What is withholding?
Employers that have an office or conduct business in Delaware, and pay wages or other remuneration to a Delaware resident or non-resident, must pay withholding tax. This tax requires businesses to withhold and amount of taxes (set forth by the Withholding Tax Computation Table) from its employees. New employees must file Federal Form W-4 or Form W-4A regarding exemptions. Based on that information, employers act as witholding agents and withhold an appropriate tax from employees’ compensation.
Every year, employers must supply each employee with a statement showing their total wages earned and the amount of taxes withheld on a W-2 form. Employers must provide these W-2 forms to all employees by January 31st. All employers are required to submit an Annual Reconciliation/Transmittal of Income Tax Withheld by filing Delaware Form W-3 along with a duplicate copy of Federal Form W-2 indicating the amount of Delaware tax withheld from each employee. Taxpayers who file W-2 information electronically are not required to submit an additional Delaware W-3, as it is automatically generated after your online submission.
Should I register as a withholding agent only?
If you are an out-of-state business that employs a Delaware resident, you may register as a withholding agent only for free on One Stop. This is a courtesy to your employees who live in Delaware.