Payroll Tax Information for Missouri

Missouri employers and employees are required to pay federal and state payroll taxes. The Internal Revenue Service administers federal payroll tax laws; the Missouri Department of Revenue oversees state income tax laws; and the Missouri Department of Labor, Division of Employment Security administers state unemployment insurance.

Withholding Forms

The IRS requires Missouri employers to give new employees a W-4 form to complete. The form helps the employer to determine federal income tax withholding. The Missouri Department of Revenue requires employers to give Missouri residents and nonresidents who perform all services in Missouri an MO W-4 form to complete — the tax withholding procedure for a nonresident is the same as for a resident.

Employee Calculations

The employer uses the employee’s W-4 form and the IRS Circular E’s withholding tax tables to figure federal income tax withholding. Specifically, it uses the filing status and allowances shown on the employee’s W-4 and the tax table that corresponds with her filing status, allowances, wages and pay period to determine the amount. The employer withholds Social Security tax at 4.2 percent of gross income, up to $106,800 for the year; and Medicare tax at 1.45 percent. The employer uses the employee’s MO W-4 form and the state withholding tax table to figure the employee’s state income tax withholding. The state gives the employee a certain sum for personal exemption, standard deduction, each claimed dependent and federal income tax withheld based on her state income tax filing status — these amounts are not taxable.

Employer Taxes

Missouri employers pay Social Security tax at 6.2 percent of gross income, up to $106,800 annually; and Medicare tax at 1.45 percent. For tax year 2011, it pays federal unemployment tax at 6.2 percent before July 1, and at 6 percent after June 30. If it paid its state unemployment insurance in a timely manner, it can take the maximum credit of 5.4 percent against its FUTA tax, which lowers the rate to .8 percent and .6 percent, respectively. For tax year 2011, the employer pays state unemployment insurance on the first $13,000 paid to each worker. The unemployment insurance tax rate varies by employer. A new employer pays the new employer rate for the first three years. Thereafter, the rate depends on the employer’s yearly taxable payroll, the amount of unemployment insurance the employer has previously paid and the number of former employees who file unemployment claims against the employer.

Considerations

Missouri employers make federal payroll tax payments and report its liabilities (usually quarterly) to the IRS. It pays state income tax withholding to the Missouri Department of Revenue. The department informs the employer of its reporting/filing frequency, such as monthly or quarterly. The employer pays state unemployment insurance, and files quarterly wage reports, to the Missouri Department of Labor, Division of Employment Security.

References

• IRS: Circular E
• Social Security Administration: Social Security and Medicare Tax Rates
• Missouri Department of Revenue: Employer's Tax Guide
• Missouri Department of Labor: Tax Rates
• American Payroll Association: State Unemployment Insurance Taxable Wage Bases 2008 - 2011
• Missouri Department of Revenue: MO W-4 Form