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Withholding Income Tax

If you have employees working at your business, you’ll need to collect withholding taxes. These are state and county taxes that are withheld from your employees’ wages.

Registration for withholding tax is necessary if the business has:

  • Employees
  • Non-resident shareholders
  • Non-resident partners
  • Beneficiaries for distributions of income.

If you previously registered to file withholding tax, you must still file Forms WH-1 and WH-3 for each period even if no tax is due or to report no employees for that time period. Late filed returns are subject to a penalty of up to 20%, and a minimum penalty of $5. Late filed WH-3’s are subject to a penalty of $10 per withholding document (W-2, 1099, K-1).

Beginning in 2023, if you file your Form WH-3 by paper, you must also complete the new Schedule IN-WH3. Schedule IN-WH3 will also be required for prior year returns.

How to Register

To register for withholding for Indiana, the business must have an Employer Identification Number (EIN) from the federal government. In addition, the employer should look at Departmental Notice #1 that details the withholding rates for each of Indiana’s 92 counties.

Additional Resources

Below you’ll find more information about withholding tax and additional resources including the business tax application, frequently asked questions and county tax rates.

If you have questions about withholding tax, visit INBIZ.

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