Setting up Additional State Withholding Deductions

Last modified by Peytience S on 2023/10/30 19:16

For the new state withholding you will need to be sure to apply for an Employer ID for withholding as you will need it for the State Forms that are filed quarterly/annually.

To set up additional State Withholding Deductions for employees in another state:

Go to "Payroll Items" and select the employee from the list on the left side of the window.
Uncheck the current State Withholding Deduction that does not apply to the employee.
Click on the red "New" button to the right of Deductions.
From the "Calculation Method" dropdown menu, select "Tax Calculation".

Learn how to set up additional State Withholding deductions.

In the "Select Tax Calculations" window, select the "Select State" button.
From the first dropdown menu below, select the proper state.
From the second dropdown menu, select the state tax and click "OK".

Learn how to set up additional State Withholding deductions.

Back in the "New Deduction" window change the "Type" dropdown to "State Income Tax".
If you post your payroll to Quickbooks, you will need to link it to an account set up as "Other Current Liability" from the Liability Account dropdown under the "Accounting Links" section for your payroll to properly post.
Click "OK".

Learn how to set up additional State Withholding deductions.

Since the deduction was created with an employee highlighted on the list, it will only be applied to that employee.
If there are more than one person that would be subject to the withholding deduction you just created, you will need to select them from the list.
- Uncheck the state Withholding deduction that does not apply and check the one that does.
Once assigned, you will need to go to the Employee Information screen and select the correct Filing Status and Number of Claims for the State Tax in the Tax section so the tax calculates correctly for the employee.