Due to the recent enactment in New York of the Marriage Equality Act, The New York State Department of Taxation and Finance has updated information for same-sex married employees and their employers.
Employers Should Not Withhold on Certain Benefits
New York employers of same-sex married employees should institute the following changes:
- Don’t withhold New York tax on certain benefits provided to a same-sex married employee. You don’t need to withhold tax for New York State, New York City, or Yonkers income tax purposes on the value of certain benefits (e.g., domestic partner health benefit), even though it’s subject to federal withholding. This applies if the employee’s federal taxable wages subject to withholding include the value of the benefits, and the value of these benefits wouldn’t be included in taxable wages if provided to a different-sex married spouse.
- When reporting the annual wage totals on Form NYS-45, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return, Part C, column d; report the federal wages minus any amount of benefits discussed above that you don’t withhold on for New York purposes (plus any amount of any taxable 414(h) retirement contributions and any IRC 125 amounts from a New York City flexible benefits program for governmental employees).
- Continue to use the rules described in the NYS-50, Employer’s Guide to Unemployment Insurance, Wage Reporting, and Withholding Tax for reporting State and local wages on federal Form W-2, Wage and Tax Statement.
Same-Sex Employees Should Consider Filing a New Form IT-2104
Same-sex employees should consider filing a new Form IT-2104, Employee’s Withholding Allowance Certificate, if they will be changing their filing status on their 2011 New York income tax return. They should also provide proof of a legal marriage to their employer so that the employer can stop withholding New York tax on the value of benefits subject to federal withholding that wouldn’t be subject to New York withholding, (e.g., domestic partner health benefit).
Contact Vision Payroll Today
Contact Vision Payroll if you have further questions on the changes in New York to withholding on same-sex married employees.