Costpoint Online Help

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Multi-State Taxes

Multi-state taxes enable employees to report when they work in various states during one pay period and be taxed appropriately.

You can enable this feature by selecting the Enable Multi-State Tax Withholding check box on the Manage Pay Periods screen. This enables the Multi-State Taxes subtask of the Manage Employee Taxes screen.

To use multi-state functionality:

  1. Select the Enable Multi-State Tax Withholding check box on the Manage Pay Periods screen.
    This enables the Multi-State Taxes subtask of the Manage Employee Taxes screen.
  2. On the Manage Employee Taxes screen, select a withholding state for your employees.
    The Compute Payroll screen uses the Taxable Entity State field on this screen to determine whether the employee is a resident of the state. Use the Multi-State Taxes subtask to enter multi-state withholding tax information.
  3. Set up default withholding rates on the Manage State Taxes screen (use the Default Multi State Withholding Rate field).
    You can use the state's non-resident tax rate. The Compute Payroll screen uses this field when taxes withheld must be withheld for a state that is not set up in the employee's Manage Employee Taxes screen. The application taxes the taxable amount for the state and multiplies it by the default withholding rate to get the state tax amount.
  4. On the Manage Reciprocal State Taxes screen, set up reciprocal state information for the state where the company is located.

    Add only one record for the company’s state. The Compute Payroll process checks for a reciprocal agreement between the home and work state. When two states have a reciprocal agreement, the employee lives in one state (the home state) and works in another state (the work state). Taxes are withheld from the state where the employee lives. If there is no reciprocal agreement between states, then Costpoint must determine whether the employee is a resident or non-resident of the state where the work is being performed.

    • If the employee home state is the employee's taxable entity (corporate office), the employee is a resident. Set up the Taxable Entity State on the Manage Employee Taxes screen.
    • If the employee's home state is not the employee's taxable entity (corporate office), the employee is a non-resident.

      If the Taxable Entity State is blank on the Manage Employee Taxes screen, Costpoint assumes that the employee is a resident of the home state.