To enter federal tax rules for an employee:In the Federal Tax Rules window, the Taxation States and Taxation Locality regions display the resident and work state, city, and county. This information derives from the employee's primary residence address and work location address, respectively. You cannot change this information from the Federal Tax Rules window.
Note: If you have set up an address override for tax purposes in the Address, Location Address, or GREs and other data windows, the override state, city, and county for taxation appears and not the actual address.
If you checked the Working at Home check box, the work details are the same as the resident details, and the employee is assumed to be working 100% from their primary address (or tax override address, if there is one) for this assignment. You cannot update this check box here. Change the Working at Home status on the Standard Conditions tab of the Assignment window.
For information about the Show Inactive Tax Records check box, see: Viewing Active and Inactive Tax Records
To enter federal tax rules for an employee:The SUI state defaults from the work state, but under the general rules for place of employment, it can be different from the work state. In this case, you can select another state as the SUI state. If a tax record is not already present for this state, select the state in the State Tax Rules window and save the default record. You can then select this state in the SUI State field.
Important: When you check the Working at Home box, the SUI State does not automatically change to the Resident state. Review the SUI State field to ensure it shows the state the employee is working in.
Default information appears for the employee in the W-4 Information region. You can change the filing status and other defaults as necessary.
In the Allowances field, enter the number of allowances the employee claims.
In the Additional Tax field, enter the amount of any additional Federal tax withholding the employee requests.
In the Tax Exemption region, check the boxes corresponding to taxes for which the employee claims exemption on the W-4. You must renew tax exemptions each year.
In the FIT Override region, enter a percentage in the Rate field to override the regular rate used in withholding calculations. To withhold a fixed amount each period with no tax calculations occurring, enter the amount.
The IRS can issue a notice rejecting the claim for more than 10 allowances, and indicating the number of allowances the employee can claim. In the Lock In Date field enter the date from the IRS notice, and reduce the number of allowances in the W-4 Information region.
Check the Use Information Hours check box to configure the employee assignment to distribute wages across multiple work jurisdictions. Use this fields as part of the Enhanced Multiple Jurisdiction Taxation configuration.
Check the Statutory Employee check box if the employee governs his or her own conditions of work and is not considered an employee under common law rules.
Example
This might apply to an insurance agent affiliated with, but not working for, an insurance company.
Statutory employees are exempt from FIT withholding, but you may need to withhold Medicare, Social Security, or FUTA for them.
Check the Cumulative Taxation check box if the employee qualifies for cumulative withholding and requests its application to his or her regular earnings and commissions.
One or two default state tax records appear in the W-4 Information region for a new employee's resident state and work state. You can change the defaults as necessary.
For an employee who may work in several different states in addition to the state of their work location, enter a State Tax Rules record for each one. This makes it possible for you to use batch element entry (BEE) to enter the employee's actual work locations each pay period from his or her timecard.
Check the FIT Exempt from Wage Accumulation check box to exempt the employee from the withholding and reporting of federal income wages and taxes.
Note: For a Puerto Rico employee, if you have selected Yes in the FIT Exempt from Wage Accumulation (PR) field in the Federal Tax Rules window for a GRE, then the value set at the GRE level overrides the value that you set at the assignment level. If you have selected No or left the FIT Exempt from Wage Accumulation (PR) field blank, then the value that you set at the assignment level for an employee takes precedence. See: Entering Federal Tax Rules for a GRE.
See also: Adjusting Percentage Tax Rules