Employees > Payroll Taxes tab

Alerts and notices

Use the Payroll Taxes tab of the Employees screen to enter specific payroll tax information for employees, including information about their federal and state withholding and allowances. Also, using the Wage Exempt checkboxes in the Taxes section, you can mark employees as exempt for individual taxes.

The tax information displayed in this screen is based on both the employee's and client's address information, making it essential to use the Address verification feature when setting up your client and employee address information.

Choose Setup > Employees and click the Payroll Taxes tab.

See also: Setting up employee payroll tax information

Fields & buttons

For live payroll processing only.

This link opens the Edit Shortfall Balances dialog, where you can modify shortfall amounts for payroll items and payroll taxes for the selected client's employees, if necessary.

After January 1, 2020, employees who need to update their W-4 information must fill out the new (2020 and later) version of Form W-4.

  • To enter selections for the new (2020 and later) Form W-4, mark the Use 2020 (or newer) W-4 checkbox and fill out the fields here in the Federal Withholding section.
  • To add or update information in the 2019 (or prior) Form W-4, do NOT mark the checkbox. Click the 2019 (or prior) W-4 button and enter information in the 2019 (or prior) Form W-4 dialog.

Enter only 2020 and newer federal withholding information in the following fields.

  • Use 2020 (or newer) W-4. Mark this checkbox only if the employee has submitted a year 2020 or higher W-4 form. For adding or updating 2019 (or prior) Form W-4 information, do NOT mark this checkbox or update the fields in this section.

    Note: If you mark the Use 2020 (or newer) W-4 checkbox and do not modify the other fields, Accounting CS will calculate the employee's withholding based on the default deduction (Single or married filing separately) and tax rates, with no other adjustments.

  • Filing status
    • Head of household
    • Married filing jointly
    • Single or married filing separately (default selection)
  • Two jobs total. You can mark this checkbox if only two jobs are held at the same time in your household. The standard deduction and tax brackets will be divided equally between the two jobs.
  •  Claim dependents. Enter the amount the employee is claiming for dependents.
  •  Other income. Enter the amount of any non-job income for which the employee wants tax to be withheld.
  • Deductions. Enter the amount of any deductions (other than the standard deduction) that the employee expects to claim.
  • Additional amount. Enter any additional tax amount to be withheld for the employee each pay period.
  • Nonresident alien. If the employee is a nonresident alien, mark this checkbox. For more information about the nonresident alien tax, see IRS Publication 519.
  • Federal tax exempt. If the employee is exempt from federal payroll taxes, mark this checkbox. This will not exclude the employee's wages from the taxable wage amounts included on payroll tax forms.

Enter 2019 or prior federal withholding information by clicking the 2019 (or prior) W-4 button.

  • 2019 (or prior) W-4 button.  Click this button to open the 2019 (or prior) Form W-4 dialog, where you can view or modify W-4 information for employees hired prior to January 1, 2020.

Enter state withholding information in this section. Many fields in this section vary by state, because they are based on the fields for each state's W-4 form. The fields described below, however, are available for either all or most states.

Note: When you update the state withholding information for an employee and then save the employee record, the information in this section may revert to displaying information for a different state. This has no bearing on the calculations that the application will perform on the payroll checks; the information you entered is saved.

  • State. This field defaults to the state where the employee resides (as entered on the Main tab).
  • Nonresident exemption certificate. If the employee has a nonresident exemption certificate, mark this checkbox. This is used for calculating state withholding, specifically for states with reciprocal agreements. For more information see Setting up multi-state employees - examples.
  • Tax exempt. If the employee is exempt from state payroll taxes, mark this checkbox. This will not exclude the employee’s wages from the taxable wage amounts included on payroll tax forms.

This section lists any states for which the employee is subject to unemployment tax. For employees working in only one state, there will be only one state listed here. For employees working in multiple states, most often only the employee's primary work location state is listed. However, if the Do not combine state unemployment checkbox is marked at the client level, all states in which the employee earns unemployment wages are listed, because the employee is subject to unemployment taxes in all those states.

  • Full FUTA rate. Mark this checkbox to indicate that this employee should receive the full FUTA rate of 6.0 percent instead of the standard 0.6 percent. This checkbox is unmarked by default.
  • New hire FICA credit. Mark this checkbox to indicate that this employee qualifies for the HIRE act FICA credit. This checkbox is unmarked by default.

    Notes

    • When this checkbox is marked, the employer FICA SS tax amount will be 0.00 for payroll checks processed for that employee with pay dates from April 2010 through December 2010.
    • The checkbox is not available for employees specified as household employees in the Main tab of the Employees screen.
    • The hire date for the employee must be between February 4, 2010, and December 31, 2010, for the employee to qualify. The hire date must be entered in the Hire date field in the Personal tab of the Employees screen.
    • Employees specified as Family of owner in the Personal tab of the Employees screen are not eligible for the credit.

This section is available only for certain states and the fields vary by state.

You can find information about these fields in the Form processing tips section of the state-specific payroll tax form information article for that state.

  • Multi-state withholding. The application's default multi-state withholding calculations are appropriate in most cases, but you can override them if necessary. In the Taxes section of the Payroll Taxes tab of the Employees screen, you can make the following selections from the Multi-state withholding drop-down list. For details, see Setting up multi-state employees - examples.
    • Automatic. The state income tax calculation is based on the application's default multi-state withholding algorithm (which is based on the multi-state withholding rules for each state).
    • Work only. The application calculates only the state income tax associated with the employee's work states.
    • Work and resident - Allow credit. The application calculates the income tax associated the employee's resident and work state. The resident SIT amount is reduced by (given a credit for) the SIT amount calculated for each work state.
    • Work and resident - Full. The application calculates the income tax associated the employee's resident and work states. No credit for the work state SIT is applied.
    • Resident only. The application calculates only the state income tax associated with the employee's resident state.
  • Adjust Taxable Wages. This link opens the Adjust Taxable Wages dialog, where you can adjust taxable and gross taxable wages for reporting purposes, if necessary.
  • Taxes grid. The Taxes grid displays the federal and state taxes to which the employee is subject, based on the location of the employee and the client.
    • Make changes within the grid to add or modify GL account numbers for all of an employee’s location/department combinations, or to mark them as wage exempt from an individual tax.
    • To modify the GL liability and expense accounts for a tax item for each of the employee's active location/department combinations, click the Ellipsis Ellipsis button button to open the Employee Tax Item Settings dialog. Specifying different GL accounts to separate location/department combinations for the same tax liability causes the GL account information to be grayed out in the Taxes grid.
    • Mark the Wage Exempt checkbox if the employee's wages are exempt from a particular tax (i.e. for clergy). This will exclude the employee's wages from the taxable wage amounts included on payroll tax forms.

      Notes

      • Do not mark the Wage Exempt checkbox if you are trying to set up a multi-state employee and want to specify that only a particular state withholding should be taken. The application automatically calculates the appropriate state withholding taxes based on each state's rules.
      • When you mark the Wage Exempt checkbox for a tax item, the application will display a dialog to confirm that all payroll checks entered for this employee in the future will reflect this wage exempt status. If you want to update the taxable wages for this employee's existing payroll checks as well, enter an effective date. For more information, see Adjusting taxable wages for employees.

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