Form H1: filing the employer's annual PAYE return

Form H1 is the employer's annual declaration of pay and tax for every employee during the year. State internal revenue services use it to check that the PAYE you remitted each month matches what your staff earned.

Who files it, and where

Every employer that deducts PAYE files Form H1 with the tax authority of each state its employees live in. If your staff live in three states, you file three returns, each listing only the people resident in that state.

What it contains

• Your company's name, address and tax identification number.
• For each employee: name, staff number, TIN, months worked, gross emoluments, pension, NHF and other allowable deductions, and the tax deducted.
• Totals that should agree with the monthly PAYE remittances you made to that state.

When it is due

The return is usually due by 31 January for the previous year. Some states also ask for supporting documents, such as copies of remittance receipts, so keep every month's receipts together.

Penalties for late or incorrect returns are set by each state and by federal law. Check the current position with your adviser before you file.

Getting it right first time

1. Make sure every employee has a state of residence and TIN on file during the year, not in January.
2. Reconcile each month: the PAYE schedule for each state should match what you paid.
3. Generate the return per state from your payroll records and check the totals against the twelve receipts.
4. Give each employee their tax deduction card, so they can confirm what was deducted.