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Nevada Payroll Tax: Everything Employers Should Know

CAVU HCM. Federal income tax withholding tables.

When it comes to owning a business, few things can be as stressful as filing and paying payroll taxes. With a never ending stream of deadlines and steep penalties, the process alone can be daunting. 

To help simplify the tax filing process, CAVU HCM’s team of payroll experts created this guide for Nevada business owners. 

In this article, we examine the different types of payroll taxes that Nevada employers are required to file and pay, as well as the forms (state and federal) that are required to be submitted on a consistent basis.

Let’s begin.

Contents:

Types of Nevada Payroll Taxes

In Nevada, business owners are required to file and pay payroll taxes on the state and federal level. There are no local payroll taxes in Nevada, however.

In this section, we will review the primary state and federal payroll taxes that every Nevada-based employer is responsible for.

FICA and Employment Taxes

In the US, every employer must deduct Federal Insurance Contribution Act (FICA) taxes from each of their employee’s paychecks, as well as their own. FICA taxes are used to fund Social Security and Medicare, which provide millions of Americans with welfare and healthcare.’

The tax rate for FICA taxes is 7.65% – the sum of the Social Security tax rate (6.2%) and Medicare tax rate (1.45%). 

As a rule of thumb, any form of payment is considered a taxable wage. This includes base pay, regardless of an employee’s work arrangement (hourly, weekly, piecework, etc.). The only forms of payment exempt from FICA taxes are outlined in IRC section 3121(a). These exceptions include:

  • Wages paid to disabled employees that collect Social Security disability insurance benefits
  • Wages paid following an employee’s death
  • Retirement contributions by an employer
  • Expense reimbursements for driven mileage.

Every year, the Social Security Administration (SSA) sets a maximum taxable wage for FICA taxes. In 2022, the maximum taxable wage for FICA taxes is $147,000, an increase from 2021’s $142,800. 

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Federal Withholding

Like every other state, Nevada-based employers are required to withhold a part of their employees’ wages for federal income taxes.

The amount of money withheld from each employee’s check is determined by their total earnings and the information on their individual W-4 forms. Employers should use the IRS’s withholding tables and their employees’ W-4 forms to determine how much should be withheld from each individual’s paycheck. The IRS also provides an Income Tax Withholding Assistant, which can be used to expedite the process and minimize mistakes.

On top of the wages their employees earned, employers should withhold income from pension and annuity payments, lottery winnings, nonresident distributions, and similar sources of income.

To learn more about federal withholding, visit the Internal Revenue Service.

State Withholding

As of 2022, the state of Nevada does not have a personal income tax. As a result, Nevada employers do not need to withhold state income tax from their employees’ paychecks. Business owners are required to withhold federal income taxes, however.

Nevada is one of just eight states without an income tax, alongside Alaska, Florida, South Dakota, Tennessee, Texas, Washington and Wyoming. 

Nevada Modified Business Tax

While Nevada does not have a personal income tax, it does require businesses to file and pay a Modified Business Tax for any employer that is subject to the state’s Unemployment Compensation Law (NRS 612).

The Modified Business Tax applies to two categories: “General Business” (NRS 363B) and “Financial Institutions and Mining” (NRS 363A). For both categories, the tax is placed on wages paid by the employer during a quarterly period.

General businesses have an excise tax at the rate of 1.475% of total wages paid during a quarter that exceeded $50,000. Employers can receive credits of up to 50% of the amount they paid in Commerce Tax the previous year.

Alternatively, financial institutions and mining businesses have an excise tax at the rate of 2% of the total wages paid during a quarter, with the same tax credit opportunity as general businesses. Importantly, the Modified Business Tax applies to all wages paid by financial institutions, unlike general business.

Like most taxes, there are some exceptions. The following are exempt from Nevada’s Modified Business Tax:

  • Native American Tribes 
  • Nonprofit organizations under 26 U.S.C. 501(c) 
  • Political subdivisions
  • Persons who performs a domestic service (Example: housekeeper, nanny)

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Unemployment Insurance Taxes

Unemployment insurance is a form of government-provided financial aid, which supports eligible individuals pursuing new employment opportunities. While the federal government can issue it during national emergencies, unemployment insurance is typically managed on the state level.

On both the state and federal level, unemployment insurance is primarily funded by tax contributions. As a result, every business is required to contribute by paying “unemployment taxes.” 

Each year, the state sets the taxable wage base for State Unemployment Insurance (SUI) at 66 ⅔% of the average annual wage for Nevada workers in the previous calendar year. For 2022, the taxable wage rate for SUI is $36,000.

The 2022 SUI tax rate ranges from 0.25% to 5.4% for experienced employers, with an average of 1.65%. New employers, however, are assigned a SUI tax rate of 2.95%. The Career Enhancement Program (CEP) surcharge is 0.05%, remaining unchanged from 2021.

On a federal level, the Employer’s Annual Federal Unemployment (FUTA) tax rate is 6.0%, which is applied to the first $7,000 of each employee’s gross wages during a calendar year. After filing Form 940, businesses can receive tax reductions of up to 5.4%  – reducing their FUTA tax rate to as little as 0.6%.

Note: Employers are required to post a notice regarding state unemployment claims in a common space for all employees to see, typically using a poster.

Payroll Tax Forms for Nevada Employers

Like every business owner in the United States, Nevada employers must file and submit the appropriate tax forms in order to fulfill their state, and federal requirements. While these forms are accessible from the appropriate government websites, it can be difficult to figure out which forms you should file on behalf of you and your employees.

In this section, we will review the state and federal tax forms that Nevada-based business owners must file on a routine basis.

State Tax Forms

Form NUCS 4072

All employers that are subject to the Nevada Unemployment Compensation Law (NRS 612) must file Form NUCS 4072, Employer’s Quarterly Contribution and Wage Report

Employers become subject to the law beginning the calendar quarter in which they first pay wages of $225 or more in wages to their workers. Once a Nevada business owner becomes subject to the law, they are required to file quarterly reports until their account is closed by the Division of Taxation – including if they pay less than $225 in wages during a quarter.

According to the instructions for Form NUCS 4072, the following forms of payment are subject to Nevada Unemployment Compensation Law and thus must be reported:

  • Wages paid to all regular, part-time, temporary or casual employees, without regard to age.
  • Wages paid for services performed for a partnership by the wife, husband, child, or other relative of a partner.
  • Wages paid by an individual owner to a son or daughter who is 18 or more years of age.
  • Salaries and other payments made to corporate officers for their services to the corporation (including Subchapter S corporations).
  • Tips reported by employees for Internal Revenue purposes by the 10th day of the month of receipt, pursuant to 26 U.S.C. 6053(a).
  • The reasonable cash value of meals, lodging, merchandise, and other types of remuneration furnished for services.
  • Commissions and bonuses paid to employees.
  • Vacation payments.
  • Dismissal pay, severance pay, or wages in lieu of notice.
  • Salary reductions pursuant to IRC Section 125 (Cafeteria Plans) or 401K plans.

There are some exceptions, however. Per the same instructions, the following are not subject Nevada Unemployment Compensation:

  • Salaries drawn by the individual owner or partner of a business. 
  • Payments made by an employer to provide his employees with retirement benefits, sickness or accident and disability benefits, hospital expenses, or life insurance. 
  • Payments to an employee that are solely to reimburse expenses incurred away from the regular place of employment (subsistence payments).

In all cases, these exceptions do not need to be reported on Form NUCS 4072.

Nevada encourages its business owners to submit their Quarterly Contribution and Wage Report digitally using the Employer Self-Service portal.

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Form TID NO:020-TX

Employers that are subject to Nevada Unemployment Compensation Law and are categorized as a ‘General Business’ must file Form TID NO:020-TX, Modified Business Tax Return – General Business. 

For General Businesses, employers must report all wages listed on Form NUCS 4072, line 3 – all wages over $50,000 will be taxed. In the case that wages do not exceed $50,000, a form still needs to be submitted.

According to the Department of Taxation, the following health benefit deductions should not be included on this form:

  • Amounts paid for industrial injury or occupational disease insurance 
  • Payments made by the employee for health care/health insurance 
  • Amounts deducted from the wages of employees for such health care or insurance 
  • Life insurance

Like quarterly federal forms, the Modified Business Tax Return must be submitted by the last day of the month following the end of the quarter. Late filings can be subject to a penalty fee as high as 10% of the unpaid balance, with an interest rate of .75%.

Form TID NO:021-TX

For businesses categorized as financial institutions and mining companies, employers must submit Form TID NO:021-TX, Modified Business Tax Return – Financial Institutions. Only employers that are subject to Nevada Unemployment Compensation Law must submit.

Like ‘General Businesses’, financial institutions must report all wages listed on Form NUCS 4072, line 3. Unlike typical companies, however, financial institutions are required to pay taxes on all wages paid, regardless of whether it exceeds $50,000.

According to the Department of Taxation, the following health benefit deductions should not be included on this form:

  • Amounts paid for industrial injury or occupational disease insurance 
  • Payments made by the employee for health care/health insurance 
  • Amounts deducted from the wages of employees for such health care or insurance 
  • Life insurance

Form TID NO:021-TX must be submitted on a quarterly basis. For 2022, the specific deadlines to submit a Modified Business Tax Return are:

  • Q1 (January-March): 5/02/2022
  • Q2 (April-June): 8/01/2022
  • Q3 (July-September): 10/31/2022
  • Q4 (October-December): 1/13/2023

Late submissions may be subject to penalties and fines.

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Federal Tax Forms

Form W-4

In order to determine their employees’ federal withholdings, every employer is required to collect Form W-4, Employee’s Withholding Certificate, from every person on their payroll.

Form W-4 is used to calculate how much federal income tax should be deducted and withheld from an individual employee’s paycheck. In the case that their employee fails to submit a W-4 form, the employer is required to withhold federal income taxes as if the employee were a single filer with no additional entries. 

When filing Form W-4, employees are required to provide the following information:

  • Individual filing status
  • Current income
  • Amount of tax credits
  • Multiple job adjustments
  • Additional withholdings

If an employee’s financial or personal situation changes, they are entitled to update their Form W-4. If updates are made, then employers must implement those changes by the first payroll period – on or after the 30th day from the date the revisions were requested.

Form W-2 

Employers must use Form W-2, Wage and Tax Statement, to report the FICA taxes withheld from each employee’s paycheck. When filing Form W-2, employers should use the information provided on the respective employee’s Form W-4.

Business owners are required to submit a Form W-2 for every person they pay in exchange for a service – including non-cash payments greater than $600. While employees must provide the necessary information on their Form W-4s, employers are ultimately responsible for filing Form W-2 and paying the withheld taxes.

Like most federal tax forms, Form W-2 must be submitted on an annual basis, due January 31st. If January 31st falls on a weekend or holiday, then submissions are due by the next business day. Employers can submit Form W-2 digitally using the SSA’s Employer W-2 Filing Instructions and Information portal.

Form 940

In order to report their annual federal unemployment taxes, business owners must file Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return. In 2022, the Employer's Federal Unemployment (FUTA) tax rate is 6.0% – applied to the first $7,000 each employee earns during the calendar year.

According the instructions for Form 940, an employer must file if:

  • They paid wages of $1,500 or more to employees in any calendar quarter during the taxed year.
  • Had one or more employees for at least some part of a day in any 20 or more different weeks in the taxed year.
  • They meet additional requirements for household and agricultural employees, tax-exempt organizations, or local/state governments.

The IRS encourages employers to submit their forms digitally, and requires them to pay their tax deposit via Electronic Funds Transfer. For the 2022 calendar year, business owners must submit Form 940 by January 31st, 2023.

Form 941

Each quarter, employers are required to submit Form 941, Employer’s Quarterly Federal Tax Return. As the name implies, the form is used to report each employee’s withheld income taxes and FICA taxes for the quarter. 

Similar to Nevada’s state tax forms, Form 941 is due on the final day of the month that follows the end of the quarter. Specifically, the quarterly submission deadlines for 2022 are:

  • Q1 (January-March): 5/02/2022
  • Q2 (April-June): 8/01/2022
  • Q3 (July-September): 10/31/2022
  • Q4 (October-December): 1/13/2023

Generally, employers should submit Form 941-V, Payment Voucher, to pay their business’s withheld taxes. To avoid penalties, however, employers should only submit Form 941-V if:

  • Total taxes after adjustments and nonrefundable credits for either the current or preceding quarter are less than $2,500
  • There was no incurrence of a $100,000 next-day deposit obligation during the current quarter
  • Payment is being made in full with timely return
  • The employer is a monthly schedule depositor, in accordance with the Accuracy of Deposits Rule.

If an employer fails to meet any of these requirements, then they must file payment via Electronic Fund Transfer.

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How CAVU HCM Simplifies Payroll Taxes

While Nevada lacks a state income tax, business owners are still required to file and pay a myriad of taxes. Even for the most experienced employer, navigating the different forms, deadlines, and instructions can be a stressful endeavor. Nevada-based employers don’t need to manage their payroll taxes on their own, however.

Located in the heart of Las Vegas, CAVU HCM is here to provide business owners with an all-in-one payroll and HR service.

Our comprehensive HCM services suite combines our premier software solution with an expert-led concierge service in order to reduce the burden of payroll management and guarantee local, state, and federal compliance. Our dedicated Payroll Guides will help guide you through the complicated process of payroll taxes, including filing the appropriate tax forms, acquiring available tax credits, and more. 

To learn more about our Payroll Solutions and related tax services, click here.