Understanding Tax Exemptions in GoCo

Tax exemptions apply when a company or employee is legally exempt from contributing to certain taxes. GoCo provides tools to help manage these exemptions. Here's an overview of common tax exemptions and how to manage them in GoCo

🔎 What Are Tax Exemptions?

Tax exemptions reduce or eliminate the requirement to contribute to specific taxes. Common examples include:

• Employer Tax Exemptions:

  
  Non-profits (e.g., 501(c)(3) organizations) often qualify for exemptions like Federal Unemployment Tax (FUTA).

• Employee Tax Exemptions:

  
  Certain employees, such as clergy or those on specific visas (e.g., J-1 or F-1), may qualify for exemptions from Social Security, Medicare, or income tax withholding.

📄 Income Tax Exemptions for Employees

If an employee claims to be exempt from income tax withholding:

1. They must complete Form W-4 and indicate their status as “Exempt.”
2. For federal and state income tax exemptions:
   • GoCo will not withhold income taxes.
   • However, wages will still appear in Boxes 1, 16, and 17 of the W-2.
3. To avoid withholding and reporting, set up the exemption directly in GoCo. When entering exempt from Federal Taxes, we recommend reaching out to GoCo Support to validate settings are captured accurately on our end. 

➡️ Additional Resources:

• What is FICA?
• FAQs About State Withholdings
• How to Fill Out the W-4 in GoCo

⭐ Reimbursable Employers

Certain non-profits or religious organizations with reimbursable status for unemployment benefits can set this up in GoCo by:

1. Contacting GoCo Support:
   Email support@goco.io with confirmation that your organization is a 501(c)(3).
2. GoCo will update your settings to establish your company as an SUI Reimbursable Employer.

⛪ Clergy and Ministers

Clergy may qualify for exemptions from Social Security and Medicare taxes. Additionally:

• Housing Allowances:
  Add these as recurring reimbursements in GoCo, and they will appear in Box 14 of the W-2.

✍️ Ensuring Accurate Tax Exemptions

GoCo works hard to collect as much data as possible during implementation to set up your organization with accurate and compliant tax settings. Here are some best practices:

1. Provide Complete Information:
   Submit all required details promptly to avoid corrections later.
2. Notify of Organizational Changes:
   If your organization changes its type or purpose, contact GoCo Support as early as possible to ensure smooth adjustments.
3. Consult Experts:
   Work with a CPA or tax expert to confirm exemption qualifications and ensure compliance.

For any additional questions, please reach out to us at support@goco.io 💚