The Indiana Department of Revenue (the “Agency”) has posted a new Departmental Notice #1 (“Notice”) with the effective date of January 1, 2009. This document provides information on how to compute withholding for state and county income taxes as well as a detailed list of all county tax rates. A copy of the notice can now be found on the Agency’s website located at http://www.state.in.us/dor/files/dn01.pdf.

Frequently Asked Questions

How do I know if I'm affected?

You may be affected if you currently withhold Indiana state and county income taxes from employee’s wages or have a valid Indiana Taxpayer ID Number.

What steps do I need to take next?

1.    View Page 2 of the Notice to see if your employees’ county tax rates have changed. Rate increases or decreases will be noted by an asterisk (*).  If a county is in bold and underlined, a new county income tax has been adopted.

2.    If your employee’s county tax rate has changed or if you want to verify your employee’s county tax rate in QuickPayroll:

·         Go to the Employee List.  

·         Double click on a subject employee.

·         Select Payroll Info tab.

·         Select the Taxes tab and then the Other tab.

·         In the designated area for Indiana County %, enter the county tax rate as a percent.  For example, the Resident Rate for Adams County lists 0.01124.  Convert and enter the rate in QuickPayroll as a percentage of 1.124%.

·         Click OK twice. 

·         Change the county tax rate for each subject employee.