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Set up employees and payroll items

Set up employee payroll tax information

Payroll tax information is added to the employee on the
Payroll Taxes
 tab of the Employees screen. Although the federal and state taxes are added to the employee automatically based on the address information for both employee and client (making it essential to use the address verification feature when setting up your client and employee address information), you must specify the employee's federal and state withholding information here.
Also, using the
Wage Exempt
 checkboxes in the
Taxes
 section, you can mark employees as exempt for individual taxes.
Follow these steps to set up payroll tax information for an employee.
  1. Select
    Setup
    ,
    Employees
    , then the
    Payroll Taxes
     tab.
  2. In the
    Federal withholding
     section: For employees being added or updated after January 2020, mark the
    Use 2020 (or newer) W-4
     checkbox and follow the remaining steps in this section. For employees added in 2019 or before, do not mark the checkbox, but rather select the
    2019 (or prior) W-4
     button to view
    or modify
    the existing federal withholding information there.
  3. Specify the filing status for the employee and make any changes to the other fields in this section as needed.
  4. To withhold any additional amounts for this employee, make a selection from the dropdown (Additional Amount, Additional Percentage, Fixed Amount, or Fixed Percentage) and then enter the appropriate amount or percentage.
  5. Mark any checkboxes that are appropriate for this employee.
    If the employee is a nonresident alien, mark the
    Nonresident alien
     checkbox, and if the employee is tax exempt, mark the
    Tax exempt
     checkbox.
  6. If the employee is eligible for earned income credit, select their EIC status from the dropdown and, if applicable, mark the
    Spouse has form W-5 in effect
     checkbox.
  7. In the
    Other Federal Settings
     section, mark the
    Full FUTA rate
     checkbox only if the full FUTA rate of 6.0% should be used for this employee instead of the standard 0.6%.
  8. If the employee qualifies for the new hire FICA credit (from the HIRE act),
    mark the
    New hire FICA credit
     checkbox.
    • When this checkbox is marked for an employee, the employer FICA SS tax amount will be 0.00 for payroll checks processed for that employee with pay dates from April 2010 through December 2010.
    • This checkbox is not available for employees specified as household employees in the
      Main
       tab of the Employees screen.
    • The hire date for the employee must be between February 4, 2010, and December 31, 2010, for the employee to qualify. The hire date must be entered in the
      Hire date
       field in the
      Personal
       tab of the Employees screen.
    • Employees specified as
      Family of owner
       in the
      Personal
       tab of the Employees screen are not eligible for the credit.
  9. In the
    State withholding
     section, enter state withholding information. Other than the
    State
     field, the fields in this section vary by state, because they are based on the fields for each state's W-4 form.
  10. In the
    Unemployment
     section, take note of which state or states are listed (if the employee works in multiple states).
    • If a single state is listed when there should be multiple unemployment states, or vice versa,
      then you may need to mark or unmark the
      Do not combine state unemployment
       checkbox on the
      Payroll Taxes
       tab of the Clients screen.
    • If the wrong state is listed as the unemployment state, make sure that the correct work location is marked as the primary location for this employee in the
      Main
       tab of the Employees screen.
  11. In the
    Taxes
     section, you have the options to override the application's multi-state withholding calculations and to adjust the employee's taxable wages if necessary.
  12. In the
    Taxes
     grid, all the applicable federal and state taxes are listed automatically based on the address information for both employee and client, but you can modify GL liability and expense account numbers for the tax item. To modify the GL liability and expense accounts for a tax item for each of the employee's active location/department combinations, select the ellipsis button to open the
    Employee Tax Item Settings
     window. This will gray out the the GL account information fields in the Taxes grid. In addition, you can mark the employee as exempt for individual taxes.
    • Mark the
      Wage Exempt
       checkbox if the employee's wages are exempt from a particular tax (i.e. for clergy). This will exclude the employee's wages from the taxable wage amounts included on payroll tax forms.
    • Don't mark the
      Wage Exempt
       checkbox if you're trying to set up a multi-state employee and want to specify that only a particular state withholding should be taken. The application automatically calculates the appropriate state withholding taxes based on each state's rules.
    • When you mark the
      Wage Exempt
       checkbox for a tax item, the application will display a screen to confirm that all payroll checks entered for this employee in the future will reflect this wage exempt status. If you want to update the taxable wages for this employee's existing payroll checks as well, enter an effective date.

This article applies to:

  • Product: Accounting CS
  • Subject: Payroll checks, Setup
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