To enter a new state tax record for an employee:Enter State Tax Rules in the State Tax Rules window. Navigate to the Federal Tax Rules window, and choose State Tax.
After completing the following procedure, refer to the State Specific Details section to make sure you have entered all required information properly.
Note: Ensure that you have set the correct effective date before entering any tax information.
For information about the Edit Inactive check box, see: Viewing Active and Inactive Tax Records
To enter a new state tax record for an employee:Choose New from the File menu, and select a state in the State field.
There can be only one record for each state, so states for which records already exist do not appear on the list.
Note: If you have set up a payroll tax override address that applies to this state in the Address, Location Address, or GREs and other data window, the Residence Tax Override in Effect or Work Tax Override in Effect box is checked.
If the Working at Home box is selected, 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.
Select a filing status, and enter other information relevant to this state.
See State Specific Details for instructions.
In the Tax Exemption region, check the boxes corresponding to taxes for which the employee is claiming exemption on the W-4. You must renew exemptions each year.
In the SIT 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, enter the amount.
Note: The amount you enter here still considers the state rules for reciprocity. The override amount you enter may not be the amount withheld.
When you enter the override, the tax calculation for all states continues to apply to the state withholding rules.
Check the Non resident Certificate check box if the employee has certificates of nonresidence on file for the state.
Select the Military Spousal Exemption check box if the employee is eligible to claim the Military Spousal Exemption in their Work State Tax Record.
If there are SUI wages taxed in a prior state for the same employer in the same tax year, you enter the difference between the prior states wages and the new states current year limit in the SUI Base Override field on the State Tax Rules window.
Note: If you make a change to the SUI state on the Federal Tax Rules window, the system automatically updates the SUI Base Override field if a credit is owed to the new state. The system also places a zero in the field if the employee has met the wage limit in the new state.
Enter a date in the Lock In Date field if the state tax authority issues a notice rejecting the claim for more than 10 allowances, and reduces the number of allowances. You must enter the date on the notice and reduce the number of allowances in the W-4 Information region.
Check the SIT Exempt from Wage Accumulation box to exempt the employee from the withholding and reporting of state income wages and taxes.
In the Further State Tax Info flexfield, select AZ in the Context Value field, and Yes in the Voluntary Arizona SIT Form Filed (AZA4V) field to indicate the employee submitted the form to withhold Arizona state tax.
To enter another work state for the employee:
Choose New Record from the Edit menu, and select another state.
Enter information for all the states in which the employee may work before you save the state tax records.
Make sure that the total of all the Time in State entries for the employee equals 100%.
See also: Adjusting Percentage Tax Rules
State Specific Details:Certain states require that you provide specific information in the State Tax Rules window in regards to filing status, exemptions, or optional calculation methods. The following instructions are provided for those states.
You can change an employee's tax rate for certain states by using an optional calculation method. To use an optional calculation method, you select a two digit code in the Optional Calculation field in the State Tax Rules window.
Optional Calculation Methods
| Code | Calculation Method |
|---|---|
| 01 | Calculate tax on separately paid supplemental gross wages. |
Optional Calculation Methods
| Code | Calculation Method |
|---|---|
| 01 | Use Optional 2.7% Rate |
| 02 | Use Optional 3.6% Rate |
| 03 | Use Optional 4.2% Rate |
| 04 | Use Optional 5.1% Rate |
| 05 | Use Optional 0% Rate |
| 06 | Use Optional 1.8% Rate |
| 07 | Use Optional 1.3% Rate |
| 08 | Use Optional 2.7% Rate (No State W4 filed) |
| 09 | Use Optional 0.8% Rate |
Arizona SIT Form AZA4V
If an employee lives in Arizona, but works outside the state, you must indicate in the Voluntary SIT Form Filed (AZ) flexfield that the employee submitted a form to withhold Arizona state tax. Income tax is only withheld if the field is set to 'Yes'. You specify this information in the Further State Tax Info flexfield.
Note: You must select a context value of AZ to view the Voluntary Arizona SIT Form Filed (AZA4V) field.
Filing Status Information
The Secondary Allowances field holds the number of dependents.
Optional Calculation Methods
| Code | Calculation Method |
|---|---|
| 00 | Use low-income tax rates. |
| 01 | Use standard tax rates. |
Filing Status Information
The Secondary Allowances field holds additional withholding allowances for estimated deductions.
Exemption Information
Negative values are permitted in the Allowances field to reduce the amount of state tax withheld.
Optional Calculation Methods
| Code | Calculation Method |
|---|---|
| 01 | Used for Maryland residents working in Delaware. You must also use 21-000-0000 in the Residence GeoCode. |
Exemption Information
All dependents and additional exemptions should be totalled and entered into the Secondary Allowances field.
Filing Status Information
Only the single and married filing status' should be used. Any other filing status information should be ignored.
Optional Calculation Methods
| Code | Calculation Method |
|---|---|
| 01 | Recalculate the Federal tax using the number of state exemptions (do not use this method when taking additional Federal tax). |
Filing Status Information
The Secondary Allowances field holds the number of credits claimed.
Filing Status Information
The Married with One Income filing status does not appear in the Filing Status field. It should be entered as Married.
Optional Calculation Methods
| Code | Calculation Method |
|---|---|
| 01 | Used for Maryland residents working in Delaware. |
Filing Status Information
If the employee is legally blind, enter a secondary exemption of 1. If both the employee and spouse are legally blind, enter a secondary exemption of 2.
Exemption Information
Total the dollar amounts derived from the filing status, and enter them in the Exemption Amount field.
Optional Calculation Methods
| Code | Calculation Method |
|---|---|
| 01 | Provides the option of recalculating Federal withholding tax based on filing status and exemptions at the state level. |
Filing Status Information
Use an Optional Calculation Method for filing status of: married filing jointly, head of household, or surviving spouse. See the table below for specific details.
Optional Calculation Methods
| Code | Calculation Method |
|---|---|
| 00 | Use tax table B (default). This method is only for employees whose filing status is: married filing jointly, head of household, or surviving spouse. |
| 01 | Use tax table A. This method is only for employees whose filing status is: married filing jointly, head of household, or surviving spouse. |
| 02 | Use tax table C. This method is only for employees whose filing status is: married filing jointly, head of household, or surviving spouse. |
| 03 | Use tax table D. This method is only for employees whose filing status is: married filing jointly, head of household, or surviving spouse. |
| 04 | Use tax table E. This method is only for employees whose filing status is: married filing jointly, head of household, or surviving spouse. |
Filing Status Information
If the filing status is left blank, it will default to the Federal W-4 filing status.