Why Offering Local Tax Forms Online Is Essential for Compliant Payroll Processing

If you offer a payroll product, then you're familiar with Form W-4 from the Internal Revenue Service and the importance of offering payroll tax forms like the W-4 in a user-friendly, electronic format. But are you also ensuring that your customers’ new hires have easy access to digital local tax forms? 

Providing all of the correct withholding forms—not just state and federal forms, but also local tax forms—to your customers and their employees ensures you’re withholding the proper income taxes on employee wages, at the proper tax rates, every pay period. This reduces the possibility that your customers’ tax filings will be audited. It also improves the employee experience by streamlining their form-filling process, saving them time and headaches. And it ensures that they won’t owe more money than they’re expecting when they file their tax returns at the end of the tax year.

Navigating local tax forms

Federal, state, and local tax forms are completed by employees and independent contractors in order to inform their employer of the correct income and employment taxes to withhold from their earned income. Tax forms allow them to claim dependents and make other assertions of their tax situation.

If you provide a payroll product that manages onboarding employees residing in states and localities with additional local income tax withholding forms, you know how vital it is to have the correct forms easily accessible. So, making online withholding forms available is a game-changer.

Let’s take Michigan, for example. Across the US, the IRS requires residents to fill out a Form W-4. But if a person lives and works in Michigan, they also have to fill out state income tax Form MI-W4 (Employee's Michigan Withholding Exemption Certificate). After that, there are 22 city income tax forms based on where a person lives within Michigan. If the employee is a Big Rapids resident, they need a Form BRW-4. A Flint resident? That’s Form FW-4. 

New York serves as another example where payroll teams have to manage multiple, complex tax forms. Depending on specific situations, employees may need to complete forms such as IT-2104-IND (Certificate of Exemption from Withholding for exempt Native Americans) or IT-2104-MS (New York State Withholding Exemption Certificate for Military Service Personnel). All of these forms ensure your customers' tax liabilities are correct and their employees are paying the right amount of tax each year.

The difficulty increases when employees work in one state but live in another. In these cases, they typically have to complete nonresident forms as well. Think back to Michigan: if an employee doesn’t live in the state but works there, that person must complete a Form MI-NR (Certificate of Non-residency). Offering the right forms in every scenario is streamlined with digital paperwork.

Streamline local tax form access

With Symmetry Payroll Forms, all requisite local tax forms, as well as state and federal income tax forms, are available electronically, so you can embed them into your payroll product to be accessible at any time. With our geocoding technology that provides coordinate-level location accuracy, Symmetry Payroll Forms ensures all of your customers’ employees and independent contractors receive all applicable tax forms at onboarding as well as new forms as needed throughout their employee lifecycle due to changes in residency and more.

Moreover, our technology can enable your product to complete, validate, and submit tax forms electronically, resulting in a more streamlined and automated experience for your customers.