Drake Accounting - State Tax and Withholding

Overview

To set up an employee's state taxes and withholding, go to Employees > Employee Setup > State Tax tab and fill out the following information:

• While working in ___, employee will use State Tax Table of ___ and SUTA of ___

  • While working in information is pulled from the location's address (Client > Add or Edit > Contact Information tab). If the client has multiple locations and the employee works at more than one location (Works at multiple locations is selected at Employees > Employee Setup > Personal Information tab), select the applicable place of work in the Locations section, located in the upper-right corner of the Employee Setup screen. Locations must be established at Client > Locations in order for them to be added at Employees > Employee Setup.

  • The employee's State Tax Table is used for tax withholding purposes.

  • The State Unemployment Tax Act (SUTA) state flows to the State Code field when processing Live and ATF payroll.

• Employee is...

  • Exempt from SUTA - Employee is exempt from paying state unemployment tax.

  • Exempt from State WH - Employee is exempt from paying state withholding.

• State Withholding Options

  • Wage Calculation Method - Use annualized payroll to calculate the state withholding as described in the publications for each state.

  • Fixed Percent Method - Use a fixed percentage to determine the state tax, regardless of income. When Fixed Percentage Method is selected, the Filing Status/Exemptions section changes to prompt for the actual withholding percent used. Enter the fixed state tax percentage in the corresponding WH Percent field.

  • Fixed Amount Method - Set each check's state withholding amount to a set amount. When Fixed Amount Method is selected, the Filing Status/Exemptions section changes to prompt for the set amount. Enter the fixed amount in the corresponding WH Amount field.

  • Rounded - Round state withholding amounts of 50 - 99 cents up to the next dollar. Amounts less than 50 cents will be rounded down to the nearest whole dollar.

• Filing Status/Exemptions - The fields Filing Status, Additional WH, and Exemptions are available when Wage Calculation Method is selected under State Withholding Options. Enter information from the employee's state W-4 here.

• General Selections - This section appears if additional state information is required based on the employee's State Tax Table selection.

  • Blind - (IL, MA, or MS) Employee, Spouse, or Both are blind.

  • Over 65 - (IL or MS) Employee, Spouse, or Both are over the age of 65.

  • Wage Chart - (NJ) Wage chart for state withholding purposes.

  • % Gross Taxable Wages - (AZ) If the employee is taxed based on a percentage of federal tax, choose the applicable tax rate.

  • Number of Dependents - (AL or MS) Number of dependents the employee claims for state withholding purposes.

  • Est. Deductions - (CA, LA, MS, NJ, or PR) If the employee qualifies for Estimated Deductions Reduction withholding, enter the amount of the deductions here.

  • Worksite ID - (CO or IN) Employee's worksite ID.

  • Dependents - (IN) Number of dependents the employee claims for state withholding purposes.

  • Reporting Unit - (IA) Reporting unit number where the employee works.

Once complete, click Save. To check that state information was set up correctly, go to Employees > Employee Setup Review.