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Setting up state withholding for multiple states

unavailable in ajeraCore unless you have the Payroll add-on

About state withholding for multiple states

Step 1: Turn on withholding for multiple states

  1. From Company menu, click Preferences.
  2. Click the Payroll tab.
  3. Select the Allow state taxes from multiple states on one paycheck check box.
  4. Click Save.

Step 2: (Optional) Enter states with complicated reciprocal agreements

Perform this step only when you want Ajera to automatically handle complicated reciprocal agreements between states.

Caution: If the state withholding between states is a simple tax exchange (tax is only withheld from one state), and you want to select which state to withhold from, do not perform this step.
  1. On the Company > Preferences > Payroll tab, select the Automatic SWH reciprocity calculations check box.

Reciprocal State Withholding (SWH) fields appear on the upper right of the window.

  1. In the Reciprocal State Withholding (SWH) fields, enter the home state (state where the employee is a resident) involved in a reciprocal agreement.

When you enter a state here, withholding for that state adheres to the applicable predefined agreements, including any applicable Nexus agreements regarding the handling of nonresidents.

  1. Click Save.

Step 3: Set up the state tax

Follow the instructions for Setting up taxes to set up a tax for each state where your employees work.

Step 4: Set up state withholding for each employee

  1. From the Setup menu, click Employees.
  2. Click the employee who needs withholding for another state, and click Edit.
  3. Click the Payroll Taxes tab.
  4. Complete the following fields:
For Do this
Home state

The state you entered as the Home State on the Payroll tab in Company > Preferences automatically appears here.

If this employee lives in a different state, select that state instead.

Note: You can select the No State option for a temporary employee on whom you want to withhold no taxes. You then select the Do not withhold option for the Federal and state filing status fields.
Default work state

Enter the state you want to withhold taxes from when an employee enters time to a project or phase, but you did not assign a state to that project or phase. (You learn how to assign states to projects and phases in the next step of these instructions).

Ajera also uses this state for supplemental pays and salary-based paychecks.

State taxes table:

In this table, complete one row for each state where the employee works (including the home state where the employee is a resident).
State

Enter a state where you need to withhold taxes.
Non Res

This check box appears only if you selected the Company > Preferences > Payroll tab > Automatic SWH reciprocity calculations check box.

If the employee has a certificate of nonresidency for the state, select this check box, and Ajera processes withholding based on the states involved, which you entered in the Company > Preferences > Payroll tab > Reciprocal State Withholding (SWH) fields.
SWH

This check box appears only if you did not select the Automatic SWH reciprocity calculations check box on the Company > Preferences > Payroll tab.

To withhold state tax for the state on this row, select this check box.
SDI

To withhold state disability insurance (SDI) for the state on this row, select the check box.

You can withhold SDI for only one state.

Multi-company only. Ajera uses the tax rate associated with the employee company. If there is none, Ajera then uses the tax rate from the tax setup where the Company field is blank.

SUI

To withhold state unemployment insurance (SUI) for the state on this row, select the check box.

You can withhold SUI for only one state.

Multi-company only. Ajera uses the tax rate associated with the employee company. If there is none, Ajera then uses the tax rate from the tax setup where the Company field is blank.

Status

Select the filing status that the employee entered on the state withholding form for the state listed on this row.

If you select Percent of Taxable, be sure to enter the percent in the Amount field.

Note:

If you previously left blank the SWH check box for a state so as to not withhold tax, but you now have selected the Company > Preferences > Payroll tab > Automatic SWH reciprocity calculations check box, be sure to select the state filing status of Do not withhold.
Exemptions Type the number of exemptions that the employee entered on the state withholding form for the state listed on this row.
Additional SWH Type the amount of any additional state withholding that the employee entered on the state withholding form for the state listed on this row.

State option

Code

Amount

untitled check box

These fields are available only if the state where the employee is paying income tax requires a special code.

The State Option field describes the special tax information needed.

Complete the Code and Amount fields and select the untitled check box, as needed, to enter the required information for the tax.

Refer to your state tax publication for more information on these special requirements.

States and codes are listed below:

  • Arizona: Percent of federal withholding
  • Arkansas: Arkansas low income
  • California: Additional allowances
  • Georgia: Marital allowances; enter 0, 1, or 2 when the state filing status is Married filing jointly.
  • Illinois: Number of dependents
  • Indiana: Number of dependents
  • Louisiana: Number of dependents
  • Massachusetts: Blind exemptions
  • Mississippi: Dual income exemptions
  1. Click Save.
  2. If you need to withhold local taxes for an employee, you can also do that at this time. Follow Step 2 of these instructions: Setting up withholding for local taxes when processing for multiple states.

Step 5: Identify the work state for your projects and phases

When employees enter time, Ajera assigns that time to the applicable state and then does the state withholding for that state on the employee's paycheck. You identify the state where employees perform work by entering it for the project or phase.

If you do not set up state withholding for a project or phase, then to calculate state tax, Ajera uses the state you entered for the employee in the Setup > Employees > Payroll Taxes tab > Default Work State field.

  1. From the Setup menu, click Projects.

  2. For each project, select the project from the project list.

On the Project Info tab > General subtab, in the Payroll Taxes area, enter a state if you want Ajera to withhold state tax when employees enter time to this project.

  1. For each phase of the project, Ajera automatically enters the same information you entered for the project. However, if the state of a phase is different from the project, click the phase in the project tree, and complete the State field for the phase.
  2. Click Save.
  3. If you need to associate local taxes with a project or phase, you can also do that at this time. Follow Step 3 of these instructions: Setting up withholding for local taxes when processing for multiple states.

  4. Ajera automatically allows all security groups access to the State and Local Tax fields in the Payroll Taxes area.

If you need to restrict access for employees of a security group (Company > Security), select the security group, and then the Projects tab > Project Info subtab. In the table, expand the Project Info tab and then the > General tab. Select the appropriate setting in the Payroll Taxes field.

 

 

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