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Withholding Income

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.

How to Register for Withholding Tax

For questions about registering for Withholding tax, visit INBIZ.

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

Forms WH-1 and WH-3

 

Form WH-1 

Form WH-3 

What is it?

Periodic withholding tax return 

Annual withholding reconciliation 

Purpose 

Report & remit tax withheld each period

Match yearly WH-1 totals to wage statements 

Filing Schedule 

Monthly, early-monthly, or annual 

Annually (due January 31) 

Where to File 

INTIME or SFTP 

INTIME or SFTP 

Late Penalty

Up to 20% of tax owed (min $5)

$10 per wage statement

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 no employees are reportable for that time period.

Electronic Filing of Withholding Taxes

Any business who files more than 25 W-2, W-2G, or 1099-R statements must file them electronically (per Indiana Code 6-3-4-16.5). A list of electronic methods and options for filing Withholding is available.

Customers can electronically submit withholding files to DOR via one of the following options:

This video is available to assist you in electronically filing withholding returns.

Choosing your file format:

This chart details the various withholding formats available, as well as the supported wage statements for each, to help you choose your filing method. File specifications, schemas, and business rules for each method can be found below:

XML Resources:

Flat File Resources:

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.