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Set up employees and payroll items

Terms used for multi-state employees

State unemployment insurance:
 By default, the application calculates state unemployment insurance (SUI) based on the location where the employee works.
note
If you clear the
Do not combine state unemployment
 checkbox in the Payroll Taxes tab of client setup, then the application calculates employee and employer-paid state unemployment and insurance for the state associated with the employee's primary location based on wages earned in any state.
State withholding:
 By default, the application uses the work location to determine the jurisdiction to use to calculate state withholding amounts. You can set up multi-state calculations depending on a number of factors.
  • Reciprocal agreement:
     An agreement that a state won't require income tax withholding from the other state's residents who perform work in the taxing state. For example, a reciprocal agreement means a resident of state A can work in state B without being subject to state B's withholding tax, ensuring that employees are not subject to tax withholding by both states.
  • Nexus:
     Your client has a business connection or a presence in that jurisdiction and is subject to state or local income and sales taxes.

Multi-state withholding options

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

This article applies to:

  • PRODUCT: Accounting CS Client Access
  • Subject: Setup