2018 CALIFORNIA EMPLOYER’S GUIDE

1 2018 CALIFORNIAEMPLOYER S GUIDEDE 44 Rev. 44 (1-18) (INTERNET) CUDE 44 Rev. 44 (1-18) (INTERNET) Cover + 120 pagesCorrection, page 6: The first PIT and SDI deposit due date for employers with a quarterly or annual federal deposit requirement that have accumulated less than $350 of state PIT withholding has been corrected to April 30, 2018. Important InformationNew Electronic Reporting and Payment Requirement: As of January 1, 2018, employers must electronically submit employment tax returns, wage reports, and payroll tax deposits to the EDD. For more information, visit or refer to page for Business: Employers can register, view, and manage their employer payroll tax account, file reports, make deposits, and pay liabilities online. For more information, visit or refer to page Information Data Exchange System (SIDES): Employers and third-party administrators can elect to electronically receive and respond to the EDD Notice of Unemployment Insurance Claim Filed (DE 1101CZ) using SIDES.

2 For more information, visit Employee Registry (NER): All employers are required by law to report all newly hired or rehired employees to the NER within 20 days of their start-of-work date. For more information visit, or refer to page Seminars: The EDD offers no-cost seminars to help employers comply with state payroll tax laws. For more information, visit or refer to page Prevention, Detection, Reporting, and UI Rate Manipulation: For information on how to prevent and detect UI fraud, visit or refer to page Payment of UI Benefits is a serious problem that has a financial impact on employers and can result in higher UI taxes for all employers. You can help by responding timely to requests for wage information. For more information, visit Employer Newsletter: For the latest news and helpful information, refer to the quarterly online newsletter at payroll Tax Rates, Taxable Wage Limits, and Maximum Benefit AmountsUnemployment Insurance (UI) The 2018 taxable wage limit is $7,000 per employee.

3 The UI maximum weekly benefit amount is $450. The UI tax rate for new employers is percent (.034) for a period of two to three years. The employer rates are available online at Training Tax (ETT) The 2018 ETT rate is percent (.001) on the first $7,000 of each employee s Disability Insurance (SDI) The 2018 SDI withholding rate is percent (.01). The rate includes Disability Insurance (DI) and Paid Family Leave (PFL). The SDI taxable wage limit is $114,967 per employee, per year. The 2018 DI/PFL maximum weekly benefit amount is $1, Personal Income Tax (PIT) WithholdingCalifornia PIT withholding is based on the amount of wages paid, the number of withholding allowances claimed by the employee, and the payroll period. Please refer to page 13 for additional information on PIT withholding.

4 The CALIFORNIA PIT withholding schedules are available on page 17 and online at # additional rate information, refer to page 10 or visit 44 Rev. 44 (1-18) (INTERNET) Inside Cover + 120 pagesCALIFORNIA LABOR AND WORKFORCE DEVELOPMENT AGENCY Edmund G. Brown Jr. Governor CALIFORNIA LABOR AND WORKFORCE DEVELOPMENT AGENCY Edmund G. Brown Dear CALIFORNIA Employer: The Employment Development Department (EDD) recognizes your valuable contribution to the economic well-being of this great state. You can count on the EDD to provide you with the tools needed to help keep you informed and in compliance with your payroll tax responsibilities. As of January 1, 2018, all employers must electronically submit their employment tax returns, wage reports, and payroll tax deposits to the EDD.

5 To learn more about the new e-file and e-pay mandate, refer to page 49 of this GUIDE or visit You can fulfill the e-file and e-pay mandate by enrolling in e-Services for Business at Use e-Services for Business to file, adjust, and print returns, make payments, view and update your account information, save basic account information for future transactions, and much more. e-Services for Business is a fast, easy, and secure way to manage your employer payroll tax account online, and is available at no cost, 24 hours a day, 7 days a week. In addition to payroll taxes, our website contains information critical to employers and their employees on topics such as Unemployment Insurance, Disability Insurance, jobs and training, labor market information, seminars, and EDD forms and publications.

6 Visit our website at or call the Taxpayer Assistance Center at 888-745-3886. We hope these services are a great benefit to you in managing your business needs. We appreciate you doing business in CALIFORNIA . Your contribution is the driving force in CALIFORNIA s growing economy, and we wish you continued success in the years ahead. Sincerely, PATRICK W. HENNING Director DE 44 Rev. 44 (1-18) (INTERNET) Director s Letter + 120 pagesMANAGE YOUR EMPLOYER payroll TAX ACCOUNT ONLINE!e-Services for BusinessFile reports, make deposits, update addresses, and much today! 44 Rev. 44 (1-18) (INTERNET) EDD Info + 120 Taxpayer Assistance Center 888-745-3886DE 44 Rev. 44 (1-18) (INTERNET) i + 120 pagesSeminars to Help Employers Succeed .. 1 Introduction .. 2 Quick and Easy Access for Tax Help, Forms, and Publications.

7 3 How to Get Started .. 4 Flowchart .. 52018 Forms and Due Dates .. 6 Who Is an Employer and When to Register .. 7 Who Is an Employee? .. 8 Common Law Employee or Independent Contractor .. 8 What Are State payroll Taxes? .. 9 Unemployment Insurance (UI) .. 9 Employment Training Tax (ETT) .. 9 State Disability Insurance (SDI) .. 9 CALIFORNIA Personal Income Tax (PIT) .. 9 State payroll Taxes (table) .. 10 Help Us Fight Fraud .. 10 What Are Wages? .. 11 Subject Wages .. 11 Personal Income Tax (PIT) Wages .. 11 Are Subject Wages and PIT Wages the Same? .. 11 Employers Subject to CALIFORNIA Personal Income Tax (PIT) Only .. 11 Meals and Lodging .. 12 Additional Information .. 12 Personal Income Tax (PIT) Wages Subject to CALIFORNIA Withholding.

8 13 How to Determine Which Wages Require PIT Withholding .. 13 Marital Status, Withholding Allowances, and Exemptions Form W-4 and DE 4 .. 13 Employer s Obligations for the Form W-4 and DE 4 .. 14 How to Determine PIT Withholding Amounts .. 15 What if Your Employee Wants Additional PIT Withholding? .. 15 How to Withhold PIT on Supplemental Wages .. 15 Quarterly Estimated Payments .. 15 Wages Paid to: CALIFORNIA Residents .. 16 Nonresidents of CALIFORNIA .. 16 PIT Withholding on Payments to Nonresident Independent Contractors .. 16 Additional Information .. 16 CALIFORNIA Withholding Schedules for 2018 .. 17 Electronic Filing and Payment Requirements E-file and E-pay Mandate for Employer .. 49 Online Services e-Services for Business.

9 50 Required Forms .. 52 Report of New Employee(s) (DE 34) Overview .. 53 Sample DE 34 Form .. 54 Report of Independent Contractor(s) (DE 542) Overview .. 55 Sample DE 542 Form .. Taxpayer Assistance Center 888-745-3886DE 44 Rev. 44 (1-18) (INTERNET) ii + 120 pages payroll Tax Deposit (DE 88) Overview .. 57 Withholding Deposits .. 58 CALIFORNIA Deposit Requirements .. 58 Due Dates for Quarterly Tax Deposits .. 61 2018 Quarterly Payment Table .. 61 Correcting payroll Tax Deposits .. 62 Quarterly Contribution Return and Report of Wages (DE 9) Overview .. 64 Correcting a Previously Filed DE 9 .. 65 Quarterly Contribution Return and Report of Wages (Continuation) (DE 9C) Overview.

10 66 Correcting a Previously Filed DE 9C .. 67 Quarterly Contribution and Wage Adjustment Form (DE 9 ADJ) Overview .. 68 Sample DE 9 ADJ Form .. 69 Federal Forms W-2 and 1099 .. 71 Change to Your Business Status .. 73 Business Name Change .. 73 Mailing Address Change .. 73 No Longer Have Employees .. 73 Close Your Business .. 73 Reopen Your Employer payroll Tax Account .. 74 Purchase, Sell, Transfer, or Change Ownership .. 74 What Is a Successor Employer? .. 75 It Is Against the Law to Change/Purchase a Business Entity Solely to Obtain a Lower UI Rate .. 75 Additional Requirements .. 75 Posting Requirements .. 75 Required Notices and Pamphlets .. 75 Earned Income Tax Credit Information Act .. 76 Plant Closure or Mass Layoff (WARN) .. 77 Government Contractor Job Listing Requirements.