Withholding Tax

Employers are required to withhold a portion of their employees’ wages for work performed in the state of Rhode Island.

The amount of tax to be withheld from an employee's wages depends on a number of factors.  Those factors include:

• Number of exemptions
• Amount of wages

Each year, the RI Division of Taxation releases a Withholding Tax Booklet (found on our Withholding forms page) that can be used to determine the amount of withholding for each employee.

Depending on the amount of wages withheld:

• Weekly - If the employer withholds $600 or more for any calendar month during the year from employees' wages, the employer must remit the taxes withheld on a weekly basis.
• Monthly - If an employer withholds $50 or more but less than $600 for any calendar month from employees' wages, the employer must remit the taxes withheld on a monthly basis. The submission is due within twenty (20) days after the close of the month
• Quarterly - If an employer withholds less than $50 for any calendar month from employees' wages, the employer must report and remit taxes withheld on a quarterly basis. A form RI-941 must accompany the payment and the form and payment are due on or before the last day of the month following the close of the quarter.

Under the filing-frequency requirement, a week will be defined as beginning on Sunday and ending on Saturday. Under the “weekly” filing frequency, all payroll occurring in a given week will be due on the business day following the end of the week. In other words, the withheld tax must be remitted on the Monday (or Tuesday if Monday is a recognized holiday) of the following week.

Please note that if an entity fails to remit withheld tax at the times prescribed by the Division of Taxation, there may be interest assessed at the annual rate.

• Weekly payment frequency is due the Monday following the close of the week.  The withholding week runs from Sunday to Saturday.  Due date would shift to a Tuesday if a holiday falls on the Monday.
• Monthly payment frequency is due 20 days following the close of the month.  The due date would shift to the next business day if the 20^th of the month falls on a holiday or weekend.
• Quarterly payment frequency is due with the RI-941 filing and is due on the last day of the month following the close of the quarter.  The due date would shift to the next business day if the last day of the month falls on a holiday or weekend.

For example, for quarter ending 03/31, the due date would be 04/30. For the quarterly payment frequency, the payment would be expected to be sent with the RI-941 filing with the same due date. The monthly payment frequency would be due by the 20th of the following month for the first two payments. The payment for the final month of the quarter would be due with the RI-941 filing for the quarter. For the weekly payment frequency, the due date would be each Monday following the end of the week.

For the RI-941 and any payment frequency, the due date would move to the next business day. Thus, a Monday holiday would move to the Tuesday and a Saturday or Sunday would move to the Monday.

On or before January 31 of each year (or at the termination of business), each employer must file a Rhode Island reconciliation return (RI W-3) for the preceding year of Rhode Island income tax withheld with all individuals and tax statements.

• The total income tax withheld shown on the reconciliation return should equal the total payments made to the Division of Taxation for that year and should also equal the total amount of Rhode Island income tax withheld as shown on all the W-2 forms the employer furnished to its employees and submitted with the W-3 form.
• The state copy of the W-2 form(s) must accompany the reconciliation form (RI W-3). Information concerning electronic reporting is available in the "W-2 Electronic Filing Requirements" document on the Division of Taxation's website.

Beginning on January 1, 2020, every employer that’s required to deduct and withhold Rhode Island personal income tax – and that had an average tax amount of $200 or more per month for the previous calendar year – must file a return and remit the payments by electronic funds transfer (or by other electronic means as defined by the Division of Taxation).

If the employer fails to pay the tax by electronic means, the employer will be subject to what is, in essence, a penalty, amounting to 5% of the withheld tax payment that was not filed electronically, or $500, whichever is less (unless there was reasonable cause for the failure – and the failure was not due to negligence or willful neglect).

Also with regard to withholding as described above, beginning on January 1, 2020, if any person fails to file a return by electronic means, there will be added to the amount of tax a sum equal to $50, unless there was reasonable cause for the failure and the failure was not due to negligence or willful neglect.

• If you are an employer submitting W-2s for your business, you can:
  • Upload your W-2 file in your Withholding account in Taxation’s portal, or
  • Send your W-2 file on a CD or DVD to the R.I. Division of Taxation
• If you are an accounting firm submitting W-2s for your client(s) AND you are authorized to access your client(s) R.I. Division of Taxation’s portal account, you can upload one file containing your client(s) W-2 information via Taxation’s portal.  
• If you are a payroll company or third-party vendor registered as a bulk filer, you can upload bulk files containing your clients W-2 information via Taxation’s portal.

NOTE:  Regardless of the filer type, the W-2 file must be in the proper EFW2 format.  See the Withholding Filing Requirements Guide for information on the EFW2 file requirements and specifications.  This file format is the same as last year's.

• If you are an individual submitting 1099s for your business, you can upload your 1099 file in your Withholding account in Taxation’s portal.
• If you are an accounting firm submitting 1099s for your client(s), you can upload one file containing all of your client(s) 1099 information via Taxation’s portal.  

• If you are a payroll company or third party vendor registered as a bulk filer, you can upload bulk files containing your clients 1099 information via Taxation’s portal.

  • To register as a bulk filer, complete and submit the Payroll Letter of Intent found on the Software Developers page.

  NOTES:

• Regardless of the filer type, the 1099 file must be in the proper FIRE format.  See the Withholding Filing Requirements Guide for information.
• 1099s should only be filed with the R.I. Division of Taxation if there is Rhode Island withholding listed on the 1099.