Tax Department Tip of the Month
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| Taxable Wage Example - One Employee | ||||
|---|---|---|---|---|
| Quarter | 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter |
| Total Wages Paid | 7,500.00 | 7,500.00 | 7,500.00 | 7,500.00 |
| Wages over $9,000.00 | 0.00 | 6,000.00 | 7,500.00 | 7,500.00 |
| Taxable Wages Paid | 7,500.00 | 1,500.00 | 0.00 | 0.00 |
| Effective Tax Rate | 2.70% | 2.70% | 2.70% | 2.70% |
| Amount of Tax | $202.50 | $40.50 | 0.00 | 0.00 |
This example illustrates how to arrive at the taxable wage amount for an employer with multiple employees.
| Taxable Wage Example - Multiple Employees | ||||
|---|---|---|---|---|
| 1st Qtr Total | 1st Qtr Taxable | 2nd Qtr Total | 2nd Qtr Taxable | |
| Employee A | 5,000.00 | 5,000.00 | 5,000.00 | 4,000.00 |
| Employee B | 10,000.00 | 9,000.00 | 10,000.00 | 0.00 |
| Employee C | 3,000.00 | 3,000.00 | 3,000.00 | 3,000.00 |
| LINE 13 Total Wages | 18,000.00 | 18,000.00 | ||
| LINE 14 Taxable Wages | 17,000.00 | 7,000.00 | ||
An employer must file reports for each quarter even if he has zero taxable wages and does not owe any tax. It is important that Line 14 contain either the taxable wage amount or a 'zero' if there are no taxable wages. Although reimbursing employers do not pay this tax, they must also submit an Employer's Quarterly Report to report wages paid to their employees.
Taxable wages reported by a predecessor account may be used in arriving at the $9,000.00 taxable wage base for the successor account during the same calendar year provided there has also been a transfer of compensation experience between accounts.
If you have questions or need additional information, please e-mail the TWC Tax Department at tax@twc.state.tx.us.
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