employee tax setup guide - adp · enterprise payroll documentation library ... 8-3 supplemental...

HR. Payro

ADP Enterprise HR®

Employee Tax Setup Guide

Versions 5.0 and higherVersion 5.03

ll. Benefits.

Copyright 1993–2013 by ADP, Inc.Portions copyright 1988–1998 PeopleSoft, Inc.

Third-Party Copyright InformationFor copyright information about the third-party software used in ADP’s HR/payroll solutions, click Copyright Information.

This manual supports ADP Enterprise HR Versions 5.0 and higher. Published Fall 2013.

All rights reserved. The information contained in this document is proprietary and confidential to ADP. No part of this document may be reproduced or transmitted in any form or by any means, mechanical or electronic, including photography and recording, for any purpose without the express written permission of ADP.

The core software technology for ADP’s product offering has been acquired through a licensing agreement with PeopleSoft, Inc., Pleasanton, California. Portions of the following text have been copied by permission of PeopleSoft, Inc. Product specifications are subject to change without notice. No product warranty should be implied from this document.

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Contents

About This Guide

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xviAudience for This Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xviiEnterprise Payroll Documentation Library. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xviiiWhat’s in This Book. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xixWhat’s New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxRelated Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxDocumentation Conventions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xxiProviding Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xxiii

1 Setting Up Federal Tax Withholding

Understanding the Basics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-2Paying a New Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-2Transferring an Employee to Another Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-2Taxing in Multiple Jurisdictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-2

Understanding ADP Enterprise HR Calculations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-3Regular Earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-3Other Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-3Multiple Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-4Supplemental. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-4

Advance Payments for Earned Income Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-5Selecting the Federal Filing Status and Entering Withholding Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-6

Selecting the Filing Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-6Entering Withholding Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-6

Setting Up Federal Taxes for an Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-7Entering IRS Tax Lock-In Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-13

Specifying Tax Lock-In Data for an Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-13Verifying Allowances and Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-16

Printing a Hard Copy of an Electronically Submitted Federal W-4 (PER052) . . . . . . . . . . . . . . . . . . . . .1-17

2 Setting Up State Tax Withholding

Understanding the Basics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-2Determining Your State’s Tax Withholding Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-2Taxing in Multiple Jurisdictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-4

Using Form W-4 for State Tax Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-5Entering State Tax Data for an Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-6

Specifying State Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-7Entering State Nonstandard Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-12

ContentsEmployee Tax Setup Guide Version 5.04

iv Contents

3 Setting Up Local Tax Withholding

Understanding the Basics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-2Understanding the Different Types of Local Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3Calculating Local Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3Taxing in Multiple Jurisdictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3

Determining Whether Local Taxes Apply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-4Setting Up Local Taxes for an Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-6

4 Alabama—Setting Up Employee Taxes

Summarizing Payroll Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-2Setting Up State Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-3

Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-3Entering Withholding Allowances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4

Setting Up Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-5Worked-in Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-5Special Conditions for Birmingham . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-5

5 Alaska—Setting Up Employee Taxes

Summarizing Payroll Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-2Setting Up State and Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3

6 Arizona—Setting Up Employee Taxes

Summarizing Payroll Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2Setting Up State Income Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-3


Setting Up Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-5

7 Arkansas—Setting Up Employee Taxes

Summarizing Payroll Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-2Setting Up State Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-3


Setting Up Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-4


Contents v

8 California—Setting Up Employee Taxes

Summarizing Payroll Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-2Setting Up State Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-3

Supplemental Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-3Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-4Entering Withholding Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-4Entering Personal Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-4Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-5Selecting the Disability Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-5

Setting Up Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-6

9 Colorado—Setting Up Employee Taxes

Summarizing Payroll Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-2Setting Up State Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-3

Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-3Entering Withholding Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-3Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-4

Setting Up Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-5Paying Local Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-5Entering Withholding Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-5

10 Connecticut—Setting Up Employee Taxes

Summarizing Payroll Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-2Setting Up State Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-3

Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-3Entering Withholding Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-4Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-4

Setting Up Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10-5

11 Delaware—Setting Up Employee Taxes




12 District of Columbia—Setting Up Employee Taxes

Summarizing Payroll Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12-2


vi Contents

Setting Up State Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-3Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-3Entering Withholding Allowances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-3Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-4

Setting Up Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-5

13 Florida—Setting Up Employee Taxes

Summarizing Payroll Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-2Setting Up State and Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-3

14 Georgia—Setting Up Employee Taxes

Summarizing Payroll Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-2Setting Up State Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-3

Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-3Entering Withholding Allowances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-4Entering Dependent Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-4Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-4


15 Hawaii—Setting Up Employee Taxes


Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-3Entering Withholding Allowances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-4Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-4Selecting the Disability Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-4


16 Idaho—Setting Up Employee Taxes


Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-3Entering Withholding Allowances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-3Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-4


17 Illinois—Setting Up


Contents vii

Employee Taxes


Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17-3Entering Withholding Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17-3Entering Personal Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17-3Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17-4


18 Indiana—Setting Up Employee Taxes


Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18-3Entering Withholding Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18-3Entering Dependent Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18-3Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18-4

Setting Up Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18-5Special Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18-6

19 Iowa—Setting Up Employee Taxes




20 Kansas—Setting Up Employee Taxes




21 Kentucky—Setting Up Employee Taxes


Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21-3


viii Contents

Entering Withholding Allowances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-3Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-4

Setting Up Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-5Special Conditions for Louisville and Jefferson County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-5Special Conditions for Boone County, Florence, Walton, Verona, and Erlanger . . . . . . . . . . . . . . . 21-6

22 Louisiana—Setting Up Employee Taxes


Calculating Income Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-3Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-3Entering Withholding Allowances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-4Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-4


23 Maine—Setting Up Employee Taxes




24 Maryland—Setting Up Employee Taxes




25 Massachusetts—Setting Up Employee Taxes


Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-3Entering Withholding Allowances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-3Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-3Indicating Head of Household Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-4



Contents ix

26 Michigan—Setting Up Employee Taxes


Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26-3Entering Withholding Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26-3Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26-3Identifying Family-owned Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26-4

Setting Up Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26-5

27 Minnesota—Setting Up Employee Taxes




28 Mississippi—Setting Up Employee Taxes




29 Missouri—Setting Up Employee Taxes




30 Montana—Setting Up Employee Taxes


Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30-3Entering Withholding Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30-3


x Contents

Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-4Setting Up Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-5

31 Nebraska—Setting Up Employee Taxes




32 Nevada—Setting Up Employee Taxes


33 New Hampshire—Setting Up Employee Taxes


34 New Jersey—Setting Up Employee Taxes


Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34-4Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34-4

Entering Withholding Allowances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34-5Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34-5Selecting the Disability Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34-5

Setting Up Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34-6Special Conditions for New Jersey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34-6Understanding Medical Malpractice Insurance Premium Assistance Assessment (MMIPAA) . . . . 34-6

Setting Up Medical Malpractice Insurance Premium Assistance Assessment (MMIPAA) . . . 34-6

35 New Mexico—Setting Up Employee Taxes


Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35-3Entering Withholding Allowances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35-4


Contents xi

Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35-4Setting Up Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35-5

36 New York—Setting Up Employee Taxes


Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36-3Entering Withholding Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36-4Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36-4Selecting the Disability Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36-4


37 North Carolina—Setting Up Employee Taxes




38 North Dakota—Setting Up Employee Taxes




39 Ohio—Setting Up Employee Taxes




40 Oklahoma—Setting Up


xii Contents

Employee Taxes




41 Oregon—Setting Up Employee Taxes



Setting Up Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41-5Understanding Workers’ Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41-5Setting Up Worked-in Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41-6

42 Pennsylvania—Setting Up Employee Taxes



Setting Up Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42-4Withholding Local and School District Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42-4Withholding for Employees Who Live in a Different Locality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42-4Special Condition for Resident-only Collector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42-5Special Conditions for Pittsburgh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42-5

Taxing Exception . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42-6Special Conditions for Philadelphia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42-6

43 Puerto Rico—Setting Up Employee Taxes


Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43-4Entering Withholding Allowances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43-4Entering Personal Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43-5Selecting the Disability Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43-5

44 Rhode Island—Setting Up


Contents xiii

Employee Taxes


Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44-3Entering Withholding Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44-3Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44-4Selecting the Disability Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44-4


45 South Carolina—Setting Up Employee Taxes




46 South Dakota—Setting Up Employee Taxes

Summarizing Payroll Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46-2Setting Up State and Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46-3

47 Tennessee—Setting Up Employee Taxes


48 Texas—Setting Up Employee Taxes


49 Utah—Setting Up Employee Taxes





xiv Contents

50 Vermont—Setting Up Employee Taxes


Selecting the Filing Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50-4Entering Withholding Allowances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50-4Entering Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50-4Specifying Health Care Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50-4


51 Virginia—Setting Up Employee Taxes




52 Washington—Setting Up Employee Taxes


53 West Virginia—Setting Up Employee Taxes




54 Wisconsin—Setting Up Employee Taxes





Contents xv

55 Wyoming—Setting Up Employee Taxes


A ADP Financial and Compliance Services

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2Accessing ADP Web-based Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3Referencing Current Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-4Locating a Local Code for Tax Filing Purposes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-5Understanding Comment Code Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7

B Abbreviations

C Tax Resources

D Filing Status Cross-Reference

E Employee Tax Setup Examples

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-2California Employee Tax Setup Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-3Maryland Employee Tax Setup Example. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-4Pennsylvania Employee Tax Setup Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-5

Setting Up State Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-5Setting Up Local Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-6

Glossary

Index


xvi Contents


About This Guide

PAGE TOPIC

xvi Introduction

xvii Audience for This Guide

xviii Enterprise Payroll Documentation Library

xix What’s in This Book

xx Related Documentation

xxi Documentation Conventions

xxiii Providing Comments

About This GuideEmployee Tax Setup Guide Version 5.04

xvi Introduction

Introduction

This guide provides the procedures and information necessary to set up employee tax

withholding information using ADP®’s Enterprise HR® payroll solution (referred to as Enterprise Payroll). Customized instructions are provided for states and localities with special withholding requirements.

The examples in this guide are based on fictional employees, and bear no relationship to any

ADP employees or employees at any other companies.

ADP provides regular tax updates, which identify the tax rates that have been recently modified by the federal, state, or local government. Tax information changes very frequently, so consult ADP Tax Updates and source material from the IRS, state government, or local jurisdiction for the most current information.

The information in this guide is current as of the publication date noted on the inside front cover.

ADP does not render wage, tax, or legal advice. Contact the proper agency to verify all

information. Check with the Internal Revenue Service (IRS) to ensure compliance.


Audience for This Guide xvii

Audience for This Guide

This guide is written for payroll professionals who are using ADP®’s Enterprise HRSM solution (referred to as ADP Enterprise HR) to set up or modify employee tax withholding information.

To take full advantage of this guide, you should have a basic understanding of how to use the ADP Enterprise HR product, including how to add, modify, and delete information. In addition, you should be comfortable with using a graphical user interface, as well as a web-enabled application. This guide is not intended to be a tutorial.


xviii Enterprise Payroll Documentation Library

Enterprise Payroll Documentation Library

The Enterprise Payroll library includes this book and the following guides:

• Payroll Setup and Maintenance Guide - describes all the payroll activities that you must complete before you can process a payroll, such as setting up and maintaining company definitions and employee payroll information.

• Payroll Processing Guide - describes the process of running a typical payroll. In addition, it provides instructions on running an off-cycle payroll for on-demand or on-line checks, adjustments, and reversals. It also provides information on post-payroll cycle processes such as preparing your payroll distributions and building your ADP Financial and Compliance Services interface file. It describes all payroll activities that you must complete on a monthly, quarterly, and yearly basis. In addition, it includes tasks that you can complete during the year in preparation for running your year-end tax reports.


What’s in This Book xix

What’s in This Book

This guide, the Employee Tax Setup Guide, covers the following topics:

Chapter 1, “Setting Up Federal Tax Withholding,” provides general information about income tax and step-by-step instructions for setting up employee federal withholding.

Chapter 2, “Setting Up State Tax Withholding,” provides general information about state taxes and step-by-step instructions for setting up employee state withholding.

Chapter 3, “Setting Up Local Tax Withholding,” provides general information about local taxes and step-by-step instructions for setting up employee local withholding.

Chapters 4-55 provide information for each of the states, plus Puerto Rico and the District of Columbia. The chapters are alphabetized by state name, beginning with Alabama and ending with Wyoming. If a state has local taxes, then state and local withholding instructions are provided in the chapter. In addition, states with occupational taxes or other worked-in taxes provide steps for your convenience. If the state has neither local taxes or special state conditions, then you are referred to Chapter 2, “Setting Up State Tax Withholding,”

Appendix A, “ADP Financial and Compliance Services,” provides helpful information for clients who use ADP Financial and Compliance Services.

Appendix B, “Abbreviations,” lists common tax abbreviations and their meanings.

Appendix C, “Tax Resources,” provides external web sites and other resources that may benefit you in the tax setup process.

Appendix D, “Filing Status Cross-Reference,” lists the filing status options for each state.

Appendix E, “Employee Tax Setup Examples,” provides example setups for three sample employees to illustrate the type of information needed for state and local employee tax withholding.

A Glossary defines terms and acronyms pertinent to employee tax withholding.

An Index is also provided.


xx What’s New

What’s New

The following change has been made for Version 5.04:

• The Social Security Number field has been removed from the Tax Withholding search dialog box.

Related Documentation

This guide provides the procedures and information necessary to set up employee tax withholding information. Customized instructions are provided for states and localities with special withholding requirements.

You may need to refer to related documentation for other areas of the product. You can access the documentation in the following locations:

• Online manuals through the ADP Enterprise HR application Help menu

• Printed and online manuals on the web at adp4me.adp.com, select the Product Knowledgebase tab and then select Payroll / HR

The Using ADP Enterprise HR Guide also includes a related documentation table which lists

the documentation set delivered with the application, the purpose of the documents, and where the documents can be located. This table also includes a list of delivered online help.

To access the ADP Enterprise HR guides on this web site, you must be assigned the ADP4ME User role in the ADP Netsecure Security Management System. This role is issued a digital certificate. For more information, contact your system administrator.


https://adp4me.adp.com

Documentation Conventions xxi

Documentation Conventions

ADP Enterprise HR allows your administrator to configure panels, translate values, and the Enterprise HR home page. Your administrator can change field labels, assign default values to fields, define fields as required, hide fields, as well as re-align fields on a panel. Translate values can be added, changed, or deleted for many fields. Panel illustrations and field descriptions used throughout this guide represent the default settings as delivered by ADP. For specifics on configuring ADP Enterprise HR, see the Application Administrator's Guide.

Table 1 describes the documentation conventions used in this guide.

Table 1. Documentation Conventions

Documentation Convention Description

bold In procedures, user interface items that you select, click, or enter information for are shown in bold. For instance, panel names, buttons, and field names.

command Indicates that you should type the command on your computer.

Signifies important additional information.

Signifies very important additional information

Identifies helpful—but not necessary—information.

Signifies that a failure to follow the recommended procedure could result in a loss of data or could result in the product not performing properly.

Used to indicate either of the following:

• You can find additional information in the online Help

• You can find additional information on interface shortcuts and tips in the user’s guide.

Company Definitions ~ Organization Definitions

At the beginning of a procedure, shows the path or navigation to a process or task.

People ~ Personnel Actions ~ Change Employee’s Job/Position ~ Change Job Position

Within text, shows the path or navigation to a process, task, or panel.


xxii Documentation Conventions

Indicates that you have reached the end of one step in a multiple-step process. Instructions are given after this convention to help you find the next step in the process and other related information.

Indicates that you have reached the end of a procedure. If additional information is available, it is noted after this convention.

Indicates where you can find a complete description of every field on a panel.

This convention is placed either to the left or, less often, to the right of a screen illustration.

Lists each step in a multi-step process, and indicates which step the current section is documenting.

In this example, the third step is currently being documented. Note that this step is highlighted in bold and is preceded by a check mark.

If you are viewing an online manual, click the highlighted text to jump to the desired section.

Table 1. Documentation Conventions (cont.)

Documentation Convention Description

For a description of the fields on this panel, press F1.

MULTI-STEP PROCESS

First step in process

Second step in process

Third step in process


Providing Comments xxiii

Providing Comments

We welcome your comments and suggestions about the documentation delivered with ADP Enterprise HR. That way, we can continue to improve the manuals and online Help. You can provide comments in one of the following ways:

• Select Help ~ Online Manuals from the ADP Enterprise HR application and then click the link to submit your suggestions.

• Give us feedback by visiting the web at www.adp4me.nas.adp.com. Select the Product Knowledgebase tab, and then select Payroll / HR.


www.adp4me.nas.adp.com

xxiv Providing Comments


Chapter 1

Setting Up Federal Tax Withholding

PAGE TOPIC

1-2 Understanding the Basics

1-3 Understanding ADP Enterprise HR Calculations

1-5 Advance Payments for Earned Income Credit

1-6 Selecting the Federal Filing Status and Entering Withholding Data

1-7 Setting Up Federal Taxes for an Employee

1-13 Entering IRS Tax Lock-In Data

1-17 Printing a Hard Copy of an Electronically Submitted Federal W-4 (PER052)

Chapter 1: Setting Up Federal Tax WithholdingEmployee Tax Setup Guide Version 5.04


Understanding the Basics

This chapter provides instructions for setting up federal tax withholding. Federal taxes include federal income tax, Social Security and Medicare tax, and Federal Unemployment Tax Act (FUTA) tax.


information. Check with the Internal Revenue Service (IRS) to ensure compliance.

If the employee works for multiple companies, the tax data is defined by company. In addition, this chapter provides information on rates and calculations.

FICA is better known as Social Security, and it includes Medicare withholding.

You can enter federal, as well as state and local, tax data using the Tax Withholding task.

Paying a New Employee

You can pay a new employee on time even if you have not yet received the employee’s withholding certificates using the Default Tax Configuration option. When you initially hire a new employee, Enterprise Payroll automatically generates a set of default tax data records. This feature allows Enterprise Payroll to pay the employee by calculating the maximum applicable income tax for the jurisdictions. Once you receive the employee’s withholding certificates, you use them to update the employee tax data. See the Payroll Setup and Maintenance Guide for more information.

Transferring an Employee to Another Company

When an employee transfers from one company to another, you can view both the employee tax withholding data for the previous company as well as the employee tax data for the current company to which the employee transferred. The Search dialog box for the Tax Withholding task displays multiple lines for an employee who has been in more than one company so that you can select the company tax information you want to view.

Taxing in Multiple Jurisdictions

To allow processing of an employee’s taxes for a specific amount of taxable wages earned in each jurisdiction, you select the Multi-jurisdiction Tax Processing check box on the Federal panel. Then you can enter the percentage of time worked for the state and/or the locality on the State panel and/or the Local panel. Earnings will be distributed based on the percentage you enter.

The total percent for the states and the total percent for the localities should equal 100

percent.


Understanding ADP Enterprise HR Calculations 1-3

Understanding ADP Enterprise HR Calculations

ADP Enterprise HR uses formulas to calculate income tax. The formulas instruct the Enterprise Payroll calculation engine how to calculate taxes. Information about the formulas is presented on the Federal/State Formulas panel for those who would like to see how the formulas work. For more information, see the Federal/State Formulas task (Payroll ~ Company Definitions ~ System Tax Data ~ Federal/State Formulas) in the Payroll Setup and Maintenance Guide.

Some of the tax calculations performed by ADP Enterprise HR are described in this section. You indicate the tax method desired for the paysheet or you can use the default information set up in company definitions. For more information, see the Earnings task (Payroll ~ Company Definitions ~ Earnings) in the Payroll Setup and Maintenance Guide.

The rules that apply depend upon how ADP Enterprise HR is initially set up.

Regular Earnings

This method uses the ADP Enterprise HR earnings code to calculate withholding. This method, which is aggregate and annualized, overrides any information that may be set up differently on the paysheet (unless you set the option to specify on paysheet).

Regular earnings must have a lower sequence number than any earnings types that reduce regular earnings. Regular earnings are calculated using the following formula:

Pay Rate + Rate Adjustmentx Hours + Hours Adjustmentx Multiplication Factor + Earnings Adjustment

EARNINGS

Other Earnings

In general, earnings are calculated either by amount or hours.

Amount

Multiplication Factor x Current Pay Period Earnings

(per the earnings or special accumulator code)Hours

Current Period Hours (per the earnings or special accumulator code)

x Hourly Rate (on the paysheet entry)x Multiplication factor

Federal/State formulas are maintained by ADP. If you make a change or addition to the standard tax information delivered with Enterprise Payroll, you are responsible for maintaining the change until it is incorporated into our tax tables.


1-4 Understanding ADP Enterprise HR Calculations

Multiple Earnings

Multiple earnings occur when a worker has two different jobs, is paid two different ways, or works for two different companies that use the same payroll system. For example, a salaried worker paid overtime by the hour would have multiple earnings, with one earnings code applied to the salaried work and another code applied to the overtime hours.

You must set up multiple earnings codes to use the multiple earnings method. You can use a special accumulator code to indicate multiple earnings. The calculation is set for each of the multiple earnings codes.

The following rules apply for calculations with multiple earnings. Examples assume that the

regular earning is set to Specified on paysheet and that the supplemental tax method is Percent of Taxable Gross as displayed on the Federal/State Tax Configuration panel (Payroll ~ Company Definitions ~ System Tax Data ~ Federal/State Tax Configuration).

Supplemental

Enterprise Payroll’s tax processing supports various tax calculation methods for supplemental earnings, including the use of aggregate tax methods where required. The method Enterprise Payroll uses for calculating withholding tax on supplemental payments may differ (in California only) depending on whether the employee receives a supplemental payment along with regular wages, or instead, receives a separate check for supplemental payment.

To view the method of supplemental withholding tax calculation, use the Federal/State Tax Configuration task (Payroll ~ Company Definitions ~ System Tax Data). See the Payroll Setup and Maintenance Guide for more information.

Table 1-1. Multiple Earnings Rules

When the other earning is set to...

And the paysheet is set to... Then ADP Enterprise HR calculates...

Specified on paysheet

N/A*

* This column is not applicable in this row.

Both earnings based on what is selected in the paysheet.

Annualized Annualized Both earnings as annualized.

Supplemental Regular earning as supplemental and other earning as annualized.

Cumulative Regular earning as cumulative and other earning as annualized.

Supplemental Annualized Regular earning as annualized and other earning as supplemental.

Supplemental Both earnings as supplemental.

Cumulative Regular earning as cumulative and other earning as supplemental.


Advance Payments for Earned Income Credit 1-5

Advance Payments for Earned Income Credit

EIC is a refundable tax credit for people who work and have earned income from employment or self-employment below established amounts. The credit is available to anyone who qualifies for the credit and files a federal income tax return (even if no tax is due).

EIC reduces the amount of tax owed and may also provide a refund, which the employer provides by adding advance payments to the employee’s paychecks. Generally, employers make the advance EIC payment from the deposit for withheld income tax and employee Social Security and Medicare taxes.

You apply EIC to Federal Tax Withholding by having the employee complete a W-5 form and entering the data on the Federal panel (Employee Information ~ Change Employee Payroll Data ~ Tax Withholding) in the EIC Status field.

The W-5 form specifies the marital status of the employee and whether the spouse has also completed a W-5. Enterprise Payroll uses this information and the gross wages of the employee to determine whether advance payments apply.

The W-5 form expires at the end of the year, so the employee must complete a W-5 every

year.

Refer to Table 1-3 to reference Earned Income Credit values on the Federal panel.

Table 1-2. Earned Income Credit

Federal Certificate Line or Reference Certificate Value

ADP Enterprise HR Value

Line 2 Single, head of household, or qualifying widow(er) S

Line 2 Married filing jointly M

Line 3 If married, does spouse have a Form W-5 in effect = Yes

B

Line 3 If married, does spouse have a Form W-5 in effect = No

M


1-6 Selecting the Federal Filing Status and Entering Withholding Data

Selecting the Federal Filing Status and Entering Withholding Data

The filing status and withholding allowances work together to determine federal income tax.

Selecting the Filing Status

Refer to Table 1-3 to complete the Filing Status field on the Federal panel. If no status is provided by the employee, leave the default value of S (Single).

Entering Withholding Allowances

In the Allowances field on the Federal panel, enter the total number of allowances the employee is claiming for federal withholding tax purposes. This number is found on Line 5 of Form W-4.

Table 1-3. Filing Status Definitions

Federal Certificate Line or Reference Certificate Value

Definition of Value


Line 3 Single Single S

Line 3 Married Married M

Line 3 Married, but withhold at a higher Single rate

Married, using single rate

S

N/A N/A Non-Resident O


Setting Up Federal Taxes for an Employee 1-7

Setting Up Federal Taxes for an Employee

This section provides instructions for entering federal tax withholding information for an employee. Use the Federal panel (Employee Information ~ Change Employee Payroll Data ~ Tax Withholding) to set up the employee’s income tax information.

When you hire a new employee, Enterprise Payroll automatically generates a set of default tax data records. This feature allows Enterprise Payroll to proceed to pay the employee, calculating the maximum applicable income tax for the jurisdictions. Once you receive the employee’s withholding certificates, you can update the employee’s tax withholding information.

If an employee works for more than one company, you must record the tax data for each

company.

When an employee transfers from one company to another, you can view both the employee tax withholding data for the previous company as well as the employee tax data for the current company to which the employee transferred. The Search dialog box for the Tax Withholding task displays multiple lines for an employee who has been in more than one company so that you can select the company tax information you want to view.

Once you enter federal tax data, you must enter state tax data and, if applicable, local tax data. See Chapter 2, “Setting Up State Tax Withholding” and Chapter 3, “Setting Up Local Tax Withholding” for more information on state and local tax withholding.

Setting up federal taxes for an employee consists of specifying federal tax withholding information.The Federal panel (Payroll ~ Employee Information ~ Change Employee Payroll Data ~ Tax Withholding) records and maintains tax information Enterprise Payroll uses to calculate federal taxes for employees. Federal taxes include federal income tax, Social Security and Medicare, and federal unemployment tax. Use this panel to record other special tax statuses, EIC data, certain data affecting W-2s, and federal W-4 data. If an employee works for more than one company, record this data for each company.

To change data or enter a new record on the Federal panel, do the following:

1. Click Payroll and make the following selections:

Employee Information ~ Change Employee Payroll Data



2. Double-click the Tax Withholding task. The Search dialog box displays.

Figure 1-1. Search Dialog Box

3. Enter the employee ID in the Empl ID field and/or other search criteria, including company name and employee name.

4. Click OK. The Federal panel displays.

Figure 1-2. Federal Panel

5. Click (Insert Row) to preserve history, and enter the new effective date in the Effective Date field, if necessary.

You can only add or change data that has an effective date the same as or more recent than the effective date of the new data. For example, if you add a new locality to the company definitions on 04/02/08, then the locality is available on the Local panel only if the effective date of the employee tax record is 04/02/08 or later.




6. From the Income Tax area, do the following:

a. Using the employee’s completed Form W-4, select the employee’s withholding status from the Withholding Status field.

The option you select in the Withholding Status field affects how Enterprise Payroll

interprets an amount or percentage in the Additional W/H $ or Additional W/H % field.

• Select Additional withholding only to override the normal tax calculation with an amount or percentage indicated in the Additional W/H $ or Additional W/H % field. Enterprise Payroll determines taxable gross for federal income tax (FIT) using the individual earnings an employee is paid. Thus, the tax withheld becomes either the flat amount or a percentage of the federal taxable wages.

After selecting this option and pressing Tab, the Allowances field is grayed and unavailable.

This rule applies in all cases except for gross ups which uses the standard tax

calculation.

• Select Exempt (do not maintain gross) if the employee is exempt from FIT. No taxable wages will accumulate.

After selecting this option and pressing Tab, the Allowances, Additional W/H $,

and Additional W/H % fields are grayed and unavailable.

• Select Subject to FIT withholding to calculate taxes using the standard tax table provided by the IRS. Taxable wages will accumulate. Select if the employee has no special tax status. Enterprise Payroll calculates federal income tax based on IRS tax tables, the employee's gross, FIT filing status and withholding allowances.

You must select this Withholding Status option if the employee’s Filing Status

is Non-Resident.

b. Select the Suppl tax plus additional W/H option to calculate tax for supplemental earnings and add the amount or percentage indicated in the Additional W/H $ or Additional W/H % field. No tax is calculated for regular earnings when you select this option.

This rule applies in all cases except for gross ups and supplemental earnings, which

use the standard tax calculation.

c. If you need to override the default filing status, enter the employee’s filing status in the Filing Status field, as listed on the employee’s state exemption certificate. The option you select controls which withholding schedule Enterprise Payroll uses for federal tax calculations.

Select the Non-Resident option for all nonresident aliens regardless of actual filing

status. If you select this option, you must select Subject to FIT withholding from the Withholding Status field.



d. In the Allowances field, enter the number of allowances the employee claims for federal withholding tax purposes from Line 5 of Form W-4.

The Allowances field is grayed and unavailable if you selected Exempt (do not

maintain gross) or Additional withholding only from the Withholding Status field.

e. Complete the Additional W/H $ or Additional W/H % field if the employee elects to have additional taxes withheld each pay period in addition to those withheld according to the Federal tax tables, or if you want to ignore the tax table and withhold a specific amount or percentage of federal taxes from each pay check.

The Additional W/H $ and Additional W/H % fields are grayed out and unavailable

if you selected Exempt (do not maintain gross) from the Withholding Status field.

The effect this field has depends on the option you selected in the Withholding Status field, as follows:

• If you selected Subject to FIT withholding in the Withholding Status field and you specify an amount and/or percent for additional withholding, Enterprise Payroll will calculate taxes based on the tax panel and take the additional amount and/or percent indicated on Line 6 of the Form W-4.

If you enter an amount in the Additional W/H $ or Additional W/H % field, this

amount will be withheld in addition to the IRS-defined amount.

• If you selected Additional withholding only in the Withholding Status field and you specify an amount and/or percent for additional withholding, Enterprise Payroll will override the normal calculated tax and take only the amount and/or percent entered in the Additional W/H % and/or Additional W/H % fields.

• If you selected Suppl tax plus additional W/H in the Withholding Status field and you specify an amount and/or percent for additional withholding, tax is calculated for supplemental earnings, and the amount or percentage indicated in the Additional W/H $ or Additional W/H % field is added. No tax is calculated for regular earnings when you select this option.

f . Select the Married but Withhold at Single Rate check box if this option is checked in Box 3 on the employee’s Form W-4.

If you select this check box, the Filing Status changes to Single.

7. From the Other Federal Taxes area, do the following:

a. Select one of the options in the FICA Status field to indicate the employee’s Social Security and Medicare status.

The Social Security and Medicare status for the employee defaults from the

Employee FICA Status field using the Company task (System Admin ~ Human Resources Setup-Required ~ Human Resources Setup), but you can override it.

b. If the employee has completed a W-5 form for the current year, select one of the options in the EIC Status field to indicate the employee’s earned income status.



c. Select the Subject to FUT check box if a United States employee is subject to FUT.

This check box defaults from the Company task (System Admin ~ Human

Resources Setup- Required ~ Human Resources Setup), but you can override it.

d. Select the W-4 Name Differs from Social Security Card check box if this option is checked in Box 4 on the employee’s Form W-4.

8. Review the Default Tax Configuration check box. If the employee’s W-4 certificate indicates the same data as the default data, you can manually clear the check box to indicate for future reference that the W-4 certificate was received and posted.

This check box is automatically selected when the employee’s tax data information has

been set up during the new hire process through the Hire Employee task (People ~ Personnel Actions ~ Hire Employee or People ~ Personnel Actions ~ Quick Hire). Once you enter tax information on this panel, this check box becomes cleared and grayed to indicate that non-default tax data is being used.

9. Select the Withhold Tax on Gross Up check box to withhold the federal tax as usual and maintain gross earnings.

When this check box is not selected, then tax is not withheld as a gross up. No federal/state/local taxes are withheld from wages except for any amount or percentage indicated in the Additional W/H $ or Additional W/H % field.

Social Security and Medicare tax are included in the gross up unless the employee’s record is flagged exempt for Social Security and Medicare (FICA). Also, employer Federal and State unemployment calculates with the transaction unless the wage limit has been met, or the Social Security limit has been met.

If an employee has multiple jurisdictions, you must select or clear the check box for each jurisdiction.

Gross earnings are maintained regardless of the setting of this check box.

10. Select the Multi-jurisdiction Tax Processing check box to allow the processing of an employee’s taxes for a specific amount of taxable wages earned in each jurisdiction.

For this option to be available, you must select the Create Multi Jurisdiction

Paysheets option on the Employee Type Options panel (Payroll ~ Company Definitions ~ Pay Groups and Payroll Calendars ~ Paygroups).



11. From the W-2 Information area, select one or more of the following check boxes:

• Statutory Employee - Select if the employee works for the employer but is not an employee under common law rules. A statutory employee’s earnings are subject to Social Security tax but not subject to federal income tax withholding. This check box is only for W-2 reporting.

• Retirement Plan - Select if the employee was an active participant in a retirement plan for any part of the year. This includes a simplified employee pension (SEP) plan maintained by the company. This check box is for W-2 reporting only.

You can choose not to select this check box. As part of the year-end process, you will

be establishing eligibility rules in Benefits Administration and then running the Quarterly LIT-Employee Detail report (TAX015) (Payroll ~ Payroll Reports ~ Tax Reports) to automatically update this check box based on any deduction balance buckets associated to the pension plan or based on whether the employee was eligible for these benefits. For more information, refer to the Periodic Payroll Processes Guide.

• Select the Third Party Sick Pay check box if ADP reports your third-party sick payments.

12. If the employee uses ADP Self Service to track W-4 elections, then review the following information in the Electronic W-4 Elections area:

The data in these fields automatically populate as the employee makes

additions/changes to his federal W-4 withholding in ADP Self Service. See also, “Printing a Hard Copy of an Electronically Submitted Federal W-4 (PER052),” on page 1-17.

• ESS W-4 Request Date - Indicates the date on which the employee made a change to his W-4.

• Employee Signature/Perjury Declaration - If this check box is selected, this indicates that the employees has created an electronic signature when completing an electronic W-4.

13. When you are finished, click (Save).

You have just finished entering federal tax withholding information for the employee.


Entering IRS Tax Lock-In Data 1-13

Entering IRS Tax Lock-In Data

Sometimes the IRS may issue a notice, or “lock-in letter,” to the employer if an employee has under-withheld taxes. This letter specifies the maximum number of allowances and the marital status permitted for the employee. After receiving this letter for an employee, you can use the Lock-In Letter panel to set up a minimum level of withholding.

Entering IRS tax lock-in data for an employee consists of the following:

• Specifying Tax Lock-In Data for an Employee

• Verifying Allowances and Filing Status

Specifying Tax Lock-In Data for an Employee

To enter IRS tax lock-in data for a specific employee, do the following:








Verifying Allowances and Filing Status





5. Click (Insert Row) to preserve history, and select the start date listed on the IRS lock-in letter from the Effective Date field.

6. Select the Filing Status listed in the Lock-In Letter.

7. Enter the number of Allowances listed in the Lock-In Letter.

8. Click the Lock-In Letter tab. The Lock-In Letter panel displays.

Figure 1-5. Lock-In Letter Panel




Entering IRS Tax Lock-In Data 1-15

9. In the IRS Instructions area, do the following:

a. Select the Start Date listed on the IRS lock-in letter.

The Start Date must be identical to the Effective Date selected on the Federal

panel.

b. Select an End Date if provided on the IRS lock-in letter.

c. Select the Filing Status indicated on the IRS lock-in letter.

d. Enter the number of Allowances indicated on the IRS lock-in letter.

10. For informational use only, you may choose to do the following:

a. Select the Date Received for the lock-in letter.

b. Enter Comments regarding the employee’s tax lock-in.


Enterprise Payroll automatically updates and grays the Withholding Status field on the

Federal panel to Subject to FIT withholding.

The following shows an example of a completed Lock-In Letter panel:

Figure 1-6. Lock-In Letter Panel

You have just finished entering the employee’s tax lock-in data. Next, verify that the allowances and marital status match the employee’s current tax setup on the Federal panel.





To verify that allowances and marital status match the employee’s current federal tax setup, do the following:

1. Click the Federal tab. The Federal tab displays.

Figure 1-7. Federal panel


2. Review the lock-in information displayed in the IRS Lock-In field to the right of the Allowances field. Verify that the filing status and number of allowances listed are identical to those listed in the Filing Status and Allowances fields.

If, at any time after the initial setup, the employee provides a Form W-4 claiming a

number of withholding allowances less than the maximum number specified in the lock-in letter, the employer must increase withholding by withholding tax based on that

Form W-4.


You’ve just finished IRS tax lock-in data for an employee.





Printing a Hard Copy of an Electronically Submitted Federal W-4 (PER052) 1-17

Printing a Hard Copy of an Electronically Submitted Federal W-4 (PER052)

You can print a hard copy of an electronically submitted W-4 using the Electronic W-4 Submission report (PER052) for an employee whose Federal Form W-4 is filed electronically through ADP Self Service. You’ll know the Form W-4 was filed electronically if the fields on the Federal panel in the Electronic W-4 Elections area are populated. See “Setting Up Federal Taxes for an Employee,” on page 1-7 for more information on the Federal panel.

You can only print a hard copy of an electronically submitted W-4 for one employee at a time.

The Electronic W-4 Submission report (PER052) uses the employee’s most current federal tax information. If the employee filed the Form W-4 electronically, then the PER052 report will produce a hardcopy of the electronic submission. If the employee filed a paper Form W-4, then the PER052 report will indicate that the employee had not filed his/her tax information electronically.

You must have Show selected in the SSN Display Option field on the user Profile panel to

run the Electronic W-4 Submission report (PER052). If Hide or Mask is selected from the SSN Display Option field, the PER052 report panel is grayed and unavailable. (For more information on the user Profile panel, see the Application Administrator’s Guide.)

Complete the Electronic W-4 Submission panel as follows:


Payroll Reports ~ Payroll Utilities

You can also access this task through People ~ Reports ~ People Reports.

2. Double-click the Electronic W-4 Submission (PER052) task.

Form W-4 information that was submitted electronically prior to this release of ADP Enterprise HR will not be available to print using the PER052 report. To make this information available for print using this report, employees should go to ADP Self Service and verify his or her Form W-4 information, select both sign-off check boxes in the Please agree to the following area, and click Save. Once the verification process is complete, the Electronic W-4 Submission report (PER052) will be available to print from ADP Enterprise HR.



The Electronic W-4 Submission panel displays.

If Hide or Mask is the Social Security setting on the user’s user Profile panel, then the

Electronic W-4 Submission panel is grayed and unavailable. (For more information on the user Profile panel, see the Application Administrator’s Guide.)

Figure 1-8. Electronic W-4 Submission Panel

3. From the Search for Employee by area, select one of the following employee search options:

• Social Security Number - Select to search for the employee by Social Security Number.

– If you select this option, go to the Search by SSN area, enter the Social Security Number of the employee in the Social Security # field, and then press Tab. The employee ID and name display.

• Name - Select to search for the employee by name.

– If you select this option, go to the Search by Name area and enter all or part of the name of the employee in the Name field (for example, enter Smith,Sam with no space between the last and first name) and then click Search. The Name, Employee ID, Department, and Department Description display for all employees for whom you have security access.

– Select the Select One Employee check box next to the employee name for whom you want to print a hardcopy of an electronically submitted Form W-4.



Printing a Hard Copy of an Electronically Submitted Federal W-4 (PER052) 1-19

The following figure shows an example of a completed Electronic W-4 Submission panel.

Figure 1-9. Electronic W-4 Submission Panel

4. Click Run Report. You will receive a message notifying you that your process has been

submitted. Click OK. When the process has completed, click (Report Outputs) to view the report.

For additional information on running, viewing, and printing reports, refer to the Using ADP Enterprise HR Guide. For details on sources, sort order, and an illustration of the report, see the Standard Reports Guide.

You’ve just finished printing a hard copy of an electronically submitted W-4.



Chapter 2

Setting Up State Tax Withholding

PAGE TOPIC


2-5 Using Form W-4 for State Tax Purposes

2-6 Entering State Tax Data for an Employee

Chapter 2: Setting Up State Tax WithholdingEmployee Tax Setup Guide Version 5.04



This chapter provides instructions for setting up employee state tax withholding, which can include State Income Tax (SIT), State Unemployment Tax (SUT), and State Disability Insurance (SDI). For step-by-step instructions on setting up state taxes at the company level, refer to the Payroll Setup and Maintenance Guide.


information. Check your state and local regulations to ensure compliance.

Also included in this chapter are a quick reference table of state employee tax information, information on taxable gross components, and a summary of reciprocity. You can enter state tax data using the Tax Withholding task (Payroll ~ Employee Information ~ Change Employee Payroll Data).

You must set up federal tax information before you can set up state tax withholding. See

Chapter 1, “Setting Up Federal Tax Withholding,” for instructions on setting up an employee’s federal withholding tax.

Local taxes and other special conditions are detailed in the state-specific chapters of this book. Refer to the state where the employee is living or working for more information.

Determining Your State’s Tax Withholding Requirements

ADP provides regular quarterly Tax Updates, which identify the tax rates that have been recently modified by the federal, state, or local government.

The information in Table 2-1 changes frequently. ADP maintains these rates and calculations

via regular ADP Enterprise HR Tax Updates. To obtain the updates, visit www.imp.nas.adp.com/adp4me. Go to Product Knowledgebase ~ Payroll/HR. Log on with your email address and password, and then navigate to Software Updates ~ Enterprise Payroll and select the appropriate version number. Click the Tax Updates folder to obtain the tax updates.

Table 2-1. Summary of State Tax Withholding Requirements

Supple- State Unemployment Insurance State Disability Insurance

State State Local mental Employer Employee Employer Employee

name tax? tax? % rate? % rate* $ limit % rate $ limit % rate $ limit % rate $ limit

Alabama Yes Yes 5 Yes 8,000 N/A N/A N/A N/A N/A N/A

Alaska No No N/A Yes 30,100 .5 30,100 N/A N/A N/A N/A

Arizona Yes No N/A Yes 7,000 N/A N/A N/A N/A N/A N/A

Arkansas Yes No 7 Yes 10,000 N/A N/A N/A N/A N/A N/A

California Yes Yes 6 Yes 7,000 N/A N/A N/A 83,389 .6 83,389

Colorado Yes Yes 4.63 Yes 10,000 N/A N/A N/A N/A N/A N/A

Connecticut Yes No N/A Yes 15,000 N/A N/A N/A N/A N/A N/A


https://imp.nas.adp.com/adp4me/

Understanding the Basics 2-3

Delaware Yes Yes N/A Yes 8,500 N/A N/A N/A N/A N/A N/A

District of Columbia Yes No N/A Yes 9,000 N/A N/A N/A N/A N/A N/A

Florida No No N/A Yes 7,000 N/A N/A N/A N/A N/A N/A

Georgia Yes No N/A Yes 8,500 N/A N/A N/A N/A N/A N/A

Hawaii Yes No N/A Yes 35,300 N/A N/A N/A 42,653 .5 42,653

Idaho Yes No 7.8 Yes 30,200 N/A N/A N/A N/A N/A N/A

Illinois Yes Yes 3 Yes 11,500 N/A N/A N/A N/A N/A N/A

Indiana Yes Yes 3.4 Yes 7,000 N/A N/A N/A N/A N/A N/A

Iowa Yes No 6 Yes 22,000 N/A N/A N/A N/A N/A N/A

Kansas Yes No 5 Yes 8,000 N/A N/A N/A N/A N/A N/A

Kentucky Yes Yes N/A Yes 8,000 N/A N/A N/A N/A N/A N/A

Louisiana Yes No N/A Yes 7,000 N/A N/A N/A N/A N/A N/A

Maine Yes No 5 Yes 12,000 N/A N/A N/A N/A N/A N/A

Maryland Yes Yes N/A Yes 8,500 N/A N/A N/A N/A N/A N/A

Massachusetts Yes No N/A Yes 14,000 N/A N/A N/A N/A N/A N/A

Michigan Yes Yes 3.9 Yes 9,000 N/A N/A N/A N/A N/A N/A

Minnesota Yes No 6.25 Yes 24,000 N/A N/A N/A N/A N/A N/A

Mississippi Yes No N/A Yes 7,000 N/A N/A N/A N/A N/A N/A

Missouri Yes Yes 6 Yes 11,000 N/A N/A N/A N/A N/A N/A

Montana Yes No 6 Yes 22,700 N/A N/A N/A N/A N/A N/A

Nebraska Yes No 5 Yes 9,000 N/A N/A N/A N/A N/A N/A

Nevada No No N/A Yes 24,600 N/A N/A N/A N/A N/A N/A

New Hampshire No No N/A Yes 8,000 N/A N/A N/A N/A N/A N/A

New Jersey Yes Yes N/A Yes 26,600 N/A 26,600 N/A 26,600 .5 26,600

New Mexico Yes Yes 5.3 Yes 18,600 N/A N/A N/A N/A N/A N/A

New York Yes Yes 7.35 Yes 8,500 N/A N/A N/A 6,240 .5 6,240

North Carolina Yes No 6 Yes 17,800 N/A N/A N/A N/A N/A N/A

North Dakota Yes No 3.92 Yes 21,300 N/A N/A N/A N/A N/A N/A

Ohio Yes Yes 3.5 Yes 9,000 N/A N/A N/A N/A N/A N/A

Oklahoma Yes No 5.65 Yes 13,200 N/A N/A N/A N/A N/A N/A

Oregon Yes Yes 9 Yes 29,000 N/A N/A N/A N/A N/A N/A

Pennsylvania Yes Yes 3.07 Yes 8,000 .09 N/A N/A N/A .09 99999999

Puerto Rico Yes No N/A Yes 7,000 N/A N/A N/A 9,000 .3 9,000

Rhode Island Yes No N/A Yes 14,000 N/A N/A N/A N/A 1.3 52,100

Table 2-1. Summary of State Tax Withholding Requirements (cont.)








The total percent for the states and the total percent for the localities must equal 100 percent.

South Carolina Yes No 7 Yes 7,000 N/A N/A N/A N/A N/A N/A

South Dakota No No N/A Yes 8,500 N/A N/A N/A N/A N/A N/A

Tennessee No No N/A Yes 7,000 N/A N/A N/A N/A N/A N/A

Texas No No N/A Yes 9,000 N/A N/A N/A N/A N/A N/A

Utah Yes No N/A Yes 25,400 N/A N/A N/A N/A N/A N/A

Vermont Yes No 7.2 Yes 8,000 N/A N/A N/A N/A N/A N/A

Virginia Yes No N/A Yes 8,000 N/A N/A N/A N/A N/A N/A

Washington No Yes N/A Yes 31,400 N/A N/A N/A N/A N/A N/A

West Virginia Yes Yes N/A Yes 8,000 N/A N/A N/A N/A N/A N/A

Wisconsin Yes No N/A Yes 10,500 N/A N/A N/A N/A N/A N/A

Wyoming No No N/A Yes 18,100 N/A N/A N/A N/A N/A N/A

Table 2-1. Summary of State Tax Withholding Requirements (cont.)





Using Form W-4 for State Tax Purposes 2-5

Using Form W-4 for State Tax Purposes

Some states use Form W-4 exclusively or offer it in lieu of the state’s tax certificate.

States offering use of the Form W-4 for state income tax calculations include:

• Colorado

• Idaho

• Kansas

• Minnesota

• Montana

• Nebraska

• New Mexico

• North Dakota

• Oregon

• Pennsylvania

• Rhode Island

• South Carolina

• Utah

In addition, Delaware and Oklahoma use Form W-4 with exceptions.



Entering State Tax Data for an Employee

The State panel records and maintains tax information Enterprise Payroll uses to calculate state taxes for employees. State taxes include state income tax, SDI, and SUT.

You must set up federal tax information and state tax information before you can set up local

tax withholding. See Chapter 1, “Setting Up Federal Tax Withholding,” for instructions on setting up an employee’s federal withholding tax.

You can assign employees to only one resident state. State income taxes are generally calculated in the employee's state of residence as well as any states on paysheets. You must add a row for any state in which the employee works plus the resident state, if different.

If an employee transfers to another work location or moves to a new residence location

mid-pay period, add a tax row for the pay period to ensure that all applicable states for this pay period are included on the employee’s tax record.

SDI and SUT, if applicable, are calculated for the employee's primary work state. The primary work state is determined from the employee's work location entered on the Job/Pay/ Location panel (Payroll ~ Employee Information ~ Change Employee Payroll Data ~ Job Earnings Distribution).

Entering state tax data consists of the following:

• Specifying State Tax Withholding

• Entering State Nonstandard Values

You must first establish the states on the Company State Tax Data panel (Payroll ~

Company Definitions ~ Company Tax Data ~ State Tax Data).

Check state rules on reciprocity to ensure your company is in compliance with all applicable tax laws.


Entering State Tax Data for an Employee 2-7

Specifying State Tax Withholding

To specify state tax withholding, do the following:





3. Enter the employee ID in the Empl ID field, and/or enter other search criteria, including company name and employee name.





Entering State Nonstandard Values





6. Click the State tab.

Figure 2-3. State Panel

7. Select the worked-in or lived-in state from the State field. If the employee lives in

another state or works at locations in two states, click the inner scroll bar and click (Insert Row) to insert additional states.

The selected state's regular pay tax calculation method displays to the right of the state name

for reference.

8. Using the employee’s completed state withholding certificate, select the correct option in the Withholding Status field.

The option you select in this field affects how Enterprise Payroll interprets an amount or

percentage in the Additional W/H $ or Additional W/H % field.

If the employee is in a state without a state tax, then this field will be grayed.

• Select Subject to SIT withholding if the employee has no special tax status. Enterprise Payroll calculates state income tax (SIT) based on state tax tables, the employee's gross, SIT marital status and withholding allowances.

• Select Exempt (do not maintain gross) if the employee is exempt from SIT. No taxable wages will accumulate.

After selecting this option and pressing Tab, the Allowances, Additional W/H $, and

Additional W/H % fields are grayed and unavailable.

You can only add or change data that has an effective date the same as or more recent than the effective date of the new data. For example, if you add a new state to the company definitions on 04/02/05, then the state is available on the employee-level State panel only if the effective date of the employee tax record is 04/02/05 or later.




• Select Additional withholding only to override the normal tax calculation with an amount or percentage indicated in the Additional W/H $ or Additional W/H % fields. Enterprise Payroll determines taxable gross for SIT using the individual earnings an employee is paid. Thus, the tax withheld becomes either the flat amount or a percentage of the state taxable wages.

After selecting this option and pressing Tab, the Allowances field is grayed and unavailable.


calculation.

• Select the Suppl tax plus additional W/H option to calculate tax for supplemental earnings and add the amount or percentage indicated in the Additional W/H $ or Additional W/H % field. No tax is calculated for regular earnings when you select this option.



9. Select the employee’s filing status from the Filing Status field. This indicates to Enterprise Payroll the tax table to use to calculate SIT. The values provided are specific to the state indicated in the State field.

10. In the Allowances field, enter the number of withholding or personal allowances the employee is claiming for state withholding tax purposes.This number should match the number on the employee's state withholding allowance certificate.

Some states provide for additional employee-specific, tax-related quantities. These nonstandard amounts are captured on the State Nonstandard Values panel. For more information about nonstandard values, see the state-specific chapters in this guide.

If the employee is in a state without a state tax or if you selected Exempt (do not

maintain gross) or Additional withholding only in the Withholding Status field, then this field is grayed and unavailable.

11. Complete the Additional W/H $ and/or Additional W/H % field if you want to withhold additional taxes each pay period in addition to those withheld according to the state tax tables, or if you want to ignore the tax table and withhold a specific amount or percentage of state taxes from each pay check.

If the employee is in a state without a state tax or if you selected Exempt (do not

maintain gross) in the Withholding Status field, then these fields are grayed and unavailable.



The effect this field has depends on the option you selected in the Withholding Status field as follows:

• If you selected Subject to SIT withholding in the Withholding Status field and you specify an amount and/or percent for additional withholding, Enterprise Payroll will calculate taxes based on the tax table and take the additional amount and/or percent indicated.

• If you selected Additional withholding only in the Withholding Status field and you specify an amount for additional withholding, Enterprise Payroll will override the normal calculated tax and take only the amount and/or percent entered in the Additional W/H $ and Additional W/H % fields.

• If you selected Suppl tax plus additional W/H in the Withholding Status field and you specify an amount for additional withholding, SIT is calculated for supplemental pay, and the amount or percentage listed in the Additional W/H $ or Additional W/H % field is added after calculations. No tax is calculated for regular earnings when you select this option.

12. Select the SDI status for the employee in the Disability Status field. This field indicates whether disability insurance applies to the employee. This option is not affected by whether it is the employee and/or the employer who contributes to SDI.

Not all states have disability insurance. Of the states that offer it, all have a state

disability plan, some have private disability plans, and some allow both.

13. Select the Subject to SUT check box if the employee’s earnings are subject to state unemployment tax.This field defaults to the company exempt from SUT value on the Company panel, but you can override it.

If you select this check box, taxable wages will be accumulated for this employee.

14. Check to see whether or not the Default Tax Configuration check box is selected, and select or clear the check box if necessary.

This check box is automatically selected when the employee's tax data information has been set up in the HR functional group during the new hire process to Default to Single, No Exemptions.

Once you enter tax information in this tax table, this option will be cleared to indicate non-default data. This option inserts a row in the tax data tables and uses the effective date from the basic job record.

If the employee's W-4 certificates indicate Single, with zero allowances, (same as the

default data) you may clear this check box, leaving other data as is. This will then indicate for future reference that the W-4 certificate was received and posted.

15. Select one of the following residency options:

If an employee transfers to another work location or moves to a new residence location

mid-pay period, add a tax row for the pay period to ensure that all old and new states are included on the employee’s tax record.



• Select the Resident check box if the employee is a resident of the state.

You can assign employees to only one resident state. State income taxes are

generally calculated in the employee's state of residence as well as any states on paysheets. You must add a row for any state in which the employee works plus the resident state, if different.

• Select the Non-resident Statement Filed check box if the employee has filed a statement of nonresidency in the state in which he or she is employed.

The Non-resident Statement Filed check box is for your information only and does

not affect the tax calculation. However, reciprocity rules apply whether this check box is selected or not, and the calculation is affected when multiple states exist. You may wish to track a non-resident employee’s paperwork by keeping the Non-resident Statement Filed check box cleared until you receive the completed form.

16. Select the Withhold Tax on Gross Up check box to withhold the state tax as usual and maintain gross earnings.

When this check box is not selected, then tax is not withheld as a gross up. No federal/state/local taxes are withheld from wages except for any amount or percentage indicated in the Additional W/H $ and/or Additional W/H % field.

Social Security and Medicare tax are included in the gross up unless the employee’s record is flagged exempt for Social Security and MedicareSocial Security and Medicare. Also, employer federal and state unemployment calculates with the transaction unless the wage limit has been met, or the Social Security limit has been met.

If an employee has multiple jurisdictions, you must select or clear the check box for each jurisdiction.


17. If you selected the Multi-jurisdiction Tax Processing check box on the Federal panel, then you may do one or all of the following:

a. If the employee is taxed in multiple jurisdictions, enter the percentage of time worked for this state in the Multi-Jurisdiction % field. Earnings will be distributed based on the percentage you enter.

The total percentage for the states must equal 100%.

b. Select the Credit All SDI check box for one state so that the state receives full credit for State Disability Insurance (SDI) and/or Voluntary/Private Disability insurnace (VPDI) taxable wages and tax.

If you select this check box, employee wages from all states are reported and taxed under that state. Once all wages are credited for one state, the Disability Insurance tax is calculated on the Disability Insurance taxable wages based on the taxable gross definition set up for that specific state.

c. Clear the Credit All SUI check box if you want State Disability Insurance (SUI) and /or VPDI to be distributed based on the percentages entered for each state.




You have just finished entering state tax information. Next, enter nonstandard state values.


The State Nonstandard Values panel allows you to enter any nonstandard tax calculation values. Following are general instructions for entering employee information for states that use nonstandard values. For information specific to each state, see the individual state chapters in this guide.

1. Click the State Nonstandard Values tab. The State Nonstandard Values panel displays.

When entering the state nonstandard values, you must first start on the Federal panel.

See page 2-7 for more information.

Figure 2-4. State Nonstandard Values Panel


3. If a check box appears (for example, Head of Household), select the check box if the information applies to the employee.

4. If a field displays that requires you to enter an amount or percent (for example, Percent of Fed Income Tax), enter the appropriate amount or percent.

5. If a field displays that requires you to enter a prompted value (for example, a Taxed Locality prompt), select the appropriate choice from the list.

You can only add or change data that has an effective date the same as or more recent than the effective date of the new data. For example, if you add a new state to the company definitions on 04/02/05, then the state is available on the employee-level State panel only if the effective date of the employee tax record is 04/02/05 or later.








You have just finished entering nonstandard state values, which is the last step in setting up state tax information for an employee.


Chapter 3

Setting Up Local Tax Withholding

PAGE TOPIC


3-4 Determining Whether Local Taxes Apply

3-6 Setting Up Local Taxes for an Employee

Chapter 3: Setting Up Local Tax WithholdingEmployee Tax Setup Guide Version 5.04



This chapter provides instructions for setting up local tax withholding. You can enter local tax data using the Tax Withholding task (Payroll ~ Employee Information ~ Change Employee Payroll Data). To find out whether a state has local taxes, see page 2-2. For step-by-step instructions on setting up local taxes at the company level, refer to the Payroll Setup and Maintenance Guide.

You must set up federal and state tax information before you can set up local tax withholding.

See Chapter 1, “Setting Up Federal Tax Withholding,” for instructions on setting up an employee’s federal withholding tax. See Chapter 2, “Setting Up State Tax Withholding,” for instructions on setting up an employee’s state withholding tax.

In addition, this chapter provides procedures for determining whether local taxes apply, defining local tax data, and checking the tax filing code for a locality.



States that include localities applying withholding tax include the following:

• Alabama

• California

• Colorado

• Delaware

• Illinois

• Indiana

• Kentucky

• Maryland

Covered by state tax withholding instructions.

• Michigan

• Missouri

• New Jersey

• New Mexico

• New York

• Ohio

• Oregon

• Pennsylvania


Understanding the Basics 3-3

• Washington

• West Virginia

Understanding the Different Types of Local Taxes

Local jurisdictions can be city, county, or both. Local taxes can be either worked-in or lived-in, and some states have both. Employees in those states with both worked-in and lived-in taxes sometimes can apply the amount paid to worked-in taxes to the lived-in tax jurisdiction.

With worked-in taxes, all employees working in the local jurisdiction are taxed. In general, employers are required to deduct worked-in taxes.

With lived-in taxes, employers are not required to withhold taxes from the employee’s paycheck. If an employer optionally chooses to assist employees by withholding lived-in taxes, then the employer needs an Employer Identification Number (EIN) from the employee’s lived-in locality. If the employer chooses not to withhold lived-in taxes, the employee is responsible for paying the taxes.

Calculating Local Taxes

The tax rate displayed on an employee’s tax data record for local codes displays the same rate as on the current effective dated row from the local tax table. Local taxes are usually calculated as a percent of an employee’s taxable gross pay with no limits on the amount deducted. Kentucky is an exception, with some localities imposing limits.

Some localities, such as New York City, use the same factors as Federal Income Tax (FIT) and State Income Tax (SIT) to calculate local tax. These factors can include gross pay, marital status, number of exemptions, and pay frequency.

Other localities have a flat dollar amount tax. In Greenwood Village, Colorado, for example, both the employer and employee pay $2 per month after an employee earns $250 in any given month.

Occupational Privilege Tax (OPT) is another method used by localities. With OPT, the tax is calculated as a fixed dollar amount but normally applies only where the employee works.



The total percent for the states and the total percent for the localities should equal 100

percent.


3-4 Determining Whether Local Taxes Apply

Determining Whether Local Taxes Apply

If the company is doing business in a new locality, or if a new employee lives in a locality where no one else in the company has resided, then you may not be set up for that jurisdiction. Gather the local tax withholding information and apply it using the ADP Enterprise HR codes.

Contact your local jurisdiction to ensure that you have the most up-to-date information on tax withholding. Local tax information changes frequently, and it is crucial that you continually verify the law to ensure that you are in compliance.

ADP makes every effort to keep up with the tax laws via frequent software updates. In the

rare occurrence that you learn of a local jurisdiction that requires tax withholding but is not indicated in ADP Enterprise HR, please call your ADP Enterprise HR service contact so we can update the information appropriately.

To view local taxes in ADP Enterprise HR, do the following:


Company Definitions ~ System Tax Data

2. Double-click the Local Tax Configuration task. The Search dialog box displays.



Determining Whether Local Taxes Apply 3-5

3. Select the state where the employee resides, and click OK. A list of localities displays.

Figure 3-2. List Returned from Search of State’s Localities

4. Click the top of the Locality name column to alphabetize the list of jurisdictions.

5. Check both the county and the city names. If the locality is listed, then you can set up local taxes for the company and for the employee(s) in that jurisdiction.

You must ensure that the tax code is set up for the company before you can use it to set

up employee withholding. See “Setting Up Local Taxes for an Employee” for directions.

You have now determined whether or not local taxes apply. If so, then you may need to define local tax data for your company. For more information, continue to the next section, “Setting Up Local Taxes for an Employee.”



Setting Up Local Taxes for an Employee

This section provides instructions for entering local tax withholding information for an employee. More specific information is found in the state-specific chapters.

You must set up federal tax information and state tax information before you can set up local

tax withholding. See Chapter 1, “Setting Up Federal Tax Withholding,” for instructions on setting up an employee’s federal withholding tax.

If the employee lives or works in a taxing locality, use the Local panel to record the employee's local tax information.

You must set up localities for your company on the company Local Tax Data panel before you

enter local tax data for employees. Use this path: Payroll ~ Company Definitions ~ Company Tax Data ~ Local Tax Data.

To change data or enter a new record on the Local panel, do the following:






Tax laws change frequently throughout the year, so be sure to check with local government to obtain the most current information.


Setting Up Local Taxes for an Employee 3-7




6. Click the Local tab.

When entering tax information, you must start on the Federal panel. See Chapter 1,

“Setting Up Federal Tax Withholding,” for information on setting up federal tax withholding.

Figure 3-5. Local Panel

You can only add or change data that has an effective date the same as or more recent than the effective date of the new data. For example, if you add a new locality to the company definitions on 04/02/05, then the locality is available on the Local panel only if the effective date of the employee tax record is 04/02/05 or later.





7. Select the locality (which imposes a tax) in which an employee lives or works from the Locality field.

If the locality is not included in the list provided, then you must determine whether the

jurisdiction has local taxes. See “Determining Whether Local Taxes Apply” on page 3-4, plus check with your local jurisdiction. If needed, you can set up localities on the Local Tax Data panel (Payroll ~ Company Definitions ~ Company Tax Data ~ Local Tax Data) for the applicable company. For more information, see “Setting Up Local Taxes for an Employee” on page 3-6.

When you make a selection in the Locality field, the calculation method for local taxes displays in the Calculation Method field, and the resident and nonresident rates appear in the Tax Rates area.

8. Using the employee’s completed local withholding form, select the appropriate option from the Withholding Status field.

• Select Subject to LIT if the employee has no special tax status so that Enterprise Payroll calculates local income tax (LIT) based on the employee's local taxable gross.

• Select Exempt (do not maintain gross) if the employee is exempt from local income tax so that the taxable base for local income tax does not reflect the pay an employee receives.

After selecting this option and pressing Tab, the Allowances, Additional W/H $, and

Additional W/H % fields are grayed and unavailable.

• Select Additional withholding only to override the normal tax calculation with an amount or percentage indicated in the Additional W/H $ or Additional W/H % fields. Enterprise Payroll determines taxable gross for LIT using the individual earnings an employee is paid. Thus, the tax withheld becomes either the flat amount or a percentage of the state taxable wages.

After selecting this option and pressing Tab, the Allowances field isgrayed and unavailable.


calculation.

• Select the Suppl tax plus additional W/H option to calculate tax for supplemental earnings and add the amount or percentage indicated in the Additional W/H $ or Additional W/H % field. No tax is calculated for regular earnings when you select this option.



9. In the Allowances field, enter the number of allowances the employee is claiming for local withholding tax purposes.This number should match the number on the employee's local withholding exemption certificate, if applicable.



Many localities do not use this field in their tax calculation. In this case, leave the default value in this field.

The Allowances field is grayed and unavailable if you selected Exempt (do not

maintain gross) or Additional withholding only from the Withholding Status field.

10. Complete the Additional W/H $ or Additional W/H % field if you want to withhold additional taxes each pay period in addition to those withheld according to the state tax tables, or if you want to ignore the tax table and withhold a specific amount or percentage of state taxes from each pay check.

The Additional W/H $ and Additional W/H % fields are grayed out and unavailable if

you selected Exempt (do not maintain gross) from the Withholding Status field.

The effect these fields have depends on the option you selected in the Withholding Status field as follows:

• If you selected Subject to LIT withholding in the Withholding Status field and you specify an amount and/or percent for additional withholding, Enterprise Payroll will calculate taxes based on the tax table and take the additional amount and/or percent indicated.

• If you selected Additional withholding only in the Withholding Status field and you specify an amount and/or percent for additional withholding, Enterprise Payroll will override the normal calculated tax and take only the amount and/or percent entered in the Additional W/H $ and/or Additional W/H % fields.

• If you selected Suppl tax plus additional W/H in the Withholding Status field and you specify an amount for additional withholding, LIT is calculated for supplemental pay, and the amount or percentage listed in the Additional W/H $ or Additional W/H % field is added after calculations. No tax is calculated for regular earnings when you select this option.

11. If the employee is taxed in multiple jurisdictions, enter the percentage of time worked for the locality in the Multi-Jurisdiction % field. Earnings will be distributed based on the percentage you enter. The total percentage for the localities should equal 100 percent.

12. If the employee works in an additional jurisdiction with local income taxes, put the second locality’s code in the Other Work Locality field. Also, set up a record for the second jurisdiction, putting the first locality’s code in the Other Work Locality field on the second record. Doing this links the localities so that ADP Enterprise HR calculates the taxes using any applicable reciprocity rules.

If a non-resident tax is not included on the location table, the local jurisdiction must be

linked using the Other Work Locality field.

To add multiple work localities, click the inside scroll bar and click (Insert Row).



13. Check to see whether or not the Default Tax Configuration check box is selected, and select or clear the check box if necessary.

This check box is automatically selected when the employee’s tax data information has

been set up during the new hire process through the Hire Employee task (People ~ Personnel Actions ~ Hire Employee or People ~ Personnel Actions ~ Quick Hire). Once you enter tax information on this panel, this check box becomes cleared and grayed to indicate that non-default tax data is being used.

14. Select the Resident check box if the employee is a resident of the locality.

15. Select the Withhold Tax on Gross Up check box to withhold the local tax as usual and maintain gross earnings.

When this check box is not selected, then tax is not withheld as a gross up. No federal/state/local taxes are withheld from wages except for any amount or percent indicated in the Additional W/H $ and Additional W/H % fields.

Social Security and Medicare tax are included in the gross up unless the employee’s record is flagged exempt for Social Security and Medicare (FICA). Also, employer Federal and State unemployment calculates with the transaction unless they’ve met the Social Security limit.

If an employee has multiple jurisdictions, you must select or clear the check box for each accreditation.


16. For employees who are residents of Indiana, select the Principal Tax Locality on Jan. 1 check box to indicate that local tax withholding applies to this locality. For detailed information on how this field works, refer to “Setting Up Local Income Taxes” on page 18-5.

This check box does not display on the panel unless the employee resides in Indiana.

17. Review the tax rates in the Tax Rates area. The fields in this area display the resident and non-resident tax rates for the specified locality.



The following figure shows an example of a completed Local panel.

Figure 3-6. Local Panel


You have just finished entering local tax withholding information.



Chapter 4

Alabama—Setting UpEmployee Taxes

PAGE TOPIC

4-2 Summarizing Payroll Taxes

4-3 Setting Up State Income Taxes

4-5 Setting Up Local Income Taxes



Chapter 4: Alabama—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04


Summarizing Payroll Taxes

Table 4-1 summarizes some basic facts about Alabama’s rules on payroll taxes. Refer to

official source materials from the state of Alabama for rates and limits.

Table 4-1. Summary of Alabama’s Payroll Taxes

Tax Applicable?

State tax Yes

Local tax Yes

Supplemental Yes

Employer state unemployment insurance Yes

Employee state unemployment insurance No

Employer state disability insurance No

Employee state disability insurance No

Worked-in taxes Yes

Lived-in taxes No

Employer required to withhold local taxes Yes

Special condition(s) Yes


Setting Up State Income Taxes 4-3

Setting Up State Income Taxes

This section provides instructions for setting up Alabama’s state tax withholding. For step-by-step instructions on setting up state taxes, see Chapter 2, “Setting Up State Tax Withholding.”

You must set up federal tax information before you can set up state withholding. See Chapter

1, “Setting Up Federal Tax Withholding,” for instructions on setting up an employee’s federal withholding tax. State values default to the federal values unless you complete the State panel.

Alabama taxes include state income tax, local income tax, and state unemployment tax. Alabama income tax must be withheld from wages paid for services performed in Alabama, regardless of the state of residency of the employer or the employee.

Check state regulations for information on reciprocity agreements.

Each employee must complete Form A-4 to indicate state withholding information for the employer. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.


Refer to Table 4-2 to complete the Filing Status field. If no status is provided, leave the default value of S (Single).


State Certificate Line or Reference

Certificate Value Definition of Value


Line 1aIf you claim full personal exemption ($1500) write a letter ‘S’

S Single S

Line 1bIf you claim no personal exemption write the figure ‘0’

0 Single or married but claiming no exemptions

0 (Zero)

Line 2aIf you claim exemption for both spouses ($3000) write the letter ‘M’

M Married M

Line 2bIf you are single claiming head of family ($3000) write the letter ‘H’

H Head of Family H




In the Allowances field, enter the number found on Line 3 of Alabama Form A-4. This number represents the total number of dependents.

Entering Additional Amounts

If any amount is found on Line 4 of the state certificate, enter this figure in the Additional W/H $ field. If Subject to SIT withholding is selected in the Withholding Status field, then this extra amount is withheld from wages in addition to the regular withholding amount per pay period.

If the box in the upper right corner of the state certificate is checked and lines 1-5 are not completed, then the employee pays no taxes and you select the Exempt (do not maintain gross) option in the Withholding Status field.

Line 2cIf you claim exemption for yourself only ($1500) write the letter ‘S’

S Married Filing Separately X

Line 2dIf you claim no personal exemption write the figure ‘0’

0 Claim no personal exemption 0 (Zero)

Table 4-2. Filing Status Definitions (cont.)





Setting Up Local Income Taxes 4-5

Setting Up Local Income Taxes

This section provides instructions for entering local tax withholding information. Worked-in taxes apply to some jurisdictions in Alabama. These taxes are generally license fees for the privilege of working in the city or county. Employers are required to withhold local taxes from employees’ paychecks for gross wages earned while in the locality.

For step-by-step instructions on setting up local taxes, see Chapter 3, “Setting Up Local Tax Withholding.”

You must set up localities for your company on the Local Tax Data panel before you enter

local tax data for employees. See “Setting Up Local Taxes for an Employee” on page 3-6 for more information.

Worked-in Taxes

City and county taxes in Alabama are based on the location of the employer and are called “worked-in” taxes. Employers are required to withhold these taxes on the wages earned by employees working at the location.

It is important to determine where the resident or non-resident payroll local code should be

used because there is usually a difference between the two rates.

Special Conditions for Birmingham

Businesses in Birmingham, which is a city located in Jefferson County, must pay worked-in tax to both the city of Birmingham and Jefferson County. See Table 4-3 for details.

Table 4-3. Special Conditions for a Business Located in Birmingham

If ... Then ...

The employee works in Birmingham

Birmingham is a city located in Jefferson County, Alabama. Both Birmingham and Jefferson County require local taxes to be withheld; therefore, the employee must be coded with both local tax codes. If an employer is located in Birmingham, the Jefferson County tax must be withheld in addition to the Birmingham city tax.

The employee does not live in Birmingham

Birmingham non-residents are only required to pay city tax for the percentage of time that they work in the city. In this case, the non-resident percentage must be applied.


Chapter 5

Alaska—Setting UpEmployee Taxes

PAGE TOPIC


5-3 Setting Up State and Local Income Taxes



Chapter 5: Alaska—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 5-1 summarizes some basic facts about Alaska’s rules on payroll taxes.

Table 5-1. Summary of Alaska’s Payroll Taxes

Tax Apply?

State tax No

Local tax No

Supplemental No

Employer-paid state unemployment insurance Yes

Employee-paid state unemployment insurance Yes

Employer-paid state disability insurance No



Setting Up State and Local Income Taxes 5-3

Setting Up State and Local Income Taxes

Alaska does not have state tax withholding. Therefore, the Withholding Status field, the Allowances field, and the Additional W/H $ and Additional W/H % fields are grayed on the State panel.

In addition, Alaska does not have local tax withholding.

However, you must set up your company state tax data for this state. For step-by-step instructions, see “Entering State Tax Data for an Employee” on page 2-6.

See Chapter 1, “Setting Up Federal Tax Withholding,” for instructions on setting up an

employee’s federal withholding tax.


Chapter 6

Arizona—Setting UpEmployee Taxes

PAGE TOPIC


6-3 Setting Up State Income Rates




Chapter 6: Arizona—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 6-1 summarizes some basic facts about Arizona’s rules on payroll taxes.

Table 6-1. Summary of Arizona’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental No


Employee-paid state unemployment insurance No



Allowances/dependents No

Filing status No


Setting Up State Income Rates 6-3

Setting Up State Income Rates

State withholding is a percentage of taxable wages. Employers must withhold Arizona income tax for services performed in Arizona by residents and non-residents. Effective January 1, 2004, the supplemental separate payment method has been changed to aggregate.


For step-by-step instructions on setting up state taxes, see Chapter 2, “Setting Up State Tax Withholding.”




The filing status has no impact on the tax calculation. Therefore, you can leave the default value of N (Not applicable) in the Filing Status field on the State panel.


The Allowances field on the State panel is not used.

In the Withholding Rate (AZ) field on the State Nonstandard Values panel, enter the withholding percentage of taxable wages withheld from Line 1 or Line 2 of the Arizona withholding certificate.

Upon hire, the Percent of Taxable Wages field defaults to 2.7%.

For more information about entering nonstandard values, see “Entering State Nonstandard Values” on page 2-12.


6-4 Setting Up State Income Rates

Following is an illustration of the State Nonstandard Values panel for Arizona.

Figure 6-1. Arizona State Nonstandard Values Panel






Arizona has no local tax withholding.


Chapter 7

Arkansas—Setting UpEmployee Taxes

PAGE TOPIC






Chapter 7: Arkansas—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 7-1 summarizes some basic facts about Arkansas’ rules on payroll taxes.

Table 7-1. Summary of Arkansas’ Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes








Employers are required to withhold Arkansas individual income for all wages paid to resident and non-resident employees for services within the state.

Employees may complete either Form AR4EC or the Federal Form W-4 to indicate state withholding information for the employer. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.






The filing status has no impact on the tax calculation. Therefore, you can leave the default value of N (Regular Income) in the Filing Status field on the State panel.


In the Allowances field on the State panel, enter the number of exemptions that the employee is claiming. This number is found on Line 3 of Form R4EC.






Arkansas has no local tax withholding.


Chapter 8

California—Setting UpEmployee Taxes

PAGE TOPIC






Chapter 8: California—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 8-1 summarizes California’s rules on payroll taxes. Refer to official source materials from the state of California for rates and limits.

Table 8-1. Summary of California’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes



Employer-paid state disability insurance Yes

Employee state disability insurance Yes

Worked-in taxes No

Lived-in taxes No

Special condition(s) No




California provides two methods for determining the amount to be withheld from wages and salaries for state personal income tax. ADP Enterprise HR uses the exact calculation method (Method B), which provides an exact amount of tax to withhold.

California income tax generally must be withheld from wages paid to resident employees for services performed either within or outside of the state and from wages paid to non-resident employees for services performed in the state.


A Form W-4 or a State of California Employment Development Department (EDD) Form DE-4 must be completed so that you know how much state income tax to withhold from an employee's wages. Filing a DE-4 does not change the federal withholding allowances designated on the W-4. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.

If the employee relies on the number of withholding allowances claimed on the W-4 for state

income tax withholding, the employee’s taxes may be significantly underwithheld. This is

particularly true if your household income is derived from more than one source.1




Supplemental Rates

California has two types of supplemental rates. One type applies to bonuses and stock options. The other type applies to all other supplemental wages, such as commission, awards, and overtime. The two types have different rates, with the bonuses and stock options taxed at a higher rate. See “Defining earnings types” in the Payroll Setup and Maintenance Guide for directions.

Bonuses and stock options must be specified as Special Supplemental Rate when setting up

the earnings code in order to be taxed at the higher rate.

1. See the California EDD Form DE-4 Employee’s Withholding Allowance Certificate




Refer to Table 8-2 to complete the Filing Status field. If no status is provided, leave the default value of S (Single). l


In the Allowances field on the State panel, enter the number of regular withholding allowances the employee is claiming for state withholding tax purposes.This number is found on the California DE-4 form, Line 1 (“Number of allowances for Regular Withholding Allowances, Worksheet A”).

Entering Personal Allowances

In the Itemized Allowances field on the State Nonstandard Values panel, enter the second number found on the California DE-4 form, Line 1 (“Number of allowances from the Estimated Deductions”).



State Certificate Line or Reference Certificate Value Definition of Value


Filing status withholding allowances

SINGLE or MARRIED (with two or more incomes)

Single or married with two or more incomes

S

MARRIED (one income) Married with one income

M

HEAD OF HOUSEHOLD Head of household H



Following is an illustration of the State Nonstandard Values panel for California.

Figure 8-1. California State Nonstandard Values Panel


If any amount is found on Line 2 (“Worksheet C”) of the state certificate, enter this figure in the Additional W/H $ field. If Subject to SIT withholding is selected in the Withholding Status field, then this extra amount is withheld from wages in addition to the regular withholding amount per pay period.

If Line 7 of the federal Form W-4 is completed, then the employee pays no taxes and you select the Exempt (do not maintain gross) option in the Withholding Status field.

An employee may only claim exempt from California withholding if that employee did not owe

any federal income tax last year and does not expect to owe any federal income tax this year. The exemption automatically expires on February 15 of the next year. The employee must file a W-4 designating exemption for the current year. If the employee expects a tax liability the next year after being exempt, the employee must give you a new W-4 by December 1.

Selecting the Disability Status

Select either the State Disability Plan option or the Vol/Private Disability Plan option in the Disability Status field on the State panel. This option is unaffected by whom contributes to SDI, the employer and/or the employee. If the employee is exempt from SDI, select the Exempt option.

If you are using a voluntary/private disability plan, the plan must be set up using the Company

Tax Data task. See “Entering State Tax Data for an Employee” on page 2-6 for more information.




California has no local tax withholding.


Chapter 9

Colorado—Setting UpEmployee Taxes

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Chapter 9: Colorado—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 9-1 summarizes some basic facts about Colorado’s rules on payroll taxes. Refer to official source materials from the state of Colorado for rates and limits.

Table 9-1. Summary of Colorado’s Payroll Taxes

Tax Applicable?

State tax Yes

Local tax Yes

Supplemental Yes

Employer state unemployment Insurance Yes

Employee state unemployment Insurance No

Employer state disability Insurance No

Employee state disability Insurance No

Worked-in taxes Yes

Lived-in taxes No






Colorado income tax generally must be withheld from wages paid to resident employees for services performed either within or outside of the state and from wages paid to non-resident employees for services performed in the state.


Colorado does not have a state withholding exemption certificate. Each employee must file Federal Form W-4 for both federal and Colorado wage withholding tax purposes. If an employee does not file Form W-4, withhold tax as if the employee is single with zero exemptions.





Colorado does not have a state withholding exemption certificate. Employers may rely on this certificate, Form W-4, filed by each employee. If Form W-4 is not filed, then use the default filing status of S (Single).

Refer to Table 9-2 to complete the Filing Status field.


In the Allowances field, enter the total number of allowances the employee is claiming for state withholding tax purposes. This number is found on Line 5 of the W-4.

You must deduct all state wage withholding in whole dollar amounts.






Line 3 Married, but withhold at higher single rate

Single S





If Line 7 of the state certificate is completed, then the employee pays no taxes and you select the Exempt (do not maintain gross) option in the Withholding Status field.




City taxes in Colorado are worked-in taxes that are both employer and employee paid. This tax is called a “head tax” where a flat dollar amount is assessed for each employee. The tax becomes due after a certain dollar amount is earned in a given month.




Paying Local Taxes

Occupational taxes apply to the city and county of Denver, Greenwood Village, and Aurora in the following way, where both employees and employers must pay a fee:

• A monthly occupational tax is withheld from employee wages as a flat dollar amount.

• The employer pays a flat amount per month per employee.

If an employee works for more than one company, you must record the local tax data for

each company.

Entering Withholding Information

Select Subject to SIT withholding in the Withholding Status field and leave the Additional W/H $ and Additional W/H % fields blank. The flat tax is computed automatically by ADP Enterprise HR.


Chapter 10

Connecticut—Setting UpEmployee Taxes

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Chapter 10: Connecticut—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 10-1 summarizes some basic facts about Connecticut’s rules on payroll taxes.

Table 10-1. Summary of Connecticut’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental No








Connecticut has state tax withholding but not local tax withholding. Connecticut income tax must be withheld from wages paid to resident employees for services performed either within or outside of the state and from the wages earned by non-residents while working in the state.


Each resident employee should complete Form CT-W4 and each non-resident employee CT-W4NA so that you know how much state income tax to withhold. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.









Line 1 Withholding Code A

Married filing separately, or two working spouses

A

Line 1 Withholding Code B

Head of household B

Line 1 Withholding Code C

Married filing jointly C

Line 1 Withholding Code D

No exemptions D







If Line 1 of the state certificate is completed with Withholding Code E, then the employee pays no taxes and you select the Exempt (do not maintain gross) option in the Withholding Status field.

Line 1 Withholding Code F

Single F

Line 1 Withholding Code E

Exempt from income taxes

OR

Employee claimed Exempt but did not file Form CT-W4 by February 15. Maximum tax rate withheld.

Select the Exempt (do not maintain gross) option in Withholding Status field if the employee is exempt from FIT. No taxable wages will accumulate. (Taxable gross is not maintained.)

N

Table 10-2. Filing Status Definitions (cont.)






Connecticut has no local tax withholding.


Chapter 11

Delaware—Setting UpEmployee Taxes

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Chapter 11: Delaware—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 11-1 summarizes some basic facts about Delaware’s rules on payroll taxes. Refer to

official source materials from the state of Delaware for rates and limits.

Table 11-1. Summary of Delaware’s Payroll Taxes

Tax Applicable?

State tax Yes

Local tax Yes

Supplemental No





Worked-in taxes Yes

Lived-in taxes Yes






Delaware income tax must be withheld from wages paid for services performed in Delaware, regardless of the state of residency of the employer or the employee.


Delaware accepts Federal Form W-4 for an employee to claim personal exemptions. In the event that an employee needs additional State withholding, Forms W-4NR and SD/W-4A are available for non-residents and residents respectively to help them calculate the additional tax to be withheld. If an employee does not file a W-4, you must withhold tax as if the employee is single with zero exemptions.





Delaware does not have a state withholding exemption certificate. Employers may rely on this certificate, Form W-4, filed by each employee. If Form W-4 is not filed, then use the default filing status of S (Single).







Line 3 Married, but withhold at higher Single rate

Married, withhold at single rate

S

Form W-4*

* Use this option if the employee specifically indicates on Form W-4 to use this option. Otherwise use Married, which is option M in the Filing Status field.

Married filing separate Married, filing separately

B




In the Allowances field, enter the number of withholding or personal allowances the employee is claiming for state withholding tax purposes. This number is found on Line 5 of Form W-4.







City taxes in Delaware are both worked-in and lived-in taxes. Currently, Wilmington is the only city that imposes this local tax. Employees who work in Wilmington are subject to this tax and residents of Wilmington are also subject to this tax.




See Table 11-3 for details on special conditions for employers in Wilmington.

Table 11-3. Special Conditions for Employers in Wilmington

If ... Then ...

the employer is located in Wilmington The employer is required to withhold the city tax.

the employer is located anywhere in Delaware and the employee lives in Wilmington

the employer is required to withhold the city tax for Wilmington.

the employer is located outside of Delaware and the employee lives in Wilmington

the employer can apply for an ID in Wilmington and withhold the tax as a courtesy to the employee or choose not to withhold the lived-in tax and make the employee responsible for the tax.


Chapter 12

District of Columbia—Setting UpEmployee Taxes

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Chapter 12: District of Columbia—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 12-1 summarizes the District of Columbia’s employee withholding taxes.

Table 12-1. Summary of D.C.’s Payroll Taxes

Tax Apply?

District tax Yes

Supplemental No








The District of Columbia’s income tax must be withheld from wages paid to resident employees for services performed either within or outside the District. Also, non-residents working in D.C. do not pay D.C. income taxes.

Each employee must complete Form D-4 to indicate withholding information for the employer. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.





Refer to Table 12-2 to complete the Filing Status field on the State panel. If no status is provided, leave the default value of S (Single).


In the Allowances field on the State panel, enter the number of exemptions that the employee is claiming from Line 2 of the Form D-4 worksheet.





Line 1 Single Single allowance S

Line 1 Married filing jointly

Married, filing jointly M

Line 1 Married filing separately

Married filing separately B

Line 1 Head of household

Head of household H




The District of Columbia has no local tax withholding.


Chapter 13

Florida—Setting UpEmployee Taxes

PAGE TOPIC





Chapter 13: Florida—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 13-1 summarizes some basic facts about Florida’s rules on payroll taxes.

Table 13-1. Summary of Florida’s Payroll Taxes

Tax Apply?

State tax No

Local tax No

Supplemental No








Florida does not have state tax withholding. Therefore, the Withholding Status field, the Allowances field, and the Additional W/H $ and Additional W/H % fields are grayed on the State panel.

In addition, Florida does not have local tax withholding.





Chapter 14

Georgia—Setting UpEmployee Taxes

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Chapter 14: Georgia—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 14-1 summarizes Georgia’s rules on payroll taxes. Refer to official source materials

from the state of Georgia for rates and limits.

Table 14-1. Summary of Georgia’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes*

* Georgia has a special supplemental table that defines the supplemental tax rate, which varies depending on conditions.





Worked-in taxes No

Lived-in taxes No





State taxes include state income tax and unemployment insurance. You must withhold Georgia Personal Income Tax (PIT) from all wages earned by Georgia residents, whether they work in-state or out-of-state, and from wages earned by non-residents while working in Georgia.


Each employee must complete Form G-4 to indicate state withholding information for the employer. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.










Line 3A Single Single S

Line 3B Married filing Joint, both spouses working

Married filing Joint, both spouses working

B

Line 3C Married filing Joint, one spouse working

Married filing Joint, one spouse working

M

Line 3D Married filing separate

Married filing separate B

Line 3E Head of Household

Head of household H




In the Allowances field on the State panel, enter the total number of allowances the employee is claiming for state withholding purposes. This number is found on Line 3 of Form G-4.

Entering Dependent Allowances

In the Dependent Allowances field on the State Nonstandard Values panel, enter the total number of additional dependent exemptions claimed. This number is found on Line 4, dependent allowances, on Form G-4.


Following is an illustration of the State Nonstandard Values panel for Georgia.

Figure 14-1. Georgia State Nonstandard Values Panel







Georgia has no local tax withholding.


Chapter 15

Hawaii—Setting UpEmployee Taxes

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Chapter 15: Hawaii—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 15-1 summarizes Hawaii’s rules on payroll taxes.

Table 15-1. Summary of Hawaii’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental No



Employer-paid state disability insurance Yes





State taxes include state income tax, unemployment insurance, state disability insurance, and employment training tax. Hawaii income tax generally must be withheld from all wages paid to resident and non-resident employees for services performed either within or outside of the state. However, when a non-resident employee files a statement verifying their nonresidency, withholding is not required for services performed outside the state.


Each employee must complete an HForm W-4 to indicate state withholding information for the employer. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.







State Certificate Line or Reference Certificate Value

Definition of Value ADP Enterprise HR Value

Line 3 Marital Status

Single Single or unmarried Head of Household

S


Married Married M


Married, but withhold at higher single rate


S


Certified disabled person (not subject to withholding)

Exempt (not subject to state income tax)

Additional Withholding Only option in Withholding Status field.

Additional W/H $ and

Additional W/H % fields should be blank.




In the Allowances field on the State panel, enter the total number of allowances the employee is claiming for state withholding tax purposes. This number is found on Line 4 of Form HW-4.



Hawaiian law does not allow “exempt” status for withholding purposes.


Select either the State Disability Plan option or the Vol/Private Disability Plan option from the Disability Status field on the State panel. This option is unaffected by who contributes to SDI, the employer and/or the employee. If the employee is exempt from SDI, select the Exempt option.






Hawaii has no local tax withholding.


Chapter 16

Idaho—Setting UpEmployee Taxes

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Chapter 16: Idaho—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 16-1 summarizes some basic facts about Idaho’s rules on payroll taxes.

Table 16-1. Summary of Idaho’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes








Idaho income tax must be withheld from wages paid to resident and non-resident employees for services performed within the state. Withholding is not required for residents working outside of the state.


Idaho does not have a state withholding exemption certificate. Idaho allows the same number of withholding exemptions as are allowed for federal income tax, and employers may rely on this certificate, Form W-4, filed by each employee. If an employee does not file a W-4, you must withhold tax as if the employee is single with zero exemptions.







In the Allowances field on the State panel, enter the total number of allowances the employee is claiming for state withholding purposes. This number is found on Line 5 of federal Form W-4.







Single S




Idaho has no local tax withholding.


Chapter 17

Illinois—Setting UpEmployee Taxes

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Chapter 17: Illinois—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 17-1 summarizes some basic facts about Illinois’ rules on payroll taxes.

Table 17-1. Summary of Illinois’ Payroll Taxes

Tax Apply?

State tax Yes

Local tax No*

* Although Illinois has no local employee taxes, Chicago imposes an employer-paid tax.

Supplemental Yes








Illinois income tax generally must be withheld from wages paid to resident employees for services performed either within or outside of the state and from wages paid to non-resident employees for services performed in the state.


Employees must complete Form IL-W4 to indicate state withholding information for the employer. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.



1, “Setting Up Federal Tax Withholding,” for instructions on setting up an employee’s federal withholding tax. State values default to the federal values unless you complete the State panels.




In the Allowances field on the State panel, enter the number of allowances the employee is claiming for state withholding tax purposes. This number is found on Line 1, Total number of basic allowances that you are claiming, of Form IL-W4


In the Additional Allowances field on the State Nonstandard Value panel, enter the total number of additional dependent exemptions claimed. This number is found on Line 2, total number of additional allowances that you are claiming, on Form IL-W4.




Following is an illustration of the State Nonstandard Values panel for Illinois.

Figure 17-1. Illinois State Nonstandard Values Panel






Illinois has no local tax withholding with the exception of the Chicago employer tax.





Chapter 18

Indiana—Setting UpEmployee Taxes

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Chapter 18: Indiana—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 18-1 summarizes some basic facts about Indiana’s rules on payroll taxes. Refer to

official source materials from the state of Indiana for rates and limits.

Table 18-1. Summary of Indiana’s Payroll Taxes

Tax Applicable?

State tax Yes

Local tax Yes

Supplemental Yes





Worked-in taxes Yes

Lived-in taxes No






Indiana taxes include state income tax, local income tax, and state unemployment tax. Indiana income tax must be withheld from wages paid to resident employees for services performed either within or outside of the state and from wages paid to non-resident employees for services performed in the state.

Employees must complete Form WH-4 to indicate state withholding information for the employer. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.








In the Allowances field on the State panel, enter the number of allowances the employee is claiming for state withholding tax purposes. This number is found on Line 4 of Indiana Form WH-4, which is the total of lines 1, 2 and 3.

Entering Dependent Exemptions

In the Dependent Exemptions field on the State Nonstandard Values panel, enter the number of additional dependent exemptions claimed. This number is found on Line 5 of Indiana Form WH-4, Addition exemption for each qualifying dependent.




Following is an illustration of the State Nonstandard Values panel for Indiana.

Figure 18-1. Indiana State Nonstandard Values Panel






Local taxes in Indiana are county taxes for the lived-in county. Employers are required to withhold taxes for the county in which the employee lives. If the lived-in county does not have a tax, then the employee is responsible for the worked-in non-resident tax rate.

It is important to determine when the resident and non-resident payroll local code should be


According to the state of Indiana, the residence, principal place of business or employment of an individual is determined on January 1 of the calendar year. An individual cannot be subject to both a resident rate and a nonresident rate at the same time. If a person resides in a taxing county on January 1, they are subject to that county's resident rate for the entire year. If a person resides in a non-taxing county (including out-of-state), but works in an Indiana taxing county, he or she is subject to the nonresident rate of the worked in, taxing county also known as his or her county of principal employment.

If you are processing multiple jurisdictions for an employee, you must allocate 100% in the

Multi-Jurisdiction % field for the locality selected as the principal tax locality.

To determine the employee’s taxing county for the calendar year, Enterprise Payroll looks at the following on the employee-level Local panel:

1. Finds the row that has the most recent effective date for the current year, the Resident check box selected, and the Principal Tax Locality on Jan. 1 check box selected, and then calculates the tax for the locality. If no locality is found, proceeds to the next step.

2. Finds the row that has the latest effective date for the past year where the Resident check box is selected and then calculates the tax for the locality. If no locality is found, proceeds to the next step.



3. Finds the row that has the most recent effective date for the current year, the Resident check box not selected, and the Principal Tax Locality on Jan. 1 check box selected, and then calculates the tax for the locality.




Special Conditions

Since most counties require local tax in Indiana, you will often be faced with a situation where the lived-in and/or worked-in county requires local tax withholding. For more

information, see Table 18-2.

Example:

An employee resides in Allen county as of 01/01/07. This county is set up as the resident locality and the principal tax locality on the employee-level Local panel. On 07/01/07 the employee moves to a new locality, Adams county. The employee should continue to be taxed in Allen county during 2007 and then be taxed in Adams county beginning 01/01/2008.

To set the employee up in the new locality, click on the inner scroll bar of the Local panel, insert an effective-dated row of 07/01/07, select Adams county from the Locality field, and select the Resident check box.

Then click on the inner scroll bar to go back to the Allen County row, clear the Resident check box, and verify that the Principal Tax Locality on Jan 1 check box remains selected.

Enterprise Payroll will continue to withhold taxes from Allen county until the end of the calendar year, 12/31/07. It will then begin to automatically withhold tax from Adams county, the new locality, on 01/01/08 because the Resident check box is indicated for this locality.

Table 18-2. Special Conditions for Indiana Local Withholding

If ... Then ...

The lived-in country requires a tax and the worked-in county does not required a tax

The employer must withhold at the resident or lived-in tax rate.

The lived-in county requires a tax and the worked-in county requires a tax

The employer must withhold at the resident or lived-in tax rate.



The lived-in county does not required a tax and the worked-in county requires a tax

The employer must withhold at the non-resident or worked-in tax rate.

The lived-in and worked-in counties do not require a tax

No tax withholding is required.

Table 18-2. Special Conditions for Indiana Local Withholding

If ... Then ...


Chapter 19

Iowa—Setting UpEmployee Taxes

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Chapter 19: Iowa—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 19-1 summarizes some basic facts about Iowa’s rules on payroll taxes.

Table 19-1. Summary of Iowa’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes








Iowa income tax must be withheld from wages paid to resident employees for services performed either within or outside of the state and from the wages earned by non-residents while working in the state. However, resident employees who pay another state's withholding tax pay only the Iowa tax that exceeds the other state's withholding tax on the same wages.


Employees must complete Form IA-W4 to indicate state withholding information for the employer. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.







In the Allowances field on the State panel, enter the total number of allowances the employee is claiming for state withholding tax purposes. This number is found on Line 6 of Form IA-W4.



Definition of Value


Marital Status Single Single S

Marital Status Married (if married but legally separated, check Single)

Married M





If the “Exemption from Withholding” line of the state certificate is completed, then the employee pays no taxes and you select the Exempt (do not maintain gross) option in the Withholding Status field.




Iowa has no local tax withholding.


Chapter 20

Kansas—Setting UpEmployee Taxes

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Chapter 20: Kansas—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 20-1 summarizes some basic facts about Kansas’ rules on payroll taxes.

Table 20-1. Summary of Kansas’ Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes








Kansas income tax must be withheld from wages paid to resident employees for services performed either within or outside of the state and from the wages earned by non-residents while working in the state.


Kansas does not have a state withholding exemption certificate. Kansas allows the same number of withholding exemptions as are allowed for federal income tax, and employers may rely on this certificate, Form W-4, filed by each employee. If an employee does not file a W-4, you must withhold tax as if the employee is single with zero exemptions.







In the Allowances field on the State panel, enter the total number of allowances the employee is claiming for state withholding purposes. This number is found on Line 5 of Federal Form W-4.







Single S




Kansas has state tax withholding but not local tax withholding.


Chapter 21

Kentucky—Setting UpEmployee Taxes

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Chapter 21: Kentucky—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 21-1summarizes some basic facts about Kentucky’s rules on payroll taxes. Refer to

official source materials from the state of Kentucky for rates and limits.

Table 21-1. Summary of Kentucky’s Payroll Taxes

Tax Applicable?

State tax Yes

Local tax Yes

Supplemental Yes





Worked-in taxes Yes

Lived-in taxes No






Kentucky taxes include state income tax, local income tax, and state unemployment tax. Kentucky income tax must be withheld from wages paid for services performed in Kentucky, regardless of the state of residency of the employer or the employee.


Each employee must complete Form K-4 to indicate state withholding for the employer. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.

A part-year resident owes tax on taxable income received from all sources while being a legal resident of Kentucky. A part-year or full-year non-resident also owes tax on wages earned from Kentucky sources.







In the Allowances field on the State panel, enter the total number of allowances the employee is claiming for state withholding tax purposes. This number is found on Line 7 of Form K-4.



Definition of Value



Line 2 (a) (b) or (c) Married Married M




Kentucky is primarily a worked-in tax type, and the taxes are often referred to as license fees. The employer is mandated to withhold the worked-in tax but may opt to withhold the lived-in tax as a courtesy to employees. In addition, many special conditions exist, and some counties and school districts also impose taxes. Where both the county and the school district imposes a tax, both rates must be set up for each employee to provide for proper withholding. As a general rule of thumb, always verify whether or not the county the employer is located in also imposes a tax. If so, employees must be set up for both jurisdictions.

Gamaliel, Kentucky and Hazard, Kenton, and Mayfield counties have recently implemented

new local tax rules that use graduated tax tables.




Special Conditions for Louisville and Jefferson County

Special conditions for Louisville and Jefferson County are described in Table 21-3.

Table 21-3. Special Conditions for Louisville and Jefferson County

If ... Then ...

The employee works in Jefferson County and lives in Louisville

The employer must withhold at the Jefferson County resident rate.

The employee works in Jefferson County and lives outside of Jefferson County

The employer must withhold at the Jefferson County non-resident rate.

The employee works in Louisville and lives in Jefferson Count

The employer must withhold at the Louisville resident rate.

The employee works in Louisville and lives outside of Jefferson County

The employer must withhold at the Louisville non-resident rate.

The employee works part-time in Louisville and part-time in Jefferson County and lives outside of Jefferson County

The employer must withhold both the Louisville and Jefferson County taxes at the non-resident rates.



Special Conditions for Boone County, Florence, Walton, Verona, and Erlanger

Boone County taxes residents and non-residents who work there at two different rates. Florence, a city in Boone County, also taxes everyone who works there. Special conditions for Boone County and Florence, Walton, Verona, and Erlanger are described in Table 21-4.

Erlanger and many other cities fall within the Kenton County jurisdiction. Therefore, the city

code and the county code must always be established.Table 21-3.

Table 21-4. Special Conditions for Boone County

If the employee lives in ... Then ...

Boone County Employers are required to withhold taxes from any employee who works in this county.

Florence(city within Boone County)

Employers are required to withhold taxes for any employee who works in this city.

Walton and Verona

(cities within Boone County)

Employees who work or live in these cities are exempt from the school tax rate if it is being paid to the Independent School district. Taxes for these employees should be withheld at the Boone County non-resident rate.

Erlanger(in general, most of Erlanger is located in Kenton County; however, two streets and portions of two other streets are located in Boone County)

The Boone County code should be established for these addresses.

Unincorporated areas of Kenton County

are only subject to the county tax.


Chapter 22

Louisiana—Setting UpEmployee Taxes

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Chapter 22: Louisiana—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 22-1 summarizes some basic facts about Louisiana’s rules on payroll taxes.

Table 22-1. Summary of Louisiana’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes








Louisiana income tax must be withheld from wages paid to resident employees for services performed either within or outside of the state and from the wages earned by non-residents while working in the state. However, a resident employee's wages are not subject to withholding if the wages have been subjected to another state's income tax withholding.


Employees may complete Form L-4 or Federal Form W-4 to indicate state withholding information for the employer. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.




Calculating Income Tax

LA does not use a percentage method withholding calculation. The overall structure of the formula used to compute the withholding tax is to tax on the total wage amount and then subtract the tax effect of the personal exemptions and dependents.








Line 3 No exemptions or dependents claimed

No exemptions or dependents claimed

O




In the Allowances field on the State panel, enter the number of exemptions the employee is claiming for state withholding tax purposes. This number is found on Line 6 of Form L-4, Total number of exemptions claimed in Block A. An exemption is a husband, wife, or single person. The exemption amounts are no longer incorporated into the filing statuses.

Allowance amounts for filing statuses are:

• Single - Allows up to one allowance amount (0 or 1) to be claimed, exempting up to $4,500 from withholding of annual wages.

• Married - Allows up to two allowance amounts (0, 1 or 2) to be claimed, exempting up to $9,000 from withholding of annual wages.

• No Exemptions or Dependents Claimed - Allows no amount exempt from withholding. Do not enter the number of Dependents from Line 7 in this field.

In the Dependency Credits field on the State Nonstandard Values panel, enter the number of dependents the employee is claiming for state withholding tax purposes. This number is found on Line 7 of Form L-4, Total number of dependents claimed in Block B. A dependent is any person who qualifies as a dependent of the employee as described in IRCS code, section 152 and exempts from withholding $1,000 of annual wages per dependent.

Exemption and dependent amounts are subject to change.



The difference between an exemption and a dependent must be taken into account since they have a different effect on the amount of tax to be withheld.




Louisiana has no local tax withholding.


Chapter 23

Maine—Setting UpEmployee Taxes

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Chapter 23: Maine—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 23-1 summarizes some basic facts about Maine’s rules on payroll taxes.



Table 23-1. Summary of Maine’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes








Maine income tax must be withheld from wages paid to resident employees for services performed either within or outside of the state and from the wages earned by non-residents while working in the state.


Employees may complete Form W-4ME or Federal Form W-4 to indicate state withholding information for the employer. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.







In the Allowances field on the State panel, enter the number of regular withholding allowances the employee is claiming for state withholding tax purposes.This number is found on Line 4 of Form W-4ME.





Line 3 Married with one income Married with one income

M

Line 3 Married with two incomes Married with two incomes

B




Maine has no local tax withholding.


Chapter 24

Maryland—Setting UpEmployee Taxes

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Chapter 24: Maryland—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 24-1 summarizes Maryland’s rules on payroll taxes. Refer to official source materials

from the state of Maryland for rates and limits.

Table 24-1. Summary of Maryland’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax Yes*

* Local taxes are combined with state tax withholding for submission to the state of Maryland.

Supplemental No





Worked-in taxes No

Lived-in taxes Yes**

** Maryland taxes are based on resident address only. However, there is a non-resident rate for reciprocity agreement purposes.





Maryland employers must withhold state tax for all wages earned by residents. State withholding includes the Maryland county tax and, if applicable, the Baltimore City tax. Local taxes are combined with state tax withholding for submission to the state of Maryland. Therefore, you only need to set up state tax withholding for your employees.

Non-resident employees are subject to state tax withholding for any wages earned while in Maryland.

Employees must complete Form MW 507 to indicate state withholding information for the employer. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.





The filing status has no impact on the tax calculation. Therefore, you can leave the default value of S (Single) in the Filing Status field on the State panel.


Using Line 1 of Form MW507, enter the number of withholding or personal allowances the employee is claiming for state withholding tax purposes in the Allowances field on the State panel.

In the Taxed Locality field on the State Nonstandard Values panel, select the employee’s county of residence from Form MW 507. The local tax rate for the county selected is added to the flat state tax rate for a total tax rate used by ADP Enterprise HR.




Following is an illustration of the State Nonstandard Values panel for Maryland.

Figure 24-1. Maryland State Nonstandard Values Panel







Local taxes are combined with state tax withholding for submission to the state of Maryland. Therefore, you only need to set up state tax withholding for your employees.


Chapter 25

Massachusetts—Setting UpEmployee Taxes

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Chapter 25: Massachusetts—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 25-1 summarizes some basic facts about Massachusetts’ rules on payroll taxes.

Table 25-1. Summary of Massachusetts’ Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental No








Massachusetts income tax generally must be withheld from wages paid to resident employees for services performed either within or outside of the state and from the wages earned by non-residents while working in the state. However, a resident employee's wages are not subject to withholding if the wages have been subjected to another state's income tax withholding.


Employees may complete Form M-4 or Federal Form W-4 to indicate state withholding information for the employer. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.







In the Allowances field on the State panel, enter the number of withholding allowances the employee is claiming for state withholding tax purposes.This number is found on Line 4 of Form M-4.



If Line 1D of the state certificate is completed, then the employee pays no taxes and you select the Exempt (do not maintain gross) option in the Withholding Status field.



Indicating Head of Household Status

Select the Head of Household check box on the State Nonstandard Values panel to indicate that this employee files as head of household on his or her tax return.


Following is an illustration of the State Nonstandard Values panel for Massachusetts.

Figure 25-1. Massachusetts State Nonstandard Values Panel




Massachusetts has no local tax withholding.


Chapter 26

Michigan—Setting UpEmployee Taxes

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Chapter 26: Michigan—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 26-1 summarizes some basic facts about Michigan’s rules on payroll taxes.

Table 26-1. Summary of Michigan’s Payroll Taxes

Tax Applicable?

State tax Yes

Local tax Yes

Supplemental Yes





Worked-in taxes Yes

Lived-in taxes Yes





Michigan taxes include state income tax, local income tax, state unemployment insurance, and state disability insurance. Michigan income tax must be withheld from wages paid to resident employees for services performed either within or outside of the state and from wages paid to non-resident employees for services performed in the state.


Employees must complete Form MI-W4 to indicate state withholding information for the employer.If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.







In the Allowances field on the State panel, enter the total number of allowances the employee is claiming for state withholding purposes. This number is found on Line 6 of Federal Form MI-W4.






Identifying Family-owned Businesses

Select Family Owned Business on the State Nonstandard Values panel if the employee is a family member who is employed in a family-owned business based in Michigan. Family employment is defined as wages earned by an employee where more than 50% of the proprietary interest is owned by the individual, his or her son, daughter, spouse, or any combination of these individuals, or in which more than 50% of the proprietary interest is owned by the mother and/or father of a child under 18.


Following is an illustration of the State Nonstandard Values panel for Michigan.

Figure 26-1. Michigan State Nonstandard Values Panel




The Michigan locals are both worked-in and lived-in taxes. However, it is only mandatory for employers to deduct and remit the taxes for the locality where the wages are earned. If an employee lives in an area other than the worked-in location, and the lived-in area imposes a local tax, the employer has the option to do one of two things: apply for an ID number in that lived-in area and ensure that the tax is deducted on behalf of the employee or choose not to deduct the tax, making the employee responsible for remitting the tax.

Directions for viewing a list of local jurisdictions is found on page 3-4.




Employee withholding rules with examples are provided in Table 26-2.

Table 26-2. Michigan Local Withholding

If ... Then ...

The employee lives and works in different jurisdictions where the rates are equal

Half of the full rate for each jurisdiction is applied.

The employee works and lives in different cities and the rates are not equal

The worked-in jurisdiction is applied at half of the full rate and the lived-in rate is applied as follows:

• Where the worked-in rate is greater, apply half of the full rate.

• Where the lived-in rate is greater, again, first apply the worked-in rate that is equal to half of the full rate, and then apply the lived-in rate that brings the sum of both rates up to the total of the full lived-in rate.


Chapter 27

Minnesota—Setting UpEmployee Taxes

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Chapter 27: Minnesota—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 27-1 summarizes some basic facts about Minnesota’s rules on payroll taxes.

Table 27-1. Summary of Minnesota’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes








Minnesota income tax must be withheld from wages paid to resident employees for services performed either within or outside of the state and from wages paid to nonresident employees for services performed in the state.


Minnesota does not have a state withholding exemption certificate. Minnesota allows the same number of withholding exemptions as are allowed for federal income tax, and employers may rely on this certificate, Form W-4, filed by each employee. If an employee does not file a W-4, you must withhold tax as if the employee is single with zero exemptions.














Single S




Minnesota has no local tax withholding.


Chapter 28

Mississippi—Setting UpEmployee Taxes

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Chapter 28: Mississippi—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 28-1 summarizes some basic facts about Mississippi’s rules on payroll taxes.

Table 28-1. Summary of Mississippi’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental No





Withholding allowances No

Annual exemption amount Yes




Mississippi income tax must be withheld from wages paid to resident employees for services performed either within or outside of the state and from the wages earned by non-residents while working in the state. However, a resident employee's wages are not subject to withholding if the wages have been subjected to another state's income tax withholding.


Employees must complete Form 89-350-98-1 to indicate state withholding information for the employer. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.





Select one of the following options to complete the Filing Status field on the State panel. If no status is provided, leave the default value of S (Single).

Table 28-2. Filing Status Options




Line 2(a) Married Spouse NOT employed

Married, spouse not employed

M

Line 2(b) Married Spouse IS employed Married, spouse employed

B

Line 3 Head of family Head of family H





In the Annual Exemption field on the State Nonstandard Values panel, enter the total number of exemptions claimed on Line 6 of the Mississippi withholding certificate.


Following is an illustration of the State Nonstandard Values panel for Mississippi.

Figure 28-1. Mississippi State Nonstandard Values Panel






Mississippi has no local tax withholding.


Chapter 29

Missouri—Setting UpEmployee Taxes

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Chapter 29: Missouri—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 29-1 summarizes some basic facts about Missouri’s rules on payroll taxes. Refer to

official source materials from the state of Missouri for rates and limits.

Table 29-1. Summary of Missouri’s Payroll Taxes

Tax Applicable?

State tax Yes

Local tax Yes*

Supplemental Yes





Worked-in taxes Yes*

Lived-in taxes Yes*

* Kansas City and St. Louis impose city taxes. St. Louis also has an employer-paid payroll expense tax. For more information, see “Setting Up Local Income Taxes” on page 29-5.






Missouri has state income tax, local income tax in some areas, and state unemployment tax. Missouri income tax is withheld from wages paid to residents working in or out of state, and from wages paid to non-resident employees for services performed in the state.

If a resident works at least 50% of the time in another taxing state, the resident can file an

affidavit for exemption on Form MO-W4C.

Each employee must complete Form MO-W4 to indicate state withholding information for the employer. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.

Table 29-1 summarizes some basic facts about Missouri’s rules on employee taxes. Refer to official source materials from the state of Missouri for rates and limits.








Definition of Value


Line 1 Allowance for yourself Enter 1 for yourself

S or H

Line 2 Allowance for your spouse. Does your spouse work = yes

Married, both spouses working

B

Line 2 Allowance for your spouse. Does your spouse work = no

Married, one spouse working

M




In the Allowances field, enter the total number of allowances the employee is claiming for state withholding tax purposes. This number is found on Line 5 of Form MO-W4.







This section provides instructions for entering local tax withholding information for Kansas City and St. Louis, which both have employee-paid city taxes.

Missouri is a worked-in and lived-in local tax state. It is mandatory for employers to withhold the worked-in taxes for wages, but optional to withhold lived-in taxes for employees. At this time, only two cities impose local income taxes in Missouri - St. Louis and Kansas City.

Residents of St. Louis and Kansas City must pay 100% of the local city tax. Non-residents are required to pay tax for the percentage of time they work in the city.

St. Louis also has an employer-paid Payroll Expense Tax (PET). The employer must pay this tax any time an employee works in the city, regardless of whether the business is located in the city. Each St. Louis employee must be set up under the PET local code 65000R.






A summary of Kansas City and St. Louis city taxes is provided in Table 29-3.

With the St. Louis local code, you must set up both the employee portion (65000) and

employer portion (65000R).

Table 29-3. Missouri’s Special Conditions

If ... Then ...

The employee works in St. Louis or Kansas City but lives outside of the city

the employer must withhold the tax for the worked-in jurisdiction.

The employee lives in St. Louis or Kansas City but the employer is located outside of these cities

the employer is not required to withhold the lived-in taxes for these employees.

Special Condition - St. Louis If an employer has a business in the city of St. Louis, St. Louis requires the employer to remit a Payroll Expense Tax. This tax is payable by the employer, for operating the business in the St. Louis area.


Chapter 30

Montana—Setting UpEmployee Taxes

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Chapter 30: Montana—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 30-1 summarizes some basic facts about Montana’s rules on payroll taxes.

Table 30-1. Summary of Montana’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes








Montana income tax must be withheld from wages paid to resident employees for services performed either within or outside of the state and from the wages earned by non-residents while working in the state.


Montana does not have a state withholding exemption certificate. Montana allows the same number of withholding exemptions as are allowed for federal income tax, and employers may rely on this certificate, Form W-4, filed by each employee. If an employee does not file a W-4, you must withhold tax as if the employee is single with zero exemptions.














Single S




Montana has no local tax withholding.


Chapter 31

Nebraska—Setting UpEmployee Taxes

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Chapter 31: Nebraska—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 31-1 summarizes some basic facts about Nebraska’s rules on payroll taxes.

Table 31-1. Summary of Nebraska’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes








Nebraska has state tax withholding but not local tax withholding. Nebraska income tax generally must be withheld from wages paid to resident employees for services performed either within or outside of the state and from wages paid to non-resident employees for services performed in the state. However, if a resident is subject to withholding in another jurisdiction by the same employer, the amount of Nebraska income tax withheld is reduced by the amount of tax required to be withheld by the other jurisdiction.


Nebraska does not have a state withholding exemption certificate. Nebraska allows the same number of withholding exemptions as are allowed for federal income tax, and employers may rely on this certificate, Form W-4, filed by each employee. If an employee does not file a W-4, you must withhold tax as if the employee is single with zero exemptions.












Single S




Nebraska has no local tax withholding.


Chapter 32

Nevada—Setting UpEmployee Taxes

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Chapter 32: Nevada—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 32-1 summarizes some basic facts about Nevada’s rules on payroll taxes.

Table 32-1. Summary of Nevada’s Payroll Taxes

Tax Apply?

State tax No

Local tax No

Supplemental No








Nevada does not have state tax withholding. Therefore, the Withholding Status field, the Allowances field, and the Additional W/H $ and Additional W/H % fields are grayed on the State panel.

In addition, Nevada does not have local tax withholding.





Chapter 33

New Hampshire—Setting UpEmployee Taxes

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Chapter 33: New Hampshire—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 33-1 summarizes some basic facts about New Hampshire’s rules on payroll taxes.

Table 33-1. Summary of New Hampshire’s Payroll Taxes

Tax Apply?

State tax No

Local tax No

Supplemental No








New Hampshire does not have state tax withholding. Therefore, the Withholding Status field, the Allowances field, and the Additional W/H $ and Additional W/H % fields are grayed on the State panel.

In addition, New Hampshire does not have local tax withholding.





Chapter 34

New Jersey—Setting UpEmployee Taxes

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Chapter 34: New Jersey—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 34-1 summarizes some basic facts about New Jersey’s rules on payroll taxes.

Table 34-1. Summary of New Jersey’s Payroll Taxes

Tax Applicable?

State tax Yes

Local tax Yes*

* Only Newark has a local tax, and it is paid by the employer. However, it must be set up in the employee’s local tax data record.

Supplemental No


Employee state unemployment Insurance Yes

Employer state disability Insurance Yes**

** Tax classes for employers and employees are available for voluntary/private disability insurance.

Employee state disability Insurance Yes

Worked-in taxes Yes

Lived-in taxes Yes

Special condition(s) Yes***

*** Healthcare and Workforce Development Fund.




Taxes include state income tax, state unemployment tax, and state disability insurance.


Each employee must complete either Form NJ-W4 or Federal Form W-4 to indicate state withholding information for the employer. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.







Refer to Table 34-2 to complete the Filing Status field on the State panel. This information is found in Form NJ-W4. If no status is provided, leave the default value of S (Single).

Line 3 applies only if 2.2, (Married/Civil Union Couple Joint), 2.4 (Head of Household), or 2.5

(Qualifying Widow(er)/Surviving Civil Union Partner is selected and supersedes Line 2 check boxes.

Examples

Below are two examples for selecting the filing status for New Jersey.

Example #1: If Line 2.2 (Married/Civil Union Couple Joint) is checked and “C” is entered on Line 3, then select the ADP Enterprise HR value of C.

Example #2: If Line 2.2 (Married/Civil Union Couple Joint) is checked and Line 3 is blank, then select the ADP Enterprise HR value of B.




Line 2.1 Single Rate A - Single, Married/Separate

A

Line 2.2 Married/Civil Union Couple Joint

Rate B - Married/Joint, HoH, Widow(er)

B

Line 2.3 Married/Civil Union Couple Separate

Rate A - Single, Married/Separate

A

Line 2.4 Head of Household Rate B - Married/Joint, HoH, Widow(er)

B

Line 2.5 Qualifying Widow(er)/Surviving Civil Union Partner


B

Line 3 “C” from Wage Chart Rate C C

Line 3 “D” from Wage Chart Rate D D

Line 3 “E” from Wage Chart Rate E E

Line 2.2 Married/Civil Union Couple Joint is checked AND “C” is entered on Line 3

Rate C C

Line 2.2 Married/Civil Union Couple Joint is checked AND Line 3 is blank


B




In the Allowances field, enter the total number of allowances the employee is claiming for state withholding tax purposes. This number is found on Line 4 of Form NJ-W4.





Select either the State Disability Plan option or the Vol/Private Disability Plan option from the Disability Status field on the State panel. This option is unaffected by whom contributes to SDI, the employer and/or the employee. If the employee is exempt from SDI, select the Exempt option.






This section provides instructions for entering local tax withholding information. Employers are required to withhold local taxes from employees’ paychecks for gross wages earned while in the locality.


You must set up localities for your company on the company Local Tax Data panel before you

enter local tax data for employees.

Special Conditions for New Jersey

The New Jersey local tax is employer paid and is based on wages earned within the city of Newark only.

Understanding Medical Malpractice Insurance Premium Assistance Assessment (MMIPAA)

The New Jersey State Legislature has established the Medical Malpractice Liability Insurance Premium Assistance Fund to ensure that residents of New Jersey continue to have access to highly-trained physicians in all specialties. To fund this program, an annual surcharge of $3 per employee was added to the Annual Assessment Bill issued by the Department of Labor and Workforce Development, and applies to all employers who are subject to the New Jersey unemployment compensation law. The employer has the option to deduct this surcharge from each employee.

Setting Up Medical Malpractice Insurance Premium Assistance Assessment (MMIPAA)

If the employer chooses to deduct the surcharge from employees, the New Jersey MMIPAA surcharge can either be set up as a local tax (recommended) or as a general deduction. If set up as a general deduction, it is reported on W-2 box 14I (Other). Refer to the Year-End Tax Reporting Guide for instructions.

New Jersey MMIPAA can also be set up and deducted as a local tax. If set up as a local tax, it is reported on W-2 box 19 (Local Income Tax) and 20 (Locality Name). Wages will not be reported on W-2 box 18 (Local Wages). This tax applies to New Jersey residents and non-residents working in New Jersey.

Note: If the employee works for multiple employers during the year, each employer must

either pay the $3.00 surcharge or deduct it from the employee. If each employer deducts from the employee, the employee cannot obtain a refund at year end.


Chapter 35

New Mexico—Setting UpEmployee Taxes

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Chapter 35: New Mexico—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 35-1 summarizes some basic facts about New Mexico’s rules on payroll taxes.

Table 35-1. Summary of New Mexico’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes





Employer-paid state workers’ compensation insurance

Yes

Employee-paid state workers’ compensation Yes




New Mexico income tax generally must be withheld from wages paid to resident employees for services performed either within or outside of the state and from wages paid to non-resident employees for services performed in the state.


New Mexico does not have a state withholding exemption certificate. Each employee must complete Federal Form W-4 to indicate state withholding information for the employer. If an employee does not file a W-4, you must withhold tax as if the employee is single with zero exemptions.





New Mexico does not have a state withholding exemption certificate. Employers may rely on this certificate, Form W-4, filed by each employee. If Form W-4 is not filed, then use the default filing status of S (Single).








Single S




In New Mexico, workers’ compensation law requires that when a worker is injured on the job or is disabled by an occupational disease, the employer must pay for the worker’s health care costs and provide indemnity pay to substitute for lost wages. Employers purchase workers’ compensation insurance to cover these benefits.

All employers who have three or more employees must have workers’ compensation coverage, including businesses, government, and nonprofit institutions. The only exceptions to this rule are if the employees are domestic servants, farm or ranch laborers, or real estate salespersons.

Every employer covered under the workers’ compensation law must pay the state a quarterly tax of $4.00 per employee, $2.00 of which shall be withheld from the wages of the employee.

Additional information is available on the Internet web site of the Workers’ Compensation Administration at http://www.wca.state.nm.us/. You can also call the hotline at 1-866-WORKOMP.

Workers’ Compensation tax in New Mexico is set up as a local tax. This tax is paid by both employees and employers. Use the ADP Enterprise HR local code NM0001 to set up workers’ compensation for both employees and employers.





http://www.wca.state.nm.us/

Chapter 36

New York—Setting UpEmployee Taxes

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Chapter 36: New York—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 36-1 summarizes some basic facts about New York’s rules on payroll taxes.

Table 36-1. Summary of New York’s Payroll Taxes

Tax Applicable?

State tax Yes

Local tax Yes

Supplemental Yes*

* Supplemental wage rates are available for both the state of New York and New York City.



Employer state disability insurance Yes


Worked-in taxes Yes

Lived-in taxes Yes






New York’s taxes include state income tax, local income tax in some areas, state unemployment tax, and employee-paid state disability insurance. New York income tax must be withheld from wages paid to resident employees for services performed either within or outside of the state and from wages paid to non-resident employees for services performed in the state.


If a resident employee is subject to another state's withholding tax, New York tax is withheld only for the amount it exceeds the other state's withholding tax on the same wages.

Each employee must complete either Form IT-2104 or Federal Form W-4 to indicate state withholding information. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.








Definition of Value


Not applicable Single/Head of household Single S

Not applicable Married Married M

Not applicable Married, but withhold at higher single rate


S






For New York City, if any amount is found on Line 4 of the state certificate, enter this figure in the Additional W/H $ field.

For Yonkers, if any amount is found on Line 5 of the state certificate, enter this figure in the Additional W/H $ field.

For all other cities, if any amount is found on Line 3 of the state certificate, enter this figure in the Additional W/H $ field.

If Subject to SIT withholding is selected in the Withholding Status field, then this extra amount is withheld from wages in addition to the regular withholding amount per pay period.


Select either the State Disability Plan option or the Vol/Private Disability Plan option from the Disability Status field on the State panel. This option is unaffected by whom contributes to SDI, the employer and/or the employee. If the employee is exempt from SDI, select the Exempt option.






New York City and Yonkers are the only cities in New York that impose local taxes. This also applies to any of the five boroughs of New York City, which include Manhattan, Brooklyn, Queens, Staten Island, and the Bronx.

This section provides instructions for entering local tax withholding information for New York City (NYC) and Yonkers. Local taxes in New York are lived-in taxes, and local taxes in Yonkers are both lived-in and worked-in.

ADP Enterprise HR withholding tables also apply to New York City and Yonkers. Graduated Tax table code Z1 is used for New York City. Graduated Tax table code Z2 is used for Yonkers. Local codes include P001 for New York city residents, 3304 for Yonkers non-resident rate, and 84000 for Yonkers resident rate. New York City no longer imposes a non-resident tax.

It is important to determine where the resident or non-resident payroll local code should be





A summary of New York’s city taxes is provided in Table 36-3.

Table 36-3. New York’s Special Conditions

If ... Then ...

the employee lives in New York City and works outside of New York City

the employer must withhold the New York City resident tax.

the employee lives outside of New York City and works in New York City

no tax withholding is required.

the employee lives in Yonkers and works in New York City

the employer must withhold the Yonkers resident tax

the employee lives in New York City and works in Yonkers

the employer must withhold the New York City resident tax and the Yonkers non-resident tax.


Chapter 37

North Carolina—Setting UpEmployee Taxes

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Chapter 37: North Carolina—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 37-1 summarizes some basic facts about North Carolina’s rules on payroll taxes.

Table 37-1. Summary of North Carolina’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes





Withholding allowances Yes

Exemption amount No




North Carolina income tax generally must be withheld from wages paid to resident employees for services performed either within or outside of the state and from wages paid to non-resident employees for services performed in the state. However, a resident employee's wages are not subject to withholding if the wages have been subjected to another state's income tax withholding.


Each employee should complete Form NC-4 so that you know how much state income tax to withhold. Line 4 of Form NC-4 provides the number of state withholding allowances. North Carolina does not allow additional amounts to be withheld from wages. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.



1, “Setting Up Federal Tax Withholding,” for instructions on setting up an employee’s federal withholding tax. State values default to the federal values unless you complete the State panel (Payroll ~ Employee Information ~ Change Employee Payroll Data).





Definition of Value



Line 3 Married or Qualifying Widow(er) Married M

Line 3 Head of Household Head of household

H




In the Allowances field on the State panel, enter the total number of allowances the employee is claiming for state withholding tax purposes. This number is found on Line 4 of Form NC-4.







North Carolina has no local tax withholding.


Chapter 38

North Dakota—Setting UpEmployee Taxes

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Chapter 38: North Dakota—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 38-1 summarizes some basic facts about North Dakota’s rules on payroll taxes.

Table 38-1. Summary of North Dakota’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes








North Dakota income tax must be withheld from wages paid to resident and non-resident employees for services performed in the state.


North Dakota does not have a state withholding exemption certificate. North Dakota allows the same number of withholding exemptions as are allowed for federal income tax, and employers may rely on this certificate, Form W-4, filed by each employee. If an employee does not file a W-4, you must withhold tax as if the employee is single with zero exemptions.












Single S




North Dakota has no local tax withholding.


Chapter 39

Ohio—Setting UpEmployee Taxes

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Chapter 39: Ohio—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 39-1 summarizes some basic facts about Ohio’s rules on payroll taxes.

Table 39-1. Summary of Ohio’s Payroll Taxes

Tax Applicable?

State tax Yes

Local tax Yes

Supplemental Yes





Worked-in taxes Yes

Lived-in taxes Yes






Ohio taxes include state income tax, local income tax, and state unemployment tax. Ohio income tax must be withheld from wages paid to resident employees for services performed either within or outside of the state and from wages paid to non-resident employees for services performed in the state.


Each employee must complete Form IT-4 so that you correctly set up state income tax withholding. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.













City taxes in Ohio are primarily based on the worked-in location. Therefore, it is mandatory for the employer to withhold for the area in which the employee works. However, there are cities that also require resident taxes to be paid. In addition, some resident tax types allow for either a full or partial credit based on what has already been paid for the worked-in tax type.




See Table 39-2 for information on special conditions in Ohio.

For example, an employee living in Springfield (2% tax) and working in Catawba (1% tax) would pay 1% to Catawba and only 1.5% to Springfield because Springfield allows a 0.5% credit for paying taxes to Catawba. Therefore, the total local taxes paid by the employee would be 2.5%.

Differences between jurisdictions in Ohio make it imperative that you ensure that the

employee information and local taxing information are accurate.

Table 39-2. Special Conditions for Ohio

If ... Then ...

an employer elects to withhold resident taxes and a full credit is allowed, and the lived-in rate is less than or equal to what the employee has already paid to the worked-in jurisdiction

the employee owes no taxes to his lived-in jurisdiction and no taxes are withheld for the resident locality.

an employer elects to withhold resident taxes and a full credit is allowed, and the lived-in rate is greater than the worked-in rate

the employee owes the difference to the resident locality and the employer should withhold at that rate.

an employer elects to withhold resident taxes and a partial credit is allowed by the lived-in jurisdiction

the calculation for this credit varies from agency to agency; therefore, it is best to refer to the agency guidelines when determining the appropriate rate.

Special condition - school district tax exception

while employers are under no obligation to withhold lived-in taxes, the school district tax exception applies regardless of the employer’s location. Simply stated, an Ohio employer must withhold applicable Ohio School District taxes for Ohio residents.


Chapter 40

Oklahoma—Setting UpEmployee Taxes

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Chapter 40: Oklahoma—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 40-1 summarizes some basic facts about Oklahoma’s rules on payroll taxes.

Table 40-1. Summary of Oklahoma’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes








Oklahoma income tax generally must be withheld from wages paid to resident employees for services performed either within or outside of the state and from wages paid to non-resident employees for services performed in the state. However, a resident employee's wages are not subject to withholding if the wages are earned in another state that requires withholding.


If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.





Oklahoma does not have a state withholding exemption certificate. Employers may rely on Form W-4, filed by each employee. If Form W-4 is not filed, then use the default filing status of S (Single).




Definition of Value



Line 3 Married Single M


Married but withhold at Single rate

S

Line 3 Married (persons with dual incomes)* Married B




Oklahoma allows the same number of withholding exemptions as are allowed for federal income tax. In the Allowances field on the State panel, enter the total number of allowances the employee is claiming for state withholding tax purposes. This number is found on Line 5 of Federal Form W-4.







Oklahoma has no local tax withholding.


Chapter 41

Oregon—Setting UpEmployee Taxes

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Chapter 41: Oregon—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 41-1 summarizes some basic facts about Oregon’s rules on payroll taxes. Refer to

official source materials from Oregon for rates and limits.

Table 41-1. Summary of Oregon’s Payroll Taxes

Tax Applicable?

State tax Yes

Local tax Yes

Supplemental Yes





Worked-in taxes Yes

Lived-in taxes No






Oregon taxes include state income tax, local income tax, and state unemployment tax. You must withhold Oregon tax from all wages paid to employees who are Oregon residents or who are non-residents working in Oregon. Resident employees are taxed on all wages, including wages earned outside of Oregon.

If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.







Oregon allows the same number of withholding exemptions as are allowed for federal income tax. In the Allowances field on the State panel, enter the total number of allowances the employee is claiming for state withholding purposes. This number is found on Line 5 of Federal Form W-4.

Worked-in taxes apply to some jurisdictions in Oregon, and they are generally license fees for the privilege of working in the city or county. Employers are required to pay these license fees. For more information on local taxes, see Chapter 3, “Setting Up Local Tax Withholding.”







Single S




In Oregon, local tax is called a transit tax, and it means that the employer pays tax on the amount of gross payroll paid for services performed within the Tri-Met or LTD district.

The Tri-Met area includes parts of Multnomah, Washington, and Clackamas counties. LTD serves the entire Eugene-Springfield urban area as well as several rural areas. Wages means all salaries, commissions, bonuses, fees, or other items of value paid to a person for services performed within a transit district.




Understanding Workers’ Compensation

Workers’ compensation tax in Oregon is set up as a local tax. This tax is paid by both employees and employers. The locals worker compensation code is OR0001.

In Oregon, every employer employing one or more subject workers, including the state government or any city, county, district, or agency thereof, is subject to the provisions of the workers’ compensation regulations. Under the provisions of the Workers’ Compensation Law, employers and employees are assessed to support the state workers’ compensation fund. The law is administered by the Department of Consumer and Business Services, Workers’ Compensation Division, 350 Labor and Industries Building, Salem, Oregon 97310; tel. (503) 947-7810. Additional information is available on the internet web site of the Department of Consumer and Business Services at http://www.cbs.state.or.us/wcd.

The Department of Consumer and Business Services has set the workers’ compensation assessment rate for calendar year 2004 to 3.4 cents (.034) for each hour or part of an hour worked by each employee (.017 cents paid by employees and .017 cents paid by employers.)


http://www.cbs.state.or.us/wcd


Setting Up Worked-in Tax

Although you do not withhold worked-in tax, you must set up the employees working in these localities in order to calculate the correct amount of employer-paid tax.

Multnomah County imposes an income tax on its residents. People working in Multnomah County who do not live there do not owe this local income tax.

In addition, cities such as Eugene are considering the addition of local income tax. Be sure to check with the local jurisdiction to ensure you are in compliance with applicable tax laws.





Chapter 42

Pennsylvania—Setting UpEmployee Taxes

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Chapter 42: Pennsylvania—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 42-1 summarizes some basic facts about Pennsylvania’s rules on payroll taxes. Refer

to official source materials from the state of Pennsylvania for rates and limits.

Table 42-1. Summary of Pennsylvania’s Payroll Taxes

Tax Applicable?

State tax Yes

Local tax Yes

Supplemental Yes


Employee state unemployment insurance Yes

Employer state disability insurance No*

* Payments made by third party insurers for sickness or disability are not taxable income for Pennsylvania purposes. Do not include periodic payments for sickness or disability in box 16 of the employee’s Form W-2.


Worked-in taxes No

Lived-in taxes Yes

Employer required to withhold local taxes Yes**

** You are required to withhold lived-in taxes for an employee only if the employee lives in a jurisdiction where your offices are located.





Pennsylvania taxes include state income tax, local income tax, and state unemployment tax. Every employer in Pennsylvania must deduct and withhold Pennsylvania Personal Income Tax from all wages paid to its resident employees, regardless if the services are performed inside the state or outside. The same must be done for all wages paid to non-residents for services rendered inside Pennsylvania unless the employee is a resident of a reciprocity state.


Pennsylvania does not have a state withholding exemption certificate. A flat percentage rate is applied to determine the appropriate level of state income tax to withhold from earnings. Federal Form W-4 must be completed by each employee to determine the appropriate level of federal income tax to withhold from earnings. If an employee does not file a W-4, you must withhold tax as if the employee is single with zero exemptions.





Leave the default value of N (Regular Income) in the Filing Status field on the State panel.


The Allowances field on the State panel is not used for Pennsylvania.







The local taxes in Pennsylvania are referred to as Earned Income Taxes or Local Services Taxes. The Earned Income Taxes are lived-in or resident taxes; however, they are collected by the cities in which the employees work. In most cases, these local taxes are then passed to the lived-in jurisdiction by the appropriate tax collector.

Generally, local taxes are remitted to one tax collector; however, in some situations the jurisdiction and school district taxes are remitted to separate tax collectors. These are called split collectors. Both jurisdictions would need to be set up in this case.

In addition, while most tax collectors will forward taxes to the employee’s lived-in jurisdiction, in a few cases, the tax collector will only collect for residents of that jurisdiction. This is referred to as a resident-only tax collector.

Many cities in Pennsylvania share the same name but are located in different counties.

Some jurisdictions also have worked-in taxes in special instances. See “Special Conditions for Philadelphia” and “Special Conditions for Pittsburgh” on page 42-5.




Withholding Local and School District Taxes

While several Pennsylvania localities do not have the same collector for both the school district and jurisdiction taxes, some agencies will collect both local and school district taxes to forward to the appropriate agencies. In this case, only one jurisdiction will be set up, the jurisdiction where the employee works. Where two separate collectors are used for these taxes, also referred to as split collectors, two jurisdictions will need to be set up.

Withholding for Employees Who Live in a Different Locality

If your employee lives in another jurisdiction and you choose to withhold taxes for that employee, then you must apply for an ID in the lived-in jurisdiction. If you do not deduct the lived-in tax, then the employee is responsible for paying the tax.

To be sure you are withholding for the correct jurisdiction, ask the name of the county where

the employee lives. Cities of the same name occur in Pennsylvania.

Some localities have variable rates for residents who work in their jurisdiction and those who do not. Check with your jurisdiction to determine whether you are required to withhold local tax for employees who are not residents of the jurisdiction where your offices are located.



If it is not required and you choose not to provide this service to non-resident employees, then they are responsible for paying the tax directly to the locality where they live.

There are variable rates in some cities for resident and non-resident taxes. If the worked-in city does not require an employer to withhold tax from a non-resident employee, then the employer can apply for an ID in that non-resident employee’s jurisdiction or make the employee responsible for remitting the taxes.

Special Condition for Resident-only Collector

Some jurisdictions allow tax to be deducted only if employees live in the locality of the employers’ business or live in a locality that is collected by this agency.

Special Conditions for Pittsburgh

Pittsburgh has two resident rates and one non-resident rate. Special conditions that apply in Pittsburgh are described in Table 42-2.

Pittsburgh has established two resident rates and one non-resident rate. The first resident rate applies to almost all of Pittsburgh residents. This rate includes a resident tax as well as a Pittsburgh School District tax.

The second resident rate applies to Pittsburgh residents who live on one particular street. This jurisdiction is called Mt. Oliver Borough and is located within the Baldwin Whitehall School District. People who live in this small jurisdiction are only required to pay a resident tax.

The non-resident rate that has been established is for those employees who live outside of Pennsylvania. This special non-resident rate has been established because it is not uncommon for residents of Ohio to work in Pittsburgh.

Table 42-2. Pittsburgh’s Special Conditions

Employees who ... Are required to ...

Work and live in Pittsburg, plus live within a school district

Pay the applicable school district tax.

Work and live in Pittsburg on Mt. Oliver Borough, a street in Pittburgh

Pay the school district tax for Baldwin Whitehall School District.

Work in Pittsburgh but do not live in Pennsylvania

Pay the non-resident rate for Pittsburgh.

Work in Pittsburgh but live in a Pennsylvania jurisdiction that does not impose local taxes

Pay the non-resident rate for Pittsburgh.

Work in Pittsburgh and live in a Pennsylvania city outside of Pittsburgh that taxes at least 1%

Pay nothing to Pittsburgh.

Work in Pittsburgh and live in a Pennsylvania city other than Pittsburgh that taxes less than 1%

Pay the difference to Pittsburgh.



Taxing Exception

If an employee works in Pittsburgh and lives in a Pennsylvania city outside of Pittsburgh where the total tax rate is at 1%, the employee is not required to pay taxes to Pittsburgh. If the tax rate where the employee lives is less than 1% or there is no tax, the difference must be paid to Pittsburgh.

Special Conditions for Philadelphia

Philadelphia has both worked-in and lived-in taxes. Employees that work in Philadelphia are subject to this tax, and residents of Philadelphia are subject to this tax.

Historically, Philadelphia changes the resident and non-resident rates each year, typically

every July 1st. Check with local government resources for current information

Philadelphia’s special conditions are described in Table 42-3.

To reduce the amount of taxable wages subject to the Philadelphia local tax, enter the

amount in the Multi-Jurisdiction % field on the Local panel. The Resident check box cannot be selected in order for this field to be available.

Employees who work in Philadelphia are subject to this local tax as well as residents of Philadelphia. In addition, if an employee lives outside of Philadelphia, the employer must withhold at the non-resident rate. The only time an employer will not be responsible for this tax type is if the business is not in Philadelphia.

Table 42-3. Philadelphia’s Special Conditions

Employees who ... Are required to ...

Work and live in Philadelphia Pay the Philadelphia resident tax.

Work outside of Philadelphia but live there Pay the Philadelphia resident tax.*

* Employers have the option of applying for an ID in the employee’s lived-in jurisdiction and withholding local tax for the employee or making the employee responsible for the local tax.

Work in Philadelphia but live in another Pennsylvania jurisdiction

Pay the Philadelphia non-resident tax.

Work in a state other than Pennsylvania and live in Philadelphia

Pay the Pennsylvania resident tax.


Chapter 43

Puerto Rico—Setting UpEmployee Taxes

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Chapter 43: Puerto Rico—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 43-1 summarizes some basic facts about Puerto Rico’s rules on payroll taxes. The

Federal Information Processing Standard (FIPS) 10-4 code for Puerto Rico is RQ. Refer to Puerto Rico’s official source materials for rates and limits.

Table 43-1. Summary of Puerto Rico’s Payroll Taxes

Tax Applicable?

State tax Yes

Local tax No

Supplemental No



Employer state disability Insurance Yes

Employee state disability Insurance Yes




Puerto Rico income tax must be withheld from wages paid to resident and non-resident employees for services performed in Puerto Rico. The basis for withholding Puerto Rico tax is to determine the exemption data, including filing status, number of dependents, allowance based on deductions, and personal exemption claimed based on the Withholding Exemption Certificate, form 499 R-4.1.

To determine an employee’s allowance for deductions (which must be considered by the employer in determining the amount of the withholding exemption), an employer may use either of the following methods:

• With the automatic method, the number of allowances is determined by using the amount of the optional standard deduction the employee is entitled to divided by $500.00.

• With the optional method, the employee estimates his or her deductions on Form 499-4B (Form to Determine the Allowances Based on Deductions Under the Optional Method) and the number of allowances is determined by:

The sum of the itemized and additional deductions the employee estimates he or she is entitled to deduct,

OR

The sum of the amount of the optional standard deduction the employee is entitled to and the amount of the additional deductions the employee estimates he or she is entitled to deduct, is divided by $500.00.

Federal income tax does not apply to a Puerto Rico resident on wages earned in Puerto

Rico.





Refer to Table 43-2 to complete the Filing Status field on the State panel. This information is found in Section A, Personal Exemption, of the exemption certificate. If no certificate or status is provided, select the status of 0, claiming no personal exemption.

If you have designated the state tax code on the State panel as Puerto Rico (PR), the Use

Optional Calc Method check box displays on the State Nonstandard Values panel. Select this option to use the optional method. If you do not select it, the automatic method is used by default.


In the Allowances field on the State panel, enter the number of regular withholding allowances the employee is claiming for state withholding tax purposes. This number is found on the Withholding Exemption Certificate, form 499R-4.1, Line B (Credit for Dependents: Number of Dependents).



Enterprise HRMS Value

Line A1 Single person, complete Single, claiming complete personal exemption

S

Line A1 Single person, none Claiming no personal exemption

0

Line A2 Married person, complete Married, claiming all exemptions

M (if filing jointly) or B (if filing separate)

Line A2 Married person, half Married, claiming half personal exemption

J

Line A2 Married person, none Married, claiming no exemptions

0

Line A3 Head of family, complete Head of household, claiming complete personal exemption

H

Line A3 Head of family, none Head of family, claiming no personal exemption

0




The Opt Method Ded Allowances field on the State Nonstandard Values panel is only available when the optional method is selected. In the Opt Method Ded Allowances field, enter the number from the Withholding Exemption Certificate, Form 499R-4.1, Line C (Allowance Based on Deductions) under the optional column.

When using the automatic method, the Allowance Based on Deductions is determined automatically within the tax calculation.

Following is an illustration of the State Nonstandard Vales panel for Puerto Rico.

Figure 43-1. Puerto Rico State Nonstandard Values Panel


Select either the State Disability Plan option or the Vol/Private Disability Plan option in the Disability Status field on the State panel. This option is unaffected by whom contributes to SDI, the employer and/or the employee. If the employee is exempt from SDI, select the Exempt option.




Chapter 44

Rhode Island—Setting UpEmployee Taxes

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Chapter 44: Rhode Island—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 44-1 summarizes some basic facts about Rhode Island’s rules on payroll taxes.

Table 44-1. Summary of Rhode Island’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes








Rhode Island generally taxes resident employees for services performed either within or outside of the state and from wages paid to non-resident employees for services performed in the state. However, when resident employees' wages are also subject to another state's withholding tax, the Rhode Island tax is withheld only to the extent it exceeds the other state's withholding tax on the wages.


Rhode Island does not have a state withholding exemption certificate. Each employee must complete Federal Form W-4 so that you correctly set up state income tax withholding. If an employee does not file a W-4, you must withhold tax as if the employee is single with zero exemptions.







Rhode Island allows the same number of withholding exemptions as are allowed for federal income tax. In the Allowances field on the State panel, enter the total number of allowances the employee is claiming for state withholding purposes. This number is found on Line 5 of Federal Form W-4.







Single S







Select either the State Disability Plan option or the Vol/Private Disability Plan option in the Disability Status field on the State panel. This option is unaffected by who contributes to SDI, the employer and/or the employee. If the employee is exempt from SDI, select the Exempt option.






Rhode Island has no local tax withholding.


Chapter 45

South Carolina—Setting UpEmployee Taxes

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Chapter 45: South Carolina—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 45-1 summarizes some basic facts about South Carolina’s rules on payroll taxes.

Table 45-1. Summary of South Carolina’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes








South Carolina generally taxes resident employees for services performed either within or outside of the state and from wages paid to non-resident employees for services performed in the state. However, a resident employee's wages are not subject to withholding if the wages are earned in another state that requires withholding.


South Carolina does not have a state withholding exemption certificate. Each employee must complete Federal Form W-4 so that you correctly set up state income tax withholding. If an employee does not file a W-4, you must withhold tax as if the employee is single with zero exemptions.












Single S




South Carolina allows the same number of withholding exemptions as are allowed for federal income tax. In the Allowances field on the State panel, enter the total number of allowances the employee is claiming for state withholding purposes. This number is found on Line 5 of Federal Form W-4.







South Carolina has no local tax withholding.


Chapter 46

South Dakota—Setting UpEmployee Taxes

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Chapter 46: South Dakota—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 46-1 summarizes some basic facts about South Dakota’s rules on payroll taxes.

Table 46-1. Summary of South Dakota’s Payroll Taxes

Tax Apply?

State tax No

Local tax No

Supplemental No








South Dakota does not have state tax withholding. Therefore, the Withholding Status field, the Allowances field, and the Additional W/H $ and Additional W/H % fields are grayed on the State panel.

In addition, South Dakota does not have local tax withholding.





Chapter 47

Tennessee—Setting UpEmployee Taxes

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Chapter 47: Tennessee—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 47-1 summarizes some basic facts about Tennessee’s rules on payroll taxes.

Table 47-1. Summary of Tennessee’s Payroll Taxes

Tax Apply?

State tax No

Local tax No

Supplemental No








Tennessee does not have state tax withholding. Therefore, the Withholding Status field, the Allowances field, and the Additional W/H $ and Additional W/H % fields are grayed on the State panel.

In addition, Tennessee does not have local tax withholding.





Chapter 48

Texas—Setting UpEmployee Taxes

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Chapter 48: Texas—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 48-1 summarizes some basic facts about Texas’ rules on payroll taxes.

Table 48-1. Summary of Texas’ Payroll Taxes

Tax Apply?

State tax No

Local tax No

Supplemental No








Texas does not have state tax withholding. Therefore, the Withholding Status field, the Allowances field, and the Additional W/H $ and Additional W/H % fields are grayed on the State panel.

In addition, Texas does not have local tax withholding.





Chapter 49

Utah—Setting UpEmployee Taxes

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Chapter 49: Utah—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 49-1 summarizes some basic facts about Utah’s rules on payroll taxes.

Table 49-1. Summary of Utah’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes








Utah generally taxes resident employees for services performed either within or outside of the state and from wages paid to non-resident employees for services performed in the state. However, when resident employees' wages are also subject to another state's withholding tax, Utah’s state income tax is withheld only to the extent it exceeds the other state's withholding tax on the wages.


Utah does not have a state withholding exemption certificate. A state tax certificate is not required since federal exemptions are used in the state formula. Each employee must complete Federal Form W-4 so that you correctly set up state income tax withholding. If an employee does not file a W-4, you must withhold tax as if the employee is single with zero exemptions.







Utah allows the same number of withholding exemptions as are allowed for federal income tax. In the Allowances field on the State panel, enter the total number of allowances the employee is claiming for state withholding purposes. This number is found on Line 5 of Federal Form W-4.







Single S




Utah has no local tax withholding.


Chapter 50

Vermont—Setting UpEmployee Taxes

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Chapter 50: Vermont—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 50-1 summarizes some basic facts about Vermont’s rules on payroll taxes.

Table 50-1. Summary of Vermont’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes








Vermont has state tax withholding but not local tax withholding. Vermont income tax must be withheld from wages paid to resident employees for services performed either within or outside of the state and from wages paid to non-resident employees for services performed in the state.


When an employee is a resident of Vermont works both in Vermont and in another state, the Vermont withholding applies to all of the earnings, then is reduced by the amount withheld for the other state(s).

When an employee is a non-resident of Vermont and works both in Vermont and in another state during a pay period, the Vermont withholding is based on the percentage of time worked in state during the period.

Employees can use either the federal Form W-4 or the state W4-VT form to indicate withholding selections However, employees who have adjusted federal withholding in anticipation of credits or other special conditions may not have enough withheld if they do not complete a W4-VT. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.









In the Allowances field on the State panel, enter the total number of allowances the employee is claiming for state withholding tax purposes. This number is found on Line 4b, Total number of Vermont withholding allowances of Form W4-VT.


If any amount is found on Line C of the state certificate, enter this figure in the Additional W/H $field. If Subject to SIT withholding is selected in the Withholding Status field, then this extra amount is withheld from wages in addition to the regular withholding amount per pay period.

If Line 7 from the federal Form W-4 is completed, then the employee pays no taxes and you select the Exempt (do not maintain gross) option in the Withholding Status field.

Specifying Health Care Coverage

In the Health Care Coverage field on the State Nonstandard Values panel, select the coverage option that applies to this employee.




Definition of Value


Part 4a Single Single S

Part 4a Married Married/civil union

M

Part 4a Married, but withhold at higher Single rate


S

Part 4a Civil Union Married/civil union

M

Part 4a Civil Union, but withhold at higher Single rate

Civil union, withhold at single rate

S



Following is an illustration of the State Nonstandard Values panel for Vermont.

Figure 50-1. Vermont State Nonstandard Values Panel




Vermont has no local tax withholding.


Chapter 51

Virginia—Setting UpEmployee Taxes

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Chapter 51: Virginia—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 51-1 summarizes some basic facts about Virginia’s payroll taxes.

Table 51-1. Summary of Virginia’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental No








You must withhold Virginia income tax for all employees working in Virginia. For example, an employee working from home in Virginia is subject to Virginia income tax withholding even if you do not have an office in Virginia. If your employees work in another state and live in Virginia, then you are not required to withhold Virginia tax, but you may do so as a courtesy to your employee if you wish.


Virginia law requires the filing of a Virginia exemption certificate, Form VA-4, for each employee. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.

See Chapter 2, “Setting Up State Tax Withholding,” for step-by-step instructions on setting up state taxes.






In the Allowances field on the State panel, enter the total number of allowances the employee is claiming for state withholding tax purposes. This number is found on Line 6 of the worksheet for Form VA-4, which should be provided on Line 1 of Form VA-4.



Definition of Value


Line 1 If no one else can claim you as a dependent, and you wish to claim yourself, write 1.

Single S

Line 2 If you are married and your spouse is not claimed on his/her own certificate, write 1.

Married M




Virginia has no local tax withholding.


Chapter 52

Washington—Setting UpEmployee Taxes

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Chapter 52: Washington—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 52-1 summarizes some basic facts about Washington’s rules on payroll taxes.

Table 52-1. Summary of Washington’s Payroll Taxes

Tax Apply?

State tax No

Local tax No

Supplemental No








Washington does not have state tax withholding. Therefore, the Withholding Status field, the Allowances field, and the Additional W/H $ and Additional W/H % fields are grayed on the State panel.

In addition, Washington does not have local tax withholding.





Chapter 53

West Virginia—Setting UpEmployee Taxes

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Chapter 53: West Virginia—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 53-1 summarizes some basic facts about West Virginia’s rules on payroll taxes.

Table 53-1. Summary of West Virginia’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental No








Employers are required to withhold West Virginia individual income for all wages paid to employees who are West Virginia residents or who are non-residents working in West Virginia.

Check state regulations for information on reciprocity agreements. You may wish to track a

non-resident employee’s paperwork on the State panel (Payroll ~ Employee Information ~ Change Employee Payroll Data ~ Tax Withholding) by keeping the Non-resident Statement Filed check box cleared until you receive the completed form.

Each employee must complete Form WV/IT-104 to indicate state withholding information for the employer. You may accept a Federal Form W-2 filed by the employee in lieu of Form WV/IT-104 unless the employee claims a different number of West Virginia withholding exemptions. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.

Employees eligible to claim the West Virginia low-income earned income exclusion must

provide you with a completed Form WV/IT-104.1, Low-Income Earned Income Exclusion Certificate. If you have this form for an employee, then select the Exempt (do not maintain gross) option on the State panel.







The default filing status for West Virginia is N, which represents both single and married. West Virginia does not distinguish between the two. The valid filing statuses for West Virginia are N for single and married and B for the optional two earner percentage method.

Refer to Table 53-2 to complete the Filing Status field. If no status is provided, leave the default value of N (Regular Percentage Method).


In the Allowances field, enter the total number of allowances the employee is claiming for state withholding tax purposes. This number is found on Line 4 of Form WV/IT-104.





Definition of Value


Line 1 If SINGLE, and you do claim an exemption, enter 1.

Single N

Line 1 If SINGLE, and you do not claim an exemption, enter 0.

Single N

Line 2 (a) If MARRIED, if you claim both exemptions, enter 2.

Married N

Line 2 (b) If MARRIED, if you claim one exemption, enter 1.

Married N

Line 2 (c) If MARRIED, you claim neither exemption, enter 1

Married N

Line 5 If you wish to have your WV income withheld using the new Optional Two Earner % Method = Yes

Optional Two Earner % Method

B




West Virginia has no local tax withholding.


Chapter 54

Wisconsin—Setting UpEmployee Taxes

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Chapter 54: Wisconsin—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 54-1 summarizes some basic facts about Wisconsin’s rules on payroll taxes.

Table 54-1. Summary of Wisconsin’s Payroll Taxes

Tax Apply?

State tax Yes

Local tax No

Supplemental Yes








Wisconsin income tax must be withheld from wages paid to resident employees for services performed either within or outside of the state and from wages paid to non-resident employees for services performed in the state.


Each employee must complete Form WT-4 so that you correctly set up state income tax withholding. Federal Form W-4 can be substituted for Form WT-4 in certain circumstances. If an employee does not file either a W-4 or state withholding certificate, you must withhold tax as if the employee is single with zero exemptions.





Refer to Table 54-2 to complete the Filing Status field. If no status is provided, select S (Single).


In the Allowances field, enter the number of allowances the employee is claiming for state withholding tax purposes. This number is found on Line 1(d) Total exemptions of Wisconsin Form WT-4.




Not applicable Single Single S

Not applicable Married Married M

Not applicable Married, but withhold at higher single rate

Single S

Not applicable If married, but legally separate, check the single box

Single S




Wisconsin has no local tax withholding.


Chapter 55

Wyoming—Setting UpEmployee Taxes

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Chapter 55: Wyoming—Setting Up Employee TaxesEmployee Tax Setup Guide Version 5.04



Table 55-1 summarizes some basic facts about Wyoming’s rules on payroll taxes.

Table 55-1. Summary of Wyoming’s Payroll Taxes

Tax Apply?

State tax No

Local tax No

Supplemental No








Wyoming does not have state tax withholding. Therefore, the Withholding Status field, the Allowances field, and the Additional W/H $ and Additional W/H % fields are grayed on the State panel.

In addition, Wyoming does not have local tax withholding.





Appendix A

ADP Financial and ComplianceServices

PAGE TOPIC

A-2 Introduction

A-3 Accessing ADP Web-based Information

A-4 Referencing Current Tax Information

A-5 Locating a Local Code for Tax Filing Purposes

A-7 Understanding Comment Code Definitions

Appendix A: ADP Financial and Compliance ServicesEmployee Tax Setup Guide Version 5.04

A-2 Introduction

Introduction

If you subscribe to ADP Financial and Compliance Services, then this appendix is for you. ADP Financial and Compliance Services has its own tax filing information on the web. Instructions for finding the local tax filing codes used by ADP Financial and Compliance Services are provided here.

The filing codes discussed in this section are not necessarily the same tax codes used by ADP Enterprise HR. Use these codes only for tax filing. For a cross-reference between ADP Enterprise HR codes and ADP Financial and Compliance Services codes, see the ADP Enterprise HR Translate table (Payroll ~ Company Definitions ~ Tax Service ~ Locality Translate Data). You can enter the state and ADP Enterprise HR code to display the ADP Financial and Compliance Services code.


Accessing ADP Web-based Information A-3

Accessing ADP Web-based Information

Other quick reference information on tax rates and other data necessary for tax reporting is also available by accessing the following web sites:

• ADP Tax and Financial Serviceshttp://complianceconnection.adp.com/

• ADP Resource Centerhttp://www.adp.com/corporate/es/

If you have questions about the content of these web sites, contact your ADP Enterprise

HR support contact for clarification.


http://www.adp.com/taxfin/

http://complianceconnection.adp.com/

http://www.adp.com/corporate/es/


A-4 Referencing Current Tax Information

Referencing Current Tax Information

The IRS and other sources provide many helpful materials on the web and in print:

• IRS forms and publicationshttp://www.irs.gov/formspubs/

• For IRS information on backup withholding, go to http://www.irs.gov/formspubs/ and look up Publication 505, Tax Withholding and Estimated Tax.

• For information on using Income Tax Withholding and Advance Earned Income Credit (EIC) Payment tables, go to http://www.irs.gov/formspubs/ and look up Publication 15, (Circular E), Employer’s Tax Guide.

ADP does not endorse any of the web sites mentioned herein. References to Internet

sites are provided for your convenience only, and their mention does not denote any approval or recommendation on the part of ADP.


http://www.irs.gov/formspubs/



Locating a Local Code for Tax Filing Purposes A-5

Locating a Local Code for Tax Filing Purposes

To find a local tax filing code required by ADP Financial and Compliance Services, do the following:

1. Open your Internet browser, and go to http://complianceconnection.adp.com/Toolbox/LocalTaxes.aspx

Another way to display the tax code locator is to go to

http://complianceconnection.adp.com/, select Toolbox, and then select Local Taxes.

Figure A-1. Toolbox Menu

2. From the State field, choose the code of the state you are checking.

3. In the City field, type the name of the city or county you are checking.

This field is not case-sensitive.

4. In the Local Code field, optionally enter the FACS tax service code.

5. Click Go. If multiple matches are found, then you must select the match that applies to you.

If the locality name is not found, then contact the local jurisdiction to ensure that no tax

withholding is required.

If you entered the FACS tax service code in the Local Code field, only one match (for the exact local code) is returned.


http://complianceconnection.adp.com/Toolbox/LocalTaxes.aspx


A-6 Locating a Local Code for Tax Filing Purposes

The City Tax Code Locator information for that city or county displays.

If you have questions about a local jurisdiction, please call your ADP service contact.

Figure A-2. City Tax Code Locator


Understanding Comment Code Definitions A-7

Understanding Comment Code Definitions

Beneath a local jurisdiction’s current rates, codes, and additional information on the City Tax Locator window, you sometimes see comment code definitions. You can click on a link to see the definitions. Many localities allow the employee credit for the taxes paid to where they worked, thereby eliminating the need for employees to also pay tax to their place of residence. Localities that vary from this rule contain one of the following comments:

• See #1 (No Credit Allowed - OHIO ONLY): Localities do not allow credit for any worked-in taxes an employee paid. If an employee wants the lived-in tax deducted, in addition to the worked-in tax, you can withhold both.

• See #2 (Partial Credit Allowed - OHIO ONLY): Some localities allow credit for a portion of the worked-in taxes paid. You can withhold both lived-in and worked-in tax if the employee requests it.

• Blank - Full Resident Credit is Applied (OHIO ONLY:) If NO COMMENT is listed, the locality allows full resident credit to the lived-in jurisdiction. Credit is never applied to the worked-in tax.

If Blank displays for states other than Ohio, then apply this definition.

• See #3: Localities require all employees to pay worked-in tax. If a lived-in tax also applies to the employee, you have the option of withholding it.

• See #4 “Only Code Residents of ... PENNSYLVANIA ONLY: When the employee lives and works in the same local jurisdiction or lives in a jurisdiction that ADP Financial and Compliance Services supports, you can withhold the lived-in tax.


A-8 Understanding Comment Code Definitions


Appendix B

Abbreviations

Tax abbreviations and their definitions, provided by the Internal Revenue Service (IRS), ADP, and other resources, are defined below.

Table B-1. Common Tax Abbreviations and Their Meanings

Abbreviations Meaning

A Individual

Acq. Acquiescence

B Individual

BE Beneficiary

BK Bank

B.T.A. Board of Tax Appeals

C. Individual

C.B. Cumulative Bulletin

CFR Code of Federal Regulations

CI City

COOP Cooperative

Ct.D. Court Decision

CY County

D Decedent

DC Dummy Corporation

DE Donee

Del. Order Delegation Order

DISC Domestic International Sales Corporation

DR Donor

E Estate

EE Employee

EIC Earned Income Credit

Appendix B: AbbreviationsEmployee Tax Setup Guide Version 5.04

B-2

EIN Employer Identification Number

E.O. Executive Order

ER Employer

ERISA Employee Retirement Income Security Act

ETT Employment Training Tax

EX Executor

F Fiduciary

FC Foreign Country

FICA Federal Insurance Contribution Act (Social Security and Medicare)

FISC Foreign International Sales Company

FIT Federal Income Tax

FPH Foreign Personal Holding Company

FR. Federal Register

FUTA Federal Unemployment Tax Act

FX Foreign Corporation

G.C.M. Chief Counsel's Memorandum

GE Grantee

GP General Partner

GR Grantor

IC Insurance Company

IRC Internal Revenue Code

I.R.B. Internal Revenue Bulletin

LE Lessee

LP Limited Partner

LR Lessor

M Minor

Nonacq. Non acquiescence

O Organization

OPT Occupational Privilege Tax

Table B-1. Common Tax Abbreviations and Their Meanings (cont.)



B-3

P Parent Corporation

PHC Personal Holding Company

PIT Personal Income Tax

PO Possession of the U.S.

PR Partner

PRS Partnership

PTE Prohibited Transaction Exemption

Pub. L. Public Law

REIT Real Estate Investment Trust

Rev. Proc. Revenue Procedure

Rev. Rul. Revenue Ruling

S Subsidiary

SEP Simplified Employee Pension

SIT State Income Tax

S.P.R. Statements of Procedural Rules

Stat. Statutes at Large

SUI State Unemployment Insurance

SUT State Unemployment Tax

SUTA State Unemployment Tax Act

T Target Corporation

TC. Tax Court

TD. Treasury Decision

TFE Transferee

TFR Transferrer

T.I.R. Technical Information Release

TP Taxpayer

TR Trust

TT Trustee

UI Unemployment Insurance

U.S.C. United States Code




B-4

USDA U.S. Department of Agriculture

VPDI Voluntary/Private Disability Insurance

X Corporation

Y Corporation

Z Corporation




Appendix C

Tax Resources

Many helpful materials are available on the web and in print from ADP, the IRS, and other resources. Some of the tax resources on the web are listed in this section.

ADP does not endorse any of the web sites mentioned herein. References to Internet sites

are provided for your convenience only, and their mention does not denote any approval or recommendation on the part of ADP.

To find state information on the Internet, search for your state name and “Department of Revenue” using any Internet search engine. A list of localities and the current tax information is typically available on the state web site. You can also search for the locality name to see if its government has information available via the web.

ADP web-based facilities offer quick reference information on tax rates, filing codes, and other data necessary to the setup of employee tax withholding. See the following sites:

• ADP Tax and Financial Serviceshttp://complianceconnection.adp.com/

• ADP Resource Centerhttp://www.adp.com/corporate/es/

Other web-based facilities offer quick reference information on tax rates, filing codes, and other data necessary to the setup of employee tax withholding. See the following sites:

Table C-1. Web Sites with Tax Information

Name of web site Address of web site

ADP Tax and Financial Services http://complianceconnection.adp.com/

ADP Resource Center http://www.adp.com/corporate/es/

IRS State Law Guides http://www.irs.gov/taxpros/article/0,,id=99249,00.html

Federation of Tax Administrators state tax information

http://www.taxadmin.org/fta/link/forms.html

Tax and Accounting Web Sites Directory http://www.taxsites.com/state.html

American Institute of Certified Public Accountants (AICPA)Listing of State Departments of Revenue

http://www.aicpa.org/yellow/yptsgus.htm

State and Local Government on the Net http://www.statelocalgov.net

Appendix C: Tax ResourcesEmployee Tax Setup Guide Version 5.04

http://www.irs.gov/taxpros/article/0,,id=99249,00.html



http://www.taxsites.com/state.html



http://www.statelocalgov.net













http://www.statelocalgov.net

C-2

U.S. Department of Agriculture (USDA) National Finance Center

http://www.nfc.usda.gov/

U.S. Department of State http://www.state.gov/employment/

Table C-1. Web Sites with Tax Information (cont.)

Name of web site Address of web site

Appendix C: Tax ResourcesEmployee Tax Setup Guide Version 5.04

http://dab.nfc.usda.gov/pubs/docs/taxformulas/na-taxseldocs/na-stateseldoc.html

http://www.state.gov/employment/

http://www.nfc.usda.gov/

http://www.state.gov/employment/

Appendix D

Filing Status Cross-Reference

This appendix provides an alphabetized list of the states and the available filing statuses for each state in ADP Enterprise HR.

The filing status for each employee is entered in the Filing Status field on the State panel (Payroll ~ Employee Information ~ Change Employee Payroll Data ~ Tax Withholding).

After a tax lock-in date has been entered on the Lock-In Letter panel, the filing status displays

next to the Filing Status field. The filing statuses on the Federal panel and Lock-In Letter panel must be identical.

Table D-1. Filing Status Options by State

State Filing Status Description

AK N Not applicable

AL 0 Single or married but claiming no exemptions

AL M Married

AL S Single

AL H Head of Family

AL X Married Filing Separately

AR N Regular Income

AS M Married

AS S Single

AZ N Not applicable

CA H Head of Household

CA M Married (one income)

CA S Single or Married (two or more incomes)

CO M Married

CO S Single

CT A Withholding Code A

CT B Withholding Code B

CT C Withholding Code C

Appendix D: Filing Status Cross-ReferenceEmployee Tax Setup Guide Version 5.04

D-2

CT D Withholding Code D

CT F Withholding Code F

CT N Form CT-W4 not filed by February 15

DC B Married filing separately

DC H Head of Household

DC M Married filing jointly

DC S Single

DE B Married, separate return

DE M Married, joint return

DE S Single

FL N Not applicable

GA B Married filing separate or joint, both spouses working

GA H Head of Household

GA M Married filing joint, one spouse working

GA S Single

GU M Married

GU S Single

HI M Married

HI S Single or Unmarried Head of Household

IA M Married

IA S Single

ID M Married

ID S Single

IL N Not applicable

IN N Not applicable

KS M Married

KS S Single

KY M Married

KY S Single

LA 0 No exemptions/credits claimed

Table D-1. Filing Status Options by State (cont.)



D-3

LA M Married

LA S Single

MA N Not applicable

MD M Married

MD S Single

ME B Married with two incomes

ME M Married with one income

ME S Single

MI N Not applicable

MN M Married

MN S Single

MO H Head of Household

MO B Married - spouse works

MO M Married - spouse does not work

MO S Single

MS B Married, spouse is employed

MS H Head of Family

MS M Married, spouse is not employed

MS S Single

MT M Married

MT S Single

NC H Head of Household

NC M Married or Qualifying Widow(er)

NC S Single

ND M Married

ND S Single

NE M Married

NE S Single

NH N Not applicable

NJ A Rate A - Single, Married/Separate




D-4

NJ B Rate B - Married/Joint, HoH, Widow(er)

NJ C Rate C

NJ D Rate D

NJ E Rate E

NM M Married

NM S Single

NV N Not applicable

NY M Married

NY S Single/Head of Household

OH N Not applicable

OK B Married (dual incomes)

OK M Married

OK S Single

OR M Married

OR S Single

PA N Not applicable

PR 0 Claiming no personal exemption

PR B Married, filing separately

PR H Head of Household

PR J Married, filing jointly, claim 1/2 exemption

PR M Married, filing jointly, claim all exemption

PR S Single

RI M Married

RI S Single

SC M Married

SC S Single

SD N Not applicable

TN N Not applicable

TX N Not applicable

UT M Married




D-5

UT S Single

VA M Married

VA S Single

VI M Married

VI S Single

VT M Married/Civil Union

VT S Single

WA N Not applicable

WI M Married

WI S Single

WV B Optional two earner percentage method

WV N Regular percentage method

WY N Not applicable




D-6


Appendix E

Employee Tax Setup Examples

PAGE TOPIC

E-2 Introduction

E-3 California Employee Tax Setup Example

E-4 Maryland Employee Tax Setup Example

E-5 Pennsylvania Employee Tax Setup Example



Appendix E: Employee Tax Setup ExamplesEmployee Tax Setup Guide Version 5.04

E-2 Introduction

Introduction

This section provides figures and explanatory text for the setup of sample employees in three states and three localities. The examples are meant to give you a basic understanding of the type of information required to properly set up state and local withholding taxes in the Enterprise Payroll module.




California Employee Tax Setup Example E-3

California Employee Tax Setup Example

This section shows the state tax withholding setup for the sample employee, Tim, who lives and works in California. He is married with two or more incomes. He is claiming two regular withholding allowances (from Line 1, Worksheet A on Form DE 4) and three allowances from the estimated deductions (from Line 1, Worksheet B on form DE4). See Figure E-1 and Figure E-2 for the state tax withholding setup for Trey.

Figure E-1. State Panel for a Sample Employee

Figure E-2. State Nonstandard Values Panel for a Sample Employee

S indicates that Tim is married with two or more incomes.

The two allowances from Line 1, Worksheet A are specified in this field.

Tim is enrolled in a voluntary/private disability plan.

Tim is a resident of California.

The three allowances from Line 1, Worksheet B are specified here.


E-4 Maryland Employee Tax Setup Example

Maryland Employee Tax Setup Example

This section shows the state tax withholding setup for the sample employee, Fred, who lives and works in Maryland and is claiming two allowances (from Line 1 on form MW 507). See Figure E-3 and Figure E-4 for the state tax withholding setup for Susana.


Exemptions for the state of Maryland are specified as Allowances on the State panel.

Figure E-4. State Nonstandard Values Panel for a Sample Employee

The filing status has no impact on the tax calculation. Therefore, you can leave the default value of S (Single) in the Filing Status field.

Fred is claiming two allowances (from Line 1 on form MW 507).

Maryland does not have State Disability Insurance (SDI).

Fred is a resident of Maryland.

Fred’s county of residence is Baltimore County as indicated in the Taxed Locality field.

The Maryland local tax is included with the state tax withholding.


Pennsylvania Employee Tax Setup Example E-5

Pennsylvania Employee Tax Setup Example

This section shows the state and local tax withholding setup for the sample employee, Jennifer, who lives in Whitpain township, Pennsylvania and works in Allentown, Pennsylvania. See Figure E-5, Figure E-6, Figure E-7, and Figure E-8 for the state tax withholding setup for Johnny.

Setting Up State Taxes

State tax withholding would be set up for Jennifer as shown in Figure E-5.


Jennifer is a resident of Pennsylvania.

The Filing Status field on the State panel is not used for Pennsylvania.



Setting Up Local Taxes

Local tax withholding would be set up for Jennifer as shown in Figure E-6.

.

Figure E-6. Local Panel for a Sample Employee (first local tax setup)


.

Figure E-7. Local Panel for a Sample Employee (second local tax setup)

Jennifer is a resident of Whitpain Township (Whitpain Twp).

Although Jennifer works in Allentown, she is not a resident of Allentown. Remove the check mark from the Resident check box. The non-resident rate will be used.

Because Jennifer works in Allentown, she is also obligated to pay the Allentown Local Services Tax. You must set up this local tax code (see Figure E-8), and then select it here as the Other Work Locality.

Because Jennifer works in Allentown, she must pay the Allentown earned income tax.


Pennsylvania Employee Tax Setup Example E-7


.

Figure E-8. Local Panel for a Sample Employee (third local tax setup)

Because Jennifer works in Allentown, she must pay the Local Services Tax.

Because Jennifer works in Allentown, she is obligated to pay the Allentown earned income tax. Select this local tax code as the Other Work Locality.


Glossary

15-T

IRS publication that provides the wage withholding panels.

Adjusted gross income

Total income reduced by certain amounts, such as for an IRA or student loan interest.

Advance Earned Income Credit (AEIC)

Payments of earned income credit during the year to employees who expect to be eligible for the credit. Employers make the payments out of federal income, Social Security and Medicare taxes withheld from the employees’ wages.

After-tax deduction

A deduction from an employee’s pay that does not reduce the employee’s taxable wages. It is taken out only after all applicable taxes and other deductions have been withheld (e.g., union dues, garnishments, charitable contributions).

Alien

An individual living in or visiting the United States who is not a citizen of the U.S. More information can be found in the Alien Immigration, Payments, and Taxation Guide.

Allowance

The number of exemptions the employee is claiming for tax withholding purposes. Tax tables generally depend on filing status and number of allowances to determine the amount of tax withheld.

Dependency exemption

Amount that taxpayers can claim for their eligible dependents. Each exemption reduces the income subject to tax. The exemption amount is a set amount that changes from year to year.

Dependent

A person, other than the taxpayer or spouse, who entitles the taxpayer to claim a dependency exemption.

Earned income

Includes wages, salaries, tips, and self-employment earnings.

Earned Income Credit (EIC)

EIC is a refundable tax credit for people who work and have earned income from employment or self-employment below established amounts. The credit is available to anyone who qualifies for the credit and files a federal income tax return (even if no tax is due). EIC reduces the amount of tax owed and may also provide a refund, which the employer provides by adding advance payments to the employee’s paychecks. Generally, employers make the advance EIC payment from the deposit for withheld income tax and employee Social Security and Medicare taxes.

Exempt (from withholding)

Free from withholding of federal income tax. A person must meet certain income, tax liability, and dependency criteria. This does not exempt a person from other kinds of tax withholding, such as the Social Security tax.

Employee Tax Setup Guide Version 5.04

g-2 Glossary

Exemption

Amount that taxpayers can claim for themselves, their spouses, and eligible dependents. There are two types of exemptions-personal and dependency. Each exemption reduces the income subject to tax. The exemption amount is a set amount that changes from year to year.

Federal Insurance Contribution Act (FICA)

Social Security and Medicare withholding. Also known as Social Security. Formerly known as OASDI.

Federal Unemployment Tax Act (FUTA)

Unemployment liability.

Federal Income Tax (FIT)

Amount held from an employee’s paycheck to pay federal income tax.

Filing status

Determines the rate at which income is taxed. The five filing statuses are: single, married filing a joint return, married filing a separate return, head of household, and qualifying widow(er) with dependent child.

Gross income

Money, goods, services, and property a person receives that must be reported on a tax return. Includes unemployment compensation and certain scholarships. It does not include welfare benefits and nontaxable Social Security benefits.

Locality

Where the company collects withholding taxes, which is where you have employees living or working. Enterprise Payroll calculates company local taxes only for localities set up on Company Local Tax table.

Reciprocity

An arrangement between taxing jurisdictions where a lived-in jurisdiction allows a credit for employee taxes paid to the worked-in jurisdiction.

Unemployment Insurance (UI)

Unemployment Insurance (UI) reporting codes for work-site reporting.

W-4

Federal Employee’s Withholding Allowance Certificate. Completed by the employee and used by the employer to determine the amount of income tax to withhold.

Widow(er)

The Qualifying Widow(er) filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you do not itemize deductions). The year of death is the last year for which you can file jointly with your described spouse. You may be eligible to use qualifying widow(er) with dependent child as your filing status for two years following the year of death of your spouse.

Withholding (“pay-as-you-earn” taxation)

Money that employers withhold from employees’ paychecks. This money is deposited for the government. It will be credited against the employees’ tax liability when they file their returns. Employers withhold money for federal income taxes, Social Security taxes, and state and local income taxes in some states and localities.


Index

Symbols(PER052) Electronic W-4 Submission report 1-17

AAdditional Allowances field 17-3Additional W/H % field 1-10, 2-9, 3-9Additional W/H $ field 1-10, 2-9, 3-9Adjusted gross income g-1ADP Financial and Compliance Services

see Financial and Compliance ServicesAdvance Earned Income Credit (AEIC) g-1AEIC (Advance Earned Income Credit) g-1After-tax deduction g-1Alabama

local taxesBirmingham special conditions 4-5overview 4-5worked-in taxes 4-5

payroll taxes summary 4-2state taxes

additional amounts 4-4filing status 4-3overview 4-3withholding allowances 4-4

Alaskapayroll taxes summary 5-2state and local taxes overview 5-3

Alien g-1Allowance g-1Allowances field 1-10, 2-9, 3-8Annual Exemption field 28-4Arizona

local taxesoverview 6-5

payroll taxes summary 6-2State Nonstandard Values panel

illustration of 6-4state taxes

additional amounts 6-4filing status 6-3nonstandard values 6-3

overview 6-3withholding allowances 6-3

Arkansaslocal taxes

overview 7-4payroll taxes summary 7-2state taxes


Audiencefor this guide xvii

CCalifornia




additional amounts 8-5disability statuses 8-5filing status 8-4nonstandard values 8-4overview 8-3personal allowances 8-4supplemental rates 8-3withholding allowances 8-4

Change Employee Payroll Data processTax Withholding task 1-7, 1-13

Coloradolocal taxes

overview 9-5paying 9-5withholding allowances 9-5


additional amounts 9-4filing status 9-3overview 9-3


i-2 Index

withholding 9-3Comments

providing for this guide xxiiiConnecticut




Credit All SDI check box 2-11Credit All SUI check box 2-11

DDate Received field 1-15Default Tax Configuration check box 1-11, 2-10,

3-10Delaware

local taxesoverview 11-5Wilmington special conditions 11-5



Dependency exemptions g-1Dependent g-1Dependent Allowances field 14-4Dependent Exemptions field 18-3Disability Status field 2-10District of Columbia



additional amounts 12-4filing status 12-3overview 12-3withholding 12-3

Documentationaudience for this guide xviiconventions xxiproviding comments xxiiirelated guides xx

EEarned income g-1Earned Income Credit (EIC) 1-5, g-1EIC (Earned Income Credit) 1-5, g-1EIC Status field 1-10Electronic W-4 Elections area 1-12Electronic W-4 Submission

search for employee area 1-18Electronic W-4 Submission (PER052) task 1-17Electronic W-4 Submission Panel

accessing 1-17illustration of 1-18, 1-19

Electronic W-4 Submission report (PER052) 1-17Employee Signature/Perjury Declaration check

box 1-12End Date field 1-15ESS W-4 Request Date field 1-12Exempt (from withholding) g-1Exemptions g-2

FFamily Owned Business check box 26-4Federal Income Tax (FIT) g-2Federal Insurance Contribution Act (FICA) g-2Federal panel

accessing 1-7, 2-7, 3-7illustration of 1-8, 1-14, 1-16, 2-7, 3-7

Federal tax setupfiling statuses 1-6multiple earnings calculations 1-4multiple jurisdictions 1-2other earnings calculations 1-3overview 1-2, 1-7paying new employees 1-2regular earnings calculations 1-3supplemental calculations 1-4transferring an employeeunemployment tax 1-2W-4 Form 2-5withholding allowances 1-6

Federal Unemployment Tax Act (FUTA) g-2FICA

entering 1-2, 1-7FICA (Federal Insurance Contribution Act) g-2FICA Status field 1-10Filing Status field 1-9, 1-15, 2-9Filing statuses

definition g-2in ADP Enterprise HR D-1

Financial and Compliance Services


Index i-3

overviewweb sites A-3

FIT (Federal Income Tax) g-2Florida

payroll taxes summary 13-2state and local taxes overview 13-3

FUTA (Federal Unemployment Tax Act) g-2

GGeorgia




additional amounts 14-4filing status 14-3nonstandard values 14-4overview 14-3withholding allowances 14-4

Glossary g-1Gross income g-2Guides

see Documentation

HHawaii



additional amounts 15-4disability statuses 15-4filing status 15-3overview 15-3withholding allowances 15-4

Head of Household check box 25-4Health Care Coverage field 50-4

IIdaho



additional amounts 16-4filing status 16-3

overview 16-3withholding allowances 16-3

Illinoislocal taxes

overview 17-5payroll taxes summary 17-2State Nonstandard Values panel


additional amounts 17-4filing status 17-3nonstandard values 17-4overview 17-3personal allowances 17-3withholding allowances 17-3

Income Tax area 1-9Indiana

local taxesoverview 18-5special conditions 18-6



additional amounts 18-4dependent exemptions 18-3filing status 18-3nonstandard values 18-4overview 18-3withholding allowances 18-3

Internet tax resources C-1Iowa




IRS Instructions area 1-15IRS Tax lock-in Letter

adding tax lock-in data in EPayroll 1-13Itemized Allowances field 8-4

JJurisdictions, multiple

for localities 3-3for states 2-4


i-4 Index

KKansas




Kentuckylocal taxes

Boone County special conditions 21-6Erlanger special conditions 21-6Florence special conditions 21-6Jefferson County special conditions 21-5Louisville County special conditions 21-5overview 21-5Verona special conditions 21-6Walton special conditions 21-6



LLocal panel

accessing 3-6, 3-7illustration of 3-7

Local tax setupcalculations 3-3determining whether taxes apply 3-4employee levelmultiple jurisdictions 3-3overview 3-2

Locality g-2Locality field 3-8Lock-In Letter

reviewing allowances and filing status 1-16setting minimum level of tax withholding 1-13

Lock-In Letter panelaccessing 1-14illustration of 1-14, 1-15

Louisianalocal taxes


additional amounts 22-4filing status 22-3income tax calculations 22-3overview 22-3withholding allowances 22-4

MMaine




Marital statussee Filing status

Married but Withhold at Single Rate check box 1-10Maryland




additional amounts 24-4filing status 24-3nonstandard values 24-4overview 24-3withholding 24-3

Massachusettslocal taxes




Michiganlocal taxes




Index i-5

additional amounts 26-3family owned businesses 26-4filing status 26-3nonstandard values 26-4overview 26-3withholding allowances 26-3

Minnesotalocal taxes


additional amounts 27-4overview 27-3withholding allowances 27-3

Mississippilocal taxes



additional amounts 28-4filing status 28-3nonstandard values 28-4overview 28-3withholding 28-4

Missourilocal taxes



Montanalocal taxes


additional amounts 30-4, 31-4withholding 30-3withholding allowances 31-4

state taxes overview 30-3Multi-Jurisdiction % field 2-11, 3-9Multi-jurisdiction Tax Processing check box 1-11,

2-11

NName 1-18

Nebraskalocal taxes overview 31-5payroll taxes summary 31-2state taxes

filing status 31-3overview 31-3

Nevadapayroll taxes summary 32-2state and local taxes overview 32-3

New Hampshirepayroll taxes summary 33-2state and local taxes overview 33-3

New Jerseylocal taxes

overview 34-6special conditions 34-6



New Mexicolocal taxes



New Yorklocal taxes



Non-resident Statement Filed check box 2-11North Carolina





i-6 Index

North Dakotalocal taxes



OOhio




Oklahomalocal taxes



Online manualsPayroll

PDF files xviiiOpt Method Ded Allowances field 43-5Oregon

local taxesoverview 41-5worked-in tax 41-6workers’ compensation 41-5



Other Federal Taxes area 1-10Other Work Locality field 3-9

PPayroll Utilities process

Electronic W-4 Submission (PER052) task 1-17Pennsylvania

local taxesexample E-6lived-in jurisdictions 42-4overview 42-4Philadelphia special conditions 42-6Pittsburgh special conditions 42-5resident-only collector 42-5school district taxes 42-4


additional amounts 42-3example E-5filing status 42-3overview 42-3withholding allowances 42-3

Puerto Ricopayroll taxes summary 43-2State Nonstandard Values panel


filing status 43-4overview 43-3withholding allowances 43-4

RReciprocity g-2Resident check box 2-11, 3-10Retirement Plan check box 1-12Rhode Island




SSearch for employee

Electronic W-4 Submission 1-18Select One Employee check box 1-18Social Security Number field 1-18South Carolina



Index i-7



South Dakotapayroll taxes summary 46-2state and local taxes overview 46-3

Start Date field 1-15State Nonstandard Values panel

accessing 2-12illustration of 2-12

State panelaccessing 2-8illustration of 2-8

State tax setupemployee level 2-6multiple jurisdictions 2-4overview 2-2withholding requirements 2-2

Statutory Employee check box 1-12Subject to FUT check box 1-11Subject to SUT check box 2-10

TTax abbreviations B-1Tax Lock-In Letter

reviewing allowances and filing status 1-16setting minimum level of withholding 1-13

Tax Lock-in Letteradding IRS tax lock-in data in EPayroll 1-13

Tax Rates area 3-10Tax resources on the internet C-1Tax Withholding task 1-8, 1-13, 2-7, 3-6Taxed Locality field 24-3Taxes

federal setupsee Federal tax setup

local setupsee Local tax setup

Tennesseepayroll taxes summary 47-2state and local taxes overview 47-3

Texaspayroll taxes summary 48-2state and local taxes overview 48-3

Third Party Sick Pay check box 1-12

UUI (Unemployment Insurance) g-2Unemployment Insurance (UI) g-2Utah




VVermont





Virginialocal taxes



WW-2 Information area 1-12W-4 g-2W-4 Name Differs from Social Security Card check

box 1-11W-4s

Printing hard copy of electronically submitted federal W-4 1-17

Tracking elections made in ADP’s Self Service solution 1-12

Washingtonpayroll taxes summary 52-2state and local taxes overview 52-3


i-8 Index

Web site tax resources C-1West Virginia




Widow(er) g-2Wisconsin




Withhold Tax on Gross Up check box 1-11, 2-11, 3-10

Withholding ("pay-as-you-earn" taxation) g-2Withholding Rate (AZ) field 6-3Withholding Status field 1-9, 2-8, 3-8Wyoming

payroll taxes summary 55-2state and local taxes overview 55-3


employee tax setup guide - adp · enterprise payroll documentation library ... 8-3 supplemental...

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