Withholding Tax

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Who Is Required To Withhold

Every employer who has resident or nonresident employees performing services (except employees exempt from income tax withholding) within Louisiana is required to withhold Louisiana income tax based on the employee's withholding exemption certificate. Wages of Louisiana residents performing services in other states are subject to withholding of Louisiana income tax if the wages are not subject to withholding of net income tax by the state in which the services are performed.



Who Must File

Every employer who withheld or was required to withhold income tax from wages must file the Employer’s Quarterly Return of Louisiana Withholding Tax (Form L-1). Each return covers one quarterly taxable period and must be fi led by the filing deadline. A quarterly return must be filed even if no taxes are withheld during the quarter or if wages paid to employees were not sufficient to require withholding.



When and How To Remit Tax Withheld

Payments must be made according to your mandated payment frequency. Payments for the last period of the quarter must be submitted with the L-1 return. All other payments must be submitted with an L-1V payment voucher.

Each employer who withholds from the combined wages of all employees less than $500 per month is required to pay on a quarterly basis. Each employer who withholds from the combined wages of all employees at least $500 but less than $5,000 per month is required to pay on a monthly basis. Each employer who withholds from the combined wages of all employees $5,000 per month or more must pay on a semimonthly basis.



Rates of Tax

Louisiana Administrative Code 61:I.1501 provides income tax withholding tables to be used for computing the proper amount to be withheld based on the employee's income, filing status, and number of exemptions. Acts 2008, No. 396, amended R.S. 47:32(A) to reduce the income tax rates and brackets, and to provide that the individual income tax withholding tables provided by LAC 61:I.1501 be amended effective July 1, 2009. The income tax withholding formulas prescribed by LAC 61:I.1501.D as amended LR 35:256 (February 2009) contained errors that will be corrected by amending the rule. The corrected formulas are as follows:

               
  D. Income Tax Withholding Formulas.
    The overall structure of the formulas used to compute the withholding tax is to calculate the tax on the total wage amount, and then subtract the amount of tax calculated on the personal exemptions and dependency credits the taxpayer claims for withholding purposes. The correct withholding formula depends upon the number of personal exemptions claimed and annual wages.
 
      1. Withholding Formulas for Single or Married Taxpayers Claiming 0 or 1 Personal Exemption:
 
          W is the withholding tax per pay period.
          S is employee’s salary per pay period for each bracket.
          X is the number of personal exemptions; X must be 0 or 1.
          Y is the number of dependency credits; Y must be a whole number that is 0 or greater.
          N is the number of pay periods.
 
          A is the effect of the personal exemptions and dependency credits equal to or less than $12,500;
            A = .021 (((X * 4500) + (Y * 1000)) ÷ N).
 
          B is the effect of the personal exemptions and dependency credits in excess of $12,500;
            B = .016 ((((X * 4500) + (Y * 1000)) - 12,500) ÷ N).
 
          If annual wages are less than or equal to $12,500, Then
            W = .021 (S) - (A + B).
 
          If annual wages are greater than $12,500, but less than or equal to $50,000, Then
            W = .021 (S) + .0160 (S - (12,500 ÷ N)) - (A + B).
 
          If annual wages are greater than $50,000, Then
            W = .021 (S) + .0160 ( S - (12,500 ÷ N)) + .0135 (S - (50,000 ÷ N)) - (A + B).
 
      2. Withholding Formulas for Married Taxpayers Claiming 2 Personal Exemptions:
 
          W is the withholding tax per pay period.
          S is the employee’s salary per pay period for each bracket.
          X is the number of personal exemptions. X must be 2.
          Y is the number of dependency credits. Y must be 0 or greater.
          N is the number of pay periods.
 
          A is the effect of the personal exemptions and dependency credits equal to or less than $25,000;
            A = .021 (((X * 4500) + (Y * 1000)) ÷ N).
 
          B is the effect of the personal exemptions and dependency credits in excess of $25,000;
            B = .0165 ((((X * 4500) + (Y * 1000)) - 25,000) ÷ N).
 
          If annual wages are less than or equal to $25,000, Then
            W = .021 (S) - (A + B).
 
          If annual wages are greater than $25,000, but less than or equal to $100,000, Then
            W = .021 (S) + .0165 (S - (25,000 ÷ N)) - (A + B).
 
          If annual wages are greater than $100,000, Then
            W = .021 (S) + .0165 (S - (25,000 ÷ N)) + .0135 (S - (100,000 ÷ N)) - (A + B).
 
      3. If any of the variables in the formula are negative, the negative variable should be considered zero.
               
  NOTE:  Any taxpayer may use the single taxpayer withholding formulas; however, only married taxpayers who will file a joint income tax return may use the married taxpayer formulas.
               
  Examples of the withholding formulas:
 
    Example 1:
 
      Taxpayer is claiming 1 personal exemption and 2 dependency credits. Taxpayer is paid $700 weekly (52 pay periods, $36,400 annual salary).
 
        The formula to use in this example is:
 
          W is the withholding tax per pay period.
          S is the employee’s salary per pay period for each bracket.
          X is the number of personal exemptions; X must be 0 or 1. (A personal exemption is equal to $4,500.)
          Y is the number of dependency credits; Y must be a whole number that is 0 or greater. (A dependency credit is equal to $1,000.)
          N is the number of pay periods.
 
          A = .021 (((X * 4,500) + (Y * 1,000)) ÷ N).
 
          B = .016 ((((X * 4,500) + (Y * 1,000)) - 12,500) ÷ N).
 
          W = .021 (S) + .0160 (S - (12,500 ÷ N)) - (A + B).
 
        The calculation for this example:
 
          S = $700
          X = 1
          Y = 2
          N = 52
 
          A = the effect of the personal exemptions and dependency credits equal to or less than $25,000;
            A = .021 (((1 * 4,500) + (2 * 1,000)) ÷ 52)
            A = .021 ((4,500 + 2,000) ÷ 52)
            A = .021 (6,500 ÷ 52)
            A = .021 (125.00)
            A = 2.63
 
          B = the effect of the personal exemptions and dependency credits in excess of $25,000;
            B = .016 ((((1 * 4,500) + (2 * 1,000)) - 12,500) ÷ 52)
            B = .016 (((4,500 + 2,000) - 12,500) ÷ 52)
            B = .016 ((6,500 - 12,500) ÷ 52)
            B = .016 (0 ÷ 52)
            B = .016 (0)
            B = 0
 
          Remember, if any of the variables in the formula are negative, the negative variable should be considered zero.
 
          W = the withholding tax per pay period;
            W = .021 (700) + .0160 (700 - (12,500 ÷ 52)) – (A + B)
            W = 14.70 + .0160 (700 - 240.38) – (2.63 + 0)
            W = 14.70 + .0160 (459.62) – 2.63
            W = 14.70 + 7.35 – 2.63
            W = $ 19.42
 
    Example 2:
 
      Taxpayer is claiming 2 personal exemptions and 3 dependency credits. Taxpayer is paid $4,600 bi-weekly (26 pay periods, $119,600 annual salary).
 
        The formula to use in this example is:
 
          W is the withholding tax per pay period.
          S is the employee’s salary per pay period for each bracket.
          X is the number of personal exemptions. X must be 2. (A personal exemption is equal to $4,500.)
          Y is the number of dependency credits. Y must be 0 or greater. (Each dependency credit is equal to $1,000.)
          N is the number of pay periods.
 
          A = .021 (((X * 4,500) + (Y * 1,000)) ÷ N).
 
          B = .0165 ((((X * 4,500) + (Y * 1,000)) - 25,000) ÷ N).
 
          W = .021( S ) + .0165 (S - (25,000 ÷ N)) + .0135 (S - (100,000 ÷ N)) - (A + B).
 
        The calculation for this example:
 
          S = $4,600
          X = 2
          Y = 3
          N = 26
 
          A = the effect of the personal exemptions and dependency credits equal to or less than $25,000;
            A = .021 (((2 * 4,500) + (3 * 1,000)) ÷ 26)
            A = .021 ((9,000 + 3,000) ÷ 26)
            A = .021 (12,000 ÷ 26)
            A = .021 (461.54)
            A = 9.69
 
          B = the effect of the personal exemptions and dependency credits in excess of $25,000;
            B = .0165 ((((2 * 4,500) + (3 * 1,000)) - 25,000) ÷ 26)
            B = .0165 (((9,000 + 3,000) – 25,000) ÷ 26)
            B = .0165 ((12,000 – 25,000) ÷ 26)
            B = .0165 (0 ÷ 26)
            B = .0165 (0)
            B = 0
 
          Remember, if any of the variables in the formula are negative, the negative variable should be considered zero.
 
          W = the withholding tax per pay period;
            W = .021 ( 4,600 ) + .0165 (4,600 - (25,000 ÷ 26)) + .0135 (4,600 - (100,000 ÷ 26)) - (A + B)
            W = 96.60 + .0165 (4,600 – 961.54) + .0135 (4,600 – 3,846.15) - (9.69 + 0)
            W = 96.60 + .0165 (3,638.46) + .0135 ( 753.85 ) – 9.69
            W = 96.60 + 60.03 + 10.18 – 9.69
            W = $ 157.12


Filing an Amended Return for periods beginning January 2012

Form L-1 is used to reconcile the payments made within this quarter to the actual amount of taxes withheld. Adjustments for prior quarters cannot be made in the current quarter. If in reviewing your prior quarter records you discover an error in reporting tax due, it will be necessary to file amended returns for all quarters in which errors were made. When filing an amended return, you must use the correct form for the quarter being amended, report the corrected amounts, and mark the “Amended Return” box. Below are the instructions to file an amended Form L-1 Lines 1 - 5.

  1. Line 1-3 – Enter the correct amount of Louisiana income tax withheld or required to be withheld from the wages of your employees for the appropriate month.
  2. Line 4 – Add Lines 1, 2 and 3. This is the total amount of taxes withheld for the quarter.
  3. Line 5 – Calculate the total amount of withholding taxes that was remitted to the department during the quarter.

Filing an Amended Return for periods prior to January 2012

Adjustments of tax for prior periods are not allowed on a current return. If in reviewing your prior period records you discover an error in reporting tax due, it will be necessary to file amended returns for all filing periods in which errors were made. You must use the correct form for the tax year in which the period you are amending fell and you must mark the “Amended” box on the return. Below are the instructions to file an amended Form L-1 Lines 1 - 4.

  1. Line 1 – Enter the correct amount of Louisiana income tax withheld or required to be withheld from the wages of your employees.
  2. Line 2 – Penalty: Due only if the original return was not timely filed. Penalty is computed on the actual tax withheld on Line 1 at a rate of 5 percent per 30-day period or any fraction thereof, from the filing deadline of the original return to the date the original return was filed. The maximum late penalty is 25 percent.
  3. Line 3 – Interest: Calculated on the actual tax withheld on Line 1. Because the interest rate varies from year to year, refer to the schedule of interest rates on uncollected taxes, Form R-1111.
  4. Line 4 – Remittance for amount due should be made by check, money order, or by electronic funds transfer. Cash should not be sent through the mail.