District of Columbia Withholding laws & HR compliance analysis

District of Columbia Withholding: What you need to know

All District of Columbia employers that are subject to the federal income tax law must withhold District income taxes from wages paid to resident employees. Employers may calculate the amount that must be withheld from employees' paychecks using either the wage bracket tables or the percentage method; detailed information about both methods is available from the Office of Tax and Revenue (OTR).
The term “employer” means employer as defined in Section 3401(d) of the Internal Revenue Code of 1986 and includes any person, firm, or corporation (including organizations that may themselves be exempt from income tax, such as religious organizations), as well as the federal or district governments and any agency, instrumentality, or political subdivision of those governments, that employs or uses the services of one or more individuals for hire, remuneration, or compensation of any kind.
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District withholding applies to all wages subject to federal withholding. In addition, income tax must be withheld each pay period from wages of certain employees who may be exempt from federal withholding, who have certified that they have no federal tax liability.
The wages covered by the District’s withholding tax law include all remuneration, whether in cash or another form, paid to an employee for services performed for his or her employer. For this purpose, the term “wages” covers all types of employee compensation, including salaries, fees, bonuses, and commissions. Tips or gratuities accounted for by the employer, vacation allowances, bonuses, and back pay are considered wage payments for withholding purposes. Distributions from retirement plans or accounts are subject to ...

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