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Change to CS Support service hours

Our Support department is closed on Friday, April 28th for a company event. However, limited Accounting CS phone support is available on that date from 9 AM - 5 PM ET due to the approaching deadline for quarterly payroll tax forms.

Links to our most popular payroll tax processing topics are available in the Alerts and notices section on the right side of most pages.

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.

Enter federal withholding information into the following fields.

  • Filing status. Select the employee's filing status from the drop-down list.
  • Total allowances. Enter the number of federal allowances the employee is claiming.
  • Additional withholding. If the employee wants to withhold an additional amount, specify whether to withhold an additional amount, additional percentage, fixed amount, or fixed percentage, and then enter the amount or percentage.
  • Nonresident alien. If the employee is a nonresident alien, mark this checkbox.
  • 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.
  • EIC status. Select the appropriate EIC status from the drop-down list. The options in this list match those found on Form W-5. If the employee's spouse has a Form W-5 in effect, mark the checkbox also.

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.

  • 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.
  • 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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Related topics

Setting up multi-state employees - examples

Editing shortfall amounts for employee payroll taxes

Adjusting taxable wages for employees

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