Employee Tax Setup - Field Descriptions

Use the table below for reference when completing the fields on this screen.

Fields/Buttons

Descriptions

Social security #

 Enter the employee's social security # in this field.

If Payroll reporting is set to 'Canada' in Payroll Installation - Properties, the number entered here will be formatted to comply with Canadian mask guidelines, including a single space between the 3rd and 4th digits and a single space between the 6th and 7th digits.

Note: The social security number will not print on reports for security reasons.

Foreign employee?

 Select this checkbox to adjust the Federal Exempt/Taxable settings.

If this checkbox is selected the Income tax, Disability and Unemployment insurance flags can be set to 'Taxable' or 'Exempt'. If this checkbox is not selected, these flags will be view-only and revert to 'Taxable'.

Note: This checkbox is hidden when the Allow non-US payroll processing? checkbox is selected in the Payroll Installation - Defaults screen.

Permanent residence / work

Tax code

 Select the appropriate federal, state, county and local tax codes from the corresponding drop-down menus. Up to 10 characters are allowed. The selected tax codes will display in the header.

If the Allow non-US payroll processing? checkbox is selected in the Payroll Installation - Defaults screen, you can edit the Federal tax code and other fields on the Federal line. Otherwise, changes to the Federal tax code are not permitted.

If an employee is claiming exemption from income tax withholding, that employee may not be exempt from other taxes; therefore, it is recommended that the employee be recorded to claim 99 deductions.

The Federal field has a default tax code; this ensures that a W-2 will be generated for the employee. This default setting cannot be changed. If an employee is claiming exemption from Federal income tax withholding, the employee may not be exempt from other taxes. Therefore, it is recommended that the employee be set up to claim 99 exemptions.

Income tax

 Select E from the drop-down menu if employee is exempt from state, county, or local income taxes; otherwise, press Enter to accept the system default of Taxable. Be sure to enter T if a W-2 will be required for this tax code and employee.

Disability (FICA/SDI)

 Select E from the drop-down menu if employee is Exempt from FICA or SDI taxes, otherwise, press Enter to accept the system default of Taxable.

Unemployment

 Select E from the drop-down menu if employee is Exempt from unemployment insurance taxes; otherwise, press Enter to accept the system default of Taxable.

Filing status

 Select one of the filing status codes from the drop-down menu of filing statuses for the particular tax code and assign it to the employee.

The Payroll tax tables allow an unlimited number of income tax filing statuses to be created in order to accommodate those who need the ability to set up more than four filing statuses for income tax withholding tables. In addition, the Payroll Manager can choose the name for these codes in order to match them with the filing statuses defined by the particular jurisdiction. Employee Tax Setup allows the Payroll Manager to assign the applicable user-defined filing status, and Check Calculation calculates income tax withholding based on the particular filing status for that employee.

Exemptions

 Enter the number of federal exemptions that this employee is claiming. Repeat as needed for permanent work state, resident county and resident local, regardless of whether a tax code is entered for these rows.

Note Regarding Canadian Provinces

Up to 99,999 exemptions may be entered in this field for Canadian employees. The payroll manager should assign $1 as the exemption rate in the Tax Table Maintenance screen. By assigning a rate of $1, the Check Calculation will automatically apply the correct dollar amount when determining the wages subject-to income tax.

Example: If the employee's exemption is $12,345, the Employees exemption will be set to 12,345. In the setup for the corresponding tax code, the exemption amount for Married, Single, Head of Household, and Other are each set to $1. During Check Calculation, the annualized gross pay subject-to income tax will be reduced by $12,345 before computing the income tax deduction.

Income tax overrides

 Click this button to enter any income tax override types (% of gross, fixed amount, add-on) and amounts for the employee.

If the Federal filing status is 'US', the override window will contain additional fields for W-4 federal withholdings:

  • Two jobs in total?
  • Dependents claimed annually
  • Other annual income
  • Other annual deductions
  • Extra withholding by pay period

Permanently override resident and work state unemployment?

 Select this checkbox if you wish to specify a permanent unemployment state in place of the resident and work state settings.

Unemployment state

 This field is only enabled when the option to permanently override the resident and work state unemployment is selected. Enter a tax code or double-click to select from a list of available codes, up to 10 characters are allowed. This permanent unemployment tax code will display on the Employee Master Report.

Temporary work

Override type

 Select an override type for the temporary work: State, County or Local.

Code

 Enter a tax code for the selected override type, or press F4 to search for tax codes, up to 10 characters are allowed. The corresponding description will display to the right of this field.

Income tax

 Select E from the drop-down menu if employee is exempt from state, county, or local income taxes for the temporary work; otherwise, press Enter to accept the system default of Taxable.

Disability

 Select E from the drop-down menu if employee is exempt from FICA or SDI taxes for the temporary work; otherwise, press Enter to accept the system default of Taxable.

Unemployment

 Select E from the drop-down menu if employee is Exempt from unemployment insurance taxes for the temporary work; otherwise, press Enter to accept the system default of Taxable.

Filing status

 Select one of the filing status codes from the drop-down menu for the temporary override.

Exemptions

 Enter the number of federal exemptions that this employee is claiming. Press Enter if this field does not apply.

Override type

 Select an income tax override type (% of gross, fixed amount, add-on) and specify override amount for the employee . If this field is left blank, the field will default to 'No override'.

Override types will default from this screen before going to the Tax Tables.

Res income tax

 Select the employee's income tax status in their resident state.

Res disability

 Select the employee's FICA or SDI tax status in their resident state.

Res unemployment

 Select the employee's unemployment insurance tax status in their resident state.