may be determined based on your own company’s claims history or based on Justworks’ aggregate claims history, depending on which state the tax is paid in.
With Justworks, your SUI tax is automatically included as part of your payroll taxes
State and federal unemployment insurance (tax) is automatically calculated and charged as an employer tax. Justworks will collect and remit these funds electronically and file your unemployment return on your behalf.
You can see a breakdown of all employer taxes, including unemployment tax, by viewing your Justworks invoice.
Former employees can file an unemployment claim with the state
Employees can make an unemployment claim by filing with their state. Once they've filed, the state will forward a request for information to either your company, or Justworks.
If your company is on Justworks and you receive an unemployment claim, you should contact Justworks right away. We may need additional information from you about the circumstances of the employee’s departure in order to respond to the claim. If we receive a claim directly from the state, we may contact you to collect additional information.
Claims made by former employees are covered by the unemployment taxes you've already paid. Please note that approved claims may affect your company's unemployment tax rate in the future.
Employees can enter their own withholding information
Employees are prompted to enter their filing status and exemption information when they enroll in the system, and can make changes on their own at any time. If you prefer, you can also enter the information yourself by navigating to their employee record and clicking Edit next to Finances.
EIN = Employee Identification Number
An Employer Identification Number (EIN) is assigned by the IRS to your company. These are 9-digit numbers that are typically formatted like this: 22-7777777.
If your company doesn’t yet have an EIN number, you can request one from the IRS online.
Once you’ve successfully applied, you’ll receive the number along with an SS-4 confirmation letter, which you should retain for your records.
We don't currently support a payroll calculator, but Paycheck City has a useful simulator available. Make sure that you enter your zip code, so that it knows to figure in the proper local and city taxes.
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.