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Set up employees and payroll items

Terms used for multi-state employees

State unemployment insurance:
 By default, the application calculates state unemployment insurance (SUI) based on the location where the employee works.
State withholding:
 By default, the application uses the work location to determine the jurisdiction to use to calculate state withholding amounts. You can set up multi-state calculations depending on a number of factors.
  • Reciprocal agreement: An agreement that a state won't require income tax withholding from the other state's residents who perform work in the taxing state. For example, a reciprocal agreement means a resident of state A can work in state B without being subject to state B's withholding tax. This ensures that employees aren't subject to tax withholding by both states.
  • Nexus: Your client has a business connection or a presence in that jurisdiction and is subject to state or local income and sales taxes.

Multi-state withholding options

You can override multi-state withholding calculations when you need to.
  • Automatic. The state income tax calculation is based on the application's default multi-state withholding algorithm (which is based on the multi-state withholding rules for each state).
  • Work only. The application calculates only the state income tax associated with the employee's work states.
  • Work and resident - Allow credit. The application calculates the income tax associated with the employee's resident and work state. The SIT amount calculated for each work state reduces (given a credit for) the resident state income tax (SIT) amount calculated for each work state.
  • Work and resident - Full. The application calculates the income tax associated with the employee's resident and work states. No credit for the work state SIT is applied.
  • Resident only. The application calculates only the state income tax associated with the employee's resident state.

This article applies to:

  • Product: Accounting CS
  • Subject: Setup

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