Update 6/5/2023: After much debate, the Washington Long-Term Care Tax will now be required to be withheld starting July 1, 2023. Datatech included the Long-Term Care tax with the 2023 tax rate tables. The program is set to automatically start the deduction after you have moved to the third quarter. No program update is required. However, you will need to review the following information to make sure your program is set up properly and ready to begin withholding this tax.
How to Start Withholding the Washington Long Term Care Tax
In order for your program to begin withholding the LTC tax, you will need to make sure of four things:
1. You must be in quarter three before checks are created for the deduction to be calculated.
2. If you deleted this tax from the State Tax Rates > Local Tax Settings tab > Long Term Care Rate (Decimal) entry, you will need to enter this tax again on this window and save the change.
3. You have to create and assign a G/L account number on the State Tax Rates > G/L Numbers tab > LTC Withheld entry.
4. Exempt workers must be set to LTC Exempt in their employee file.
You will find the instructions for these steps below.
Adding a New General Ledger Account
A new General Ledger Account entry has been added for the LTC Withheld. You may either create a new G/L number or have the program create it for you.
To create a new G/L number, follow these steps:
1. Go to General Ledger > Chart of Accounts.
2. Open an existing Tax Liability account.
3. Press Ctrl + F5 to clear the Account # and Description, then enter an available number and description.
4. Then, enter this number on the G/L Numbers tab of the State Tax Rates file.
If you do not create a new G/L number, the software will create a copy of the SUI G/L account using the next available number. This will happen when you run the first Payroll Journal with the LTC tax withheld.
All employees subject to Family & Medical Leave tax are subject to the Long Term Care tax, with these two known exemptions:
1. Employees who average under 12 ½ hours per week are not subject to the tax.
Note: Datatech software does not try to determine if an employee is eligible based on average hours. You will need to mark employees exempt if they average less than 12 ½ hours per week.
2. Some employees may choose to apply for an exemption from WA Cares coverage. It’s their responsibility to apply, and—if approved—to notify and give you a copy of their approval letter from the Employment Security Department (ESD). Once approved, exemptions are permanent and employees can never opt back in.
Identifying an Employee as Exempt in Datatech Software
To identify an employee as exempt in your Datatech software, follow these steps:
1. Open the Employee’s File.
2. On the Deductions tab, select the LTC Exempt option at the bottom of the State Taxes section.
Long Term Care Deduction Reports
You will see the Long Term Care deduction in the Tax Deductions section of the Batch Payroll Check Entry.
It will be labeled as LTC on the Batch Payroll Check Report.
Note: We are still working on re-formatting the Earnings Records and Check Detail Reports to print these deductions.
Resources: Use the following link to review the WA Cares Fund website:
On January 27, Governor Inslee signed two bills passed by the Legislation to make improvements to the WA Cares Fund. This includes a delay in employee contributions until July 2023 and employers must refund any premiums collected in 2022.
Click here for more information from the WA Cares Fund website.
To refund any withheld premiums in 2022 for the WA Cares Fund, follow these steps:
1. Download the latest version of Datatech software. Go to Tools > Check for Updates.
2. Go to Payroll > Setup > State Tax Rate Tables > Local Tax Settings tab.
3. Change the Long Term Care Rate to 0 and click Save.
The software will do a year-to-date calculation on the 0 rate and refund any deductions previously taken.
While some Datatech customers have decided to continue collecting the Long-Term Care Tax, others have decided to stop and wish to refund what has already been taken.
Do you want to refund money previously taken for the Washington Long-Term Care Tax?
The latest update includes the ability to refund employees that have had the Washington Long-Term Care Tax withheld. To do this, you will need to remove the Long Term Care Rate from the State Tax Rate file.
For instructions on removing the tax rate, see the Datatech Program Changes section below. When the tax rate is zeroed in the State Tax Rate file, the program will automatically create a rebate for employees that have had the tax withheld.
Washington’s Long-Term Care Tax was set to begin January 2022.
On December 17, 2021, Gov. Jay Inslee announced a plan to change and improve the WAS Care Fund program during the 2022 legislative session. In the mean-time, the Employment Securities Department will not collect premiums from employers until April 2022 or further direction is received.
This article will discuss what this means for you and what changes have been made to your Datatech Software to handle this tax.
What Does This Mean For You?
The existing law still directs employers to begin collecting premiums from their employees beginning January 1. However, the updates to the WA Cares website state that each employer will need to decide whether they will implement the law as it stands or await legislative action.
Click here for the WA Cares Fund > Employer Information page.
As it seems employers will still be responsible for remitting the tax at some point, Datatech has decided to leave the tax in effect for checks starting January 1, 2022. However, if you would like to remove the tax, you may do so.
If left as is, the tax will be withheld on your first checks of 2022.
Datatech Program Changes
An update is now available that includes the ability to start withholding the LTC tax for Washington employers.
In the 2022 State Tax Rates table for Washington, a new entry has been added on the Local Tax Settings tab for Long Term Care Rate (Decimal). This entry will automatically appear after you update your program.
Removing the Tax: If you choose to delay implementation until there is further legislative action, you may remove this rate from the 2022 State Tax Rates table. Simply delete the entered tax rate from the Long Term Care Rate (Decimal) entry and click Save to confirm this change.