How to setup a new jurisdiction for local taxes in QuickBooks

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You, as the employer, must decide which taxes an employee is expected to pay in compliance with local and state laws. Intuit QuickBooks Desktop Payroll Assisted, Basic, Standard, and Enhanced cannot advise a company on setting up local taxes and reportable salaries for their employees.

Assisted Payroll does not debit, reimburse, or file municipal tax payments or returns, except for the following, which must be charged and filed with the State Withholding or Unemployment Agency: 

Maryland’s Percentage Rate: The rate will be included in the Withholding taxes until it is set up. To correctly set up an MD employee, click the Taxes button in the Edit Employee window for each employee, then select the State tab. Select Yes next to Subject to State Withholding. Enter the percentage rate for your Maryland county in the County percent Rate sector.

New Jersey: WF/SWF Company/Employee Family Leave Insurance 

New Mexico: WF/SWF Company/Employee

New York: New York City Worker’s Compensation Fee Company/Employee Yonkers City resident MCTMT Nonresident Yonkers City Resident (Transit Tax) 

Oregon: Transit District of Oregon (LTD), Transit District of (Tri-Met)

Intuit also assists states with State Unemployment Surcharges or Assessments. Check out our State Unemployment: Details for Each State or our Payroll Tax Compliance site to learn more about unemployment in your state. Set up and pay scheduled or custom (unscheduled) liabilities in QuickBooks Desktop for more detail on paying municipal taxes or other penalties.

Links to Local Taxes: Use the tools mentioned below to help you decide the correct employee setup for the most popular local taxes if you’re unsure which local jurisdictions or local tax agencies you’re responsible for withholding and paying.

  • QuickBooks Desktop covered local and other taxes.
  • Intuit QuickBooks Desktop Payroll News & Updates 
  • Payroll Tax Compliance

Visit the American FactFinder website to read more about local jurisdictions. The American FactFinder website, which the United States Census Bureau maintains, allows you to search for local jurisdictions by address. To make use of that website, follow these instructions:

  • Go to http://factfinder2.census.gov to access the American FactFinder website.
  • After that, choose Advanced Search and then SHOW ME Everything.
  • On the left, click the Geographies link.
  • There will be a pop-up window that appears. Toggle to the Address tab.
  • Select GO after entering the address (either work or home).
  • The results will indicate the related jurisdictional details that may be needed to determine local taxes.

Local Taxes on W-2 – QuickBooks Desktop can generate standard payroll items for local taxes, such as “MI – Cities Res Tax” and “MI – Cities Work Tax,” in some cases. For QuickBooks Desktop Payroll Assisted, these things have hardcoded names that flow to the W-2. Even if you insert text in the “Print on W-2 as” area, the details will not appear on the W-2 under that name. In that case, you’ll need to build a new local tax item by following the steps below: 

Create a payroll item, and assign it to employees: To create a local payroll object, follow these steps:

  • Select Lists > Payroll Item List from the drop-down menu. Tap Payroll Item > New in the bottom left corner.
  • Select Next after choosing Custom Configuration.
  • Tap Next after selecting Other Tax.
  • Pick the tax from the drop-down list by clicking the drop-down button. If the tax isn’t listed, choose User-Defined and then either: 
        • Tax is to be paid by the employee; or
        • The corporation is responsible for paying the tax.
  • Next should be selected.
  • Select Next after entering the tax item’s name.
  • Enter the tax agency’s name as well as the tax ID number. If you don’t know the number, skip it; you can add it later.
  • Tap Next after selecting the Liability Account.
  • Select the Tax Tracking Form (consult your tax advisor if you’re unsure), and then click Next.
  • Choose either Calculate this item based on quantity or Calculate this item based on price. If appropriate, calculate this item based on hours and then press Next.
  • Click Next after entering the Default Rate or Limit, if applicable.
  • If you want to adjust the current settings because a tax could impact this local tax’s salaries, make the change and click Next.
  • Check the payroll item from the list if it could reduce the local tax’s salaries and then press Finish.

To tax other workers, follow these steps:

  • Select Workers > Employee Center from the drop-down menu. Select the employee’s name by double-clicking it.
  • Select the Payroll Info tab from the drop-down menu.
  • Then, on the Other page, press Taxes.
  • Pick the local tax in the Item Name column (press Tab to switch to the following available line).
  • Click OK after entering the rate and cap (if not already done in the previous steps).

Summary

To summarise, QuickBooks Desktop software offers you a lot of functions and features and setting up a new jurisdiction for local taxes in the software is one feature that may help you in the long run , so please do read the whole blog very carefully. I hope that reading this blog was worth your time. 

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