Deel withholds and remits taxes on a PEO employee's income. Employees are required to file federal, and where applicable, state taxes annually through a tax return.
Employee Tax Returns and Tax Documents
PEO Employee tax rate in the United States depends on a number of factors including their annual taxable income, number of claimed dependents, and any deductions to their income. Taxes can also be accessed by the PEO employee's state or local government. Taxes are withheld by Deel in accordance with the Internal Revenue Service (IRS) and state and local requirements.
The employee's withholding rate is determined by their income, filing status, number of dependents claimed, and deductions to their income. The employees may also request additional amounts to be withheld from their paychecks. This information is collected on the W-4 Employee’s Withholding Certificate as part of the PEO employee onboarding process. The IRS Tax Withholding Estimator can help employees in calculating their tax withholdings.
Mandatory contributions for Medicare and Social Security as well as any applicable local taxes are also deducted from the employee's pay.
Important Dates:
End of January April 15 |
W-2 Wage and Tax Statement is available on Deel Your Federal tax return is due |
State tax return due dates vary state by state, but usually occur on or around the IRS due date.
Tax Documents
The employee's W-2 Wage and Tax Statement will be available for download from the Deel Tax Documents tab at the end of January. They can use this form to file their annual return.
Tax Returns
The tax year in the United States is January 1 through December 31. The Federal tax return is due by April 15. State Taxes are filed separately from the employee's federal Tax Return. Due dates vary but usually occur on or around the IRS due date.
[ACCORDION] What forms are needed from Deel to file the annual tax return?
PEO Employees need a Form W2 from Deel to file their taxes.
[ACCORDION] What is a Form W2?
Every employer engaged in a trade or business who pays remuneration, including noncash payments of $600 or more for the year (all amounts if any income, social security, or Medicare tax was withheld) for services performed by an employee must file a Form W-2 for each employee (even if the employee is related to the employer) from whom:
- Income, Social Security, or Medicare tax was withheld.
- Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4, Employee's Withholding Allowance Certificate.
[ACCORDION] How to file the annual tax return?
Employees should use Form W2 to file their annual tax return. As an employer, we are unable to provide specific advice on how PEO employees should complete their tax forms, as individual circumstances can vary. It is recommended that employees connect with an accountant for the best support and guidance on their tax filing.
[ACCORDION] Can I change my withholdings throughout the year?
While employees cannot change their tax rates, certain tax-deductible contributions, such as eligible retirement savings plans, may reduce their tax obligations.
Additional deductions or allowances claimed when employees file their taxes may also reduce their tax obligations.
Any overpayments or underpayments resulting from their withholding rates will be reconciled when they file their tax returns.
[ACCORDION] Why is the withholding rate different from the IRS website?
The IRS withholding rate tool is an estimate only. Changes in salary, bonuses, allowances or earnings that do or do not apply to the specified tax withholding will affect the employee's withholding rate.
In addition, some taxes are deducted based on a year-to-date gross amount or have a year-to-date maximum which can alter the employee's net take home pay from payslip to payslip.
[ACCORDION] How are expenses taxed?
Expenses are reimbursements for legitimate business expenses and are generally not taxable In rare exceptions they may be subject to tax.