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Kentucky Withholding: What you need to know

Kentucky employers obligated to withhold federal income taxes must withhold Kentucky income taxes from all wages paid to residents (whether working in or out of Kentucky) who are regularly employed in the employer's usual course of business. Wages of nonresidents are also subject to withholding to the extent that the wages are for personal services rendered in Kentucky by a regular employee in the employer's usual course of business. Wages subject to federal withholding are generally subject to Kentucky withholding. Taxes must be withheld each payroll period based on tables or a computer formula provided by the Department of Revenue.
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Reciprocal tax agreements. A nonresident employee is not subject to withholding when the employee is a resident of a state having a reciprocal exemption agreement with Kentucky. Residents of Illinois, Indiana, Michigan, Ohio, West Virginia, and Wisconsin must file a certificate of nonresidence, Form 42A809, to obtain this exemption.
Withholding exemption. The Kentucky Department of Revenue strongly encourages all employers to utilize Form K-4E, Special Withholding Exemption Certificate, when applicable. This certificate should be completed by employees who anticipate no Kentucky Income Tax liability. If the employee is eligible to claim this exemption, the employer does not withhold Kentucky income tax from wages. The K-4E may be used instead of Form K-4 by those employees qualified to claim the exemption.
Cost of dependent health care. Kentucky has conformed its income tax law with the federal law so that the cost of healthcare coverage for dependent children is exempt from state income tax until the child reaches age 26.
Electronic filing. The Withholding Return and Payment System ...

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Kentucky Withholding Resources

Withholding Products

Taxation and Withholding Explained Webinar Recording
BLR Webinar: "Taxation and Withholding Explained: Compliance Tips for Multistate Employers""
Employment Taxes in Multiple States Webinar Recording
BLR Webinar: "Employment Taxes in Multiple States: Step-by-Step Calculation and Reporting Strategies""
Payroll Webinar Recording
BLR Webinar: "Payroll: How to Legally Handle Tax Levies and Garnishments""
IRS and ICE Audit Alert Webinar Recording
BLR Webinar: "IRS and ICE Audit Alert: How to Avoid and Manage Payroll and Recordkeeping Scrutiny""
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Claim Your Free Copy of Top 100 FLSA Overtime Q&As

We’ve compiled a list of the 100 most commonly asked questions we have received on the federal Fair Labor Standards Act (FLSA) overtime regulations.
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This report, "Top 100 FLSA Q&As", is designed to provide you with an examination of the federal FLSA overtime regulations in Q&A format, including valuable tips for bringing your workplace into compliance in an affordable manner.

At the end of the report, you will find a list of state resources on wage and hour issues. This report includes practical advice on topics such as:
  • FLSA Coverage: How FLSA regulations apply to all employers and any specific exemptions from the overtime requirements
  • Salary Level: Qualifying for exemptions and nonexempt employees
  • Deductions from Pay: Deducting for violations, disciplinary reasons, sick leave, or personal leave

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