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Setting up withholding for local taxes when processing for multiple states

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Follow these instructions to set up withholding for local taxes only if you turned on withholding for multiple states (you selected the Company > Preferences > Payroll tab > Allow state taxes from multiple states on one paycheck check box). Otherwise, see Withholding for local taxes.

Step 1: Set up the local tax

From the Company menu, click Payroll > Taxes.

Note:

Taxes appear on paycheck stubs in the order listed in this window. To change the order, click the tax and click or . To return to the original order, click (Refresh).

Click the New button.
Leave the status as Active. When you no longer want to use the tax, you change it to Inactive.
Enter the following information:

For

Do this

Description

Type the name of the tax that you are setting up. This is the name that appears on lists in Ajera and on paycheck stubs and reports.

Employer tax

To withhold the tax from the employee, leave this check box cleared.

Type

Select Local.

State

Select the state where the tax applies.

Tax ID

Enter your account number with this tax entity.

Liability account

Select the liability account to use for this tax.

Expense account

If you selected the Employer tax check box, select the expense account to use for this tax.

W-2 form boxes 10-20

To report the amounts for this tax in boxes 10 through 20 on Form W-2, select the box on Form W-2 where you want to report the tax.

Otherwise, leave the Not Reported option selected.

For box 14, 18, or 19, you must identify the tax by printing a description for it in the box. You enter this description in Ajera in the W-2 Box Description field.

For more information, see About Form W-2.

W-2 box description

If you selected to report this tax in Box 14, 18, or 19, you identify it by printing a description for it in the box. Type the description you want to print, entering up to five characters.

Workers' comp code

This field only applies to taxes with a type of Workers' Compensation.

Calculation method

Select the calculation method for the tax.

Select the Percent of Taxable calculation method if the tax is based on a percent of the taxable amount or if the tax is applied based on the location where the work is performed.

Taxable type

If you selected the Percent of Taxable calculation method, select one of the following options to determine the percent of taxable on which to base the local tax withholding.

Local

Select this option to base the tax on the taxable wages less exempt pays and deductions.

Federal

Select this option to base the tax on the federal withholding taxable amount.

Social Security

Select this option to base the tax on the Social Security taxable amount.

State

Select this option to base the tax on the state withholding taxable amount for the state where the local tax applies.

Location-based

Select this option if you are setting up a tax that is based on where the work is performed. Whenever an employee enters time to a project or phase where the tax applies, Ajera withholds for this tax. Ajera bases the tax on the state withholding taxable amount for the time entered for the project or phase set up for the tax.

Rate

Wage limit

If applicable, depending on the calculation method you selected, type the amount or percent that you want to use. Enter a percent as a whole number; for example, enter 2% as 2.00 and not .02.

If applicable, type the maximum amount of income that is subject to this tax. For example, SDI, FICA, and FUTA taxes are subject to a limit. Ajera calculates the wage limit for the calendar year.

Note:

When you change a rate or wage limit, Ajera uses the new rate and limit, and it removes any rate or wage limit you set up for a specific employee in Setup > Employees > Payroll Taxes tab > Additional Taxes table.

Effective date

Rate

Wage limit

Use these fields if you want a rate or wage limit for the tax to become effective some time in the future.

For example, you want to get started on your January payroll, but you have not yet processed your last December payroll. You enter an effective date of January 1 and the new rate and wage limit. Ajera then uses the current rate and wage limit for your December payroll, and the new rate and wage limit for your January payroll.

Note:

When you enter an effective rate or wage limit for a new effective date, Ajera uses the new rate and limit, and it removes any rate or wage limit you set up for a specific employee in Setup > Employees > Payroll Taxes tab > Additional Taxes table.

Notes

Enter any notes.

Click Save.

Step 2: Set up employee withholding for the local tax

Note:

To withhold for the tax one time on only one paycheck, you can also manually add the tax to the paycheck through Manage > Payroll by selecting a payroll and then a paycheck. On the Taxes tab of the Edit Paycheck window, add the local tax on the next available line in the table.

Ensure that you selected Local in the Taxable Type field in Step 1 of these instructions.
From the Setup menu, click Employees.
Double-click the employee you are setting up.
Click the Payroll Taxes tab.
In the Additional Taxes table, enter a row for each local tax you need to set up for the employee, as follows.

For	Do this
Tax	Enter the tax. If the tax you want is not already set up, click the New button from the Tax List window.
Calculation	To override the calculation method of this tax (as set up in Company > Payroll > Taxes) for this employee only, select a different calculation method.
Amount	To override the amount of this tax (as set up in Company > Payroll > Taxes) for this employee only, enter it here.
On demand	If you do not want this additional tax automatically included for every paycheck, select this check box. When running payroll, you can choose to include all on-demand taxes for all employees.
Supp	Select this check box to also automatically deduct this tax from a supplemental pay check, such as a bonus. If you want to deduct this tax only on supplemental paychecks, you must also select the On Demand check box.
Limit	Enter the limit that can be withheld for this tax. You can only enter a limit if one was not entered in the setup of the tax (Company > Payroll > Taxes).
Limit period	Note that the limit you entered is always per year.
Notes	Enter any notes.

Click Save.

Step 3: Set up a local tax based on the where employees perform the work

Follow these instructions only if the tax is based on where the employees perform the work (you selected Location-based in the Taxable Type field when performing Step 1 of these instructions).

From the Setup menu, click Projects.
For each project, select the project from the project list.

On the Project Info tab > General subtab, complete the fields in the Payroll Taxes area, as follows.

For

Do this

State

This field applies to state withholding. You do not need to change it for the local tax.

Local tax

Select the tax you want to apply to this location (the tax you set up in Step 1 of these instructions).

A tax is available only if you set it up as location-based (Company > Payroll > Taxes >Type field with the Local option selected > Calculation Method field with the Percent of Taxable option selected, and the Taxable Type field with Location Based selected).

For each phase of the project, Ajera automatically enters the same information you entered for the project. However, if the location of a phase is different from the project, click the phase in the project tree, and complete the Local Tax field for the phase.
Click Save.
Ajera automatically allows all security groups access to the State and Local Tax fields in the Payroll Taxes area.

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