Maintain Employer Withholding Tax
- Do I need to register with the Department of Revenue for withholding tax?
- How do I file and report withholding tax?
- How do I compute the amount of tax to withhold from my employees wages?
- What is the timely compensation deduction and how do I calculate it?
- Due dates
- Filing/Paying a Withholding Tax Return Late
- Closing an Account
- Credits and Refunds
- Common Filing Mistakes to Avoid
Do I need to register with the Department of Revenue for withholding tax?
As an employer, you must withhold Missouri State Income Tax from employees who are:
- Earning wages in Missouri
- Missouri residents working in a state with no income tax
- Missouri residents working in a state with lower income tax rate than Missouri
Missouri does not honor reciprocity agreement(s) with any other state; therefore, if an out of state employer hires a Missouri resident, the employer is responsible for paying Missouri withholding if applicable.
If you are a Missouri employer with a nonresident employee, you still need to withhold wages paid to nonresidents for services performed in Missouri as in the case of a Missouri resident. However, if a nonresident does not work in Missouri, even if they are paid from a Missouri office, you do not have to withhold.
If you are a Non-Missouri Employer who conducts business or maintains an office in Missouri, you must withhold the amount determined for Missouri income tax purposes, minus any amount deducted and withheld for your own state. If there is no state withholding in your business' home state, you withhold, and send the full amount determined for Missouri.
For additional information visit the Employer’s Tax Guide.
For information concerning Business Tax Registration and the process to apply, as well as assistance for new businesses to understand all the requirements, visit our website /taxation/business/registration/requirements.html or contact us via email at firstname.lastname@example.org or call (573) 751-5860.
How do I file and report withholding tax?
Employers registered as a monthly, quarterly or annual filer with the Department of Revenue will receive a pre-printed voucher booklet in which you will use to report tax withheld for the corresponding file period. If you do not have a pre-printed voucher booklet, obtain a blank Form MO-941.
Withholding tax returns may be filed on a quarter-monthly (weekly), monthly, quarterly or annual basis. Your filing frequency is determined by the amount of income tax that is withheld from the wages you pay.
Employers withholding over $9,000 per month must file and pay using the quarter-monthly (weekly) frequency. Quarter-monthly filers are also required to pay electronically.
Employers withholding $500 to $9,000 per month must file and pay on a monthly basis.
Employers withholding $100 per quarter to $499 per month must file and pay on a quarterly basis.
Employers withholding less than $100 per quarter will file and pay on an annual basis.
Your filing frequency is reviewed by the Department of Revenue on an annual basis. If this review indicates that your filing frequency should be changed, the change will be made and notification will be sent to you.
Every employer with an active account is required to file a return (Form MO-941) even if there is no tax to report.
How do I compute the amount of tax to withhold from my employees wages?
You must have a completed Form MO W-4 from your employee. You will use this information to calculate the appropriate amount of tax to withhold. You can manually calculate the tax amount by using the Tax Formula or you can electronically calculate it by using the Withholding Tax Calculator.
What is the timely compensation deduction and how do I calculate it?
Employers, except the United States, the state of Missouri, and all agencies and political subdivisions of the state of Missouri or the United States Government, who file and pay their MO-941 return in a timely manner may deduct and retain the following percentages.
0 to $5,000
$5,001 to $10,000
In Excess of $10,000
This is an annual accumulative total. The employer is not entitled to compensation if payment is not made on or before the due date. If the compensation deduction is allowable, the deduction must be deducted on each return filed.
Your withholding tax return is considered timely if it is postmarked on or before the required due date. If a metered postmark differs from the U.S. Postal Service postmark, the U.S. Postal Service postmark will be used as evidence of timely filing.
The Department publishes a Tax Calendar each year which includes all due dates. In addition, the Department publishes withholding tax due dates in the Employer’s Tax Guide (Form 4282).
When the due date falls on a Saturday, Sunday or holiday, your return will be considered timely filed if it is postmarked by the next business day.
Filing/Paying a Withholding Tax Return Late
If your return is filed or paid late, interest and additions to tax may be charged.
The interest percentage rate for delinquencies is updated annual and published in the Employer’s Tax Guide (Form 4282). Interest may be calculated in two ways:
- Multiply the total amount of tax due by the current annual percentage rate. Multiply the result by the number of days late. Then divide that amount by 365 (366 if within a leap year). The
following are examples based on a 5% interest rate.
$100.00 x 5% = $5.00 x 30 days late = $150.00
$150.00 divided by 365 = $.41
- Multiply the total amount of tax due by the daily rate. Multiply the result by the number of days late.
$100.00 x .0001370 = $.0137
$.0137 x 30 days late = $.41
Note: Interest is calculated on the tax amount due only.
Additions to tax is a penalty charged for failure to pay or failure to file the required withholding tax return(s) by the due date.
When your withholding tax return has been filed, but not paid by the required due date, you should calculate your penalty by multiplying the tax amount due by 5 percent. This penalty does not increase.
When no withholding tax return has been filed, you should calculate your penalty by multiplying the tax amount due by 5 percent for each month you are late. This penalty increases each month you fail to file the return. The maximum amount of penalty is 25 percent.
Please visit our website to use the Additions to Tax and Interest Calculator.
Closing an Account
You can close your account by completing Form MO-941F.
Credits and Refunds
Employers may visit the Online Credit Inquiry System to view current credits on their account. From this site, employers may also complete a Refund Request Form.
If an employer has mistakenly overpaid on a return and the credit is not shown on the Online Credit Inquiry System, an Employer's Withholding Tax Return Correction (MO-941C) must be filed first.
Employers may elect to take any approved overpayment as a credit on a future return by indicating the amount on line three of Form MO-941.
Common Filing Mistakes to Avoid
- Every business with an active account is required to file a return even if no tax is due. If a return is not received, the Department of Revenue will issue an estimated assessment.
- Make sure you are using the correct form (Form MO-941) to submit your withholding tax return. If you do not have a withholding tax return you may obtain one here.
- Only submit one return (Form MO-941) for each filing period. Filing multiple returns for the same file period can cause critical errors on your account. If adjustments need to be made, please file a Employer’s Return of Income Taxes Withheld (Form MO-941) and mark the amended box on the top right corner for each period to be adjusted.