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    Create or set up local taxes

    Article ID: 1000226

    Overview

    This article explains how to set up an employee's local taxes.

    You, as the employer, are responsible to determine which taxes an employee must pay according to local and state requirements.  Intuit Assisted, Basic, Standard and Enhanced Payroll cannot recommend to any business how they should set up their employee's local taxes and reportable wages.

    Assisted Payroll:  Assisted Payroll service does not debit, pay or file local tax payments or returns, except for the following as these are required to be paid and filed with the State Withholding or Unemployment agency:

    • Maryland
      • County Percent Rate
    • New Jersey:
      • Family Leave Insurance
      • WF/SWF Company/Employee
    • New Mexico
      • Worker's Comp Fee Company/Employee
    • New York:
      • New York City Resident
      • Yonkers City Resident
      • Yonkers City Nonresident
      • MCTMT (Transit Tax)
    • Oregon:
      • Transit District (LTD)
      • Transit District (Tri-Met)
    Intuit also support states with surcharges or assessments related to State Unemployment.  To learn more about the Unemployment in your state check out our State Unemployment: Details for Each State or our Payroll Tax Compliance site.  For information about paying local taxes or other liabilities in QuickBooks see Set up and pay scheduled or custom (unscheduled) liabilities for more information.

    Local Tax Links

    If you are not sure what local jurisdictions or local tax agencies you are responsible for withholding and paying, use these resources listed below to help you determine the proper employee setup for the most common local taxes.

    To determine local jurisdictions check out the American FactFinder website.  Click below to learn more.

    http://factfinder2.census.gov/

    Maintained by the U.S. Census Bureau, the American FactFinder website will allow you to find local jurisdictions by address.

    To use this site:
    1. Go to the American FactFinder website at http://factfinder2.census.gov.
    2. Click on Advanced Search and then click the SHOW ME ALL button.
    3. Click on Geographies link on the left.
    4. A pop-up window will open.  Click the Address tab.
    5. Enter the address (either work or home) in question and click GO.
    The results will display the appropriate jurisdictional information that may be necessary in determing local taxes.

    Colorado

    Local taxes in Colorado vary by city and are referred to as Occupational Privilege Taxes (OPT), or Head Taxes.  Contact your city to see what taxes apply to you.

    Kentucky

    Local taxes in Kentucky vary by city and county.  Contact your city and county to see what taxes apply to you.

    Missouri

    Local taxes in Missouri vary by city.  Contact your city to see what taxes apply to you.

    Ohio

    Ohio Local Tax Finder:  https://thefinder.tax.ohio.gov/StreamlineSalesTaxWeb/default_municipal.aspx
    • The Ohio Local Tax Finder website can help locate rates and taxes. When using the website, click both of the following buttons: School District and Municipal Tax.

    Pennsylvania

    PA Find Local Tax: http://munstatspa.dced.state.pa.us/FindLocalTax.aspx
    • Enter the employee's home and work location addresses and click View Report.  the report will display the local taxes and the associated rates.

    Create And Add The Payroll Item To Employees

    To create a local payroll item:

    Choose Lists > Payroll Item List. At the bottom left, click Payroll Item > New.

    Select Custom Setup, and click Next.

    Select Other Tax and click Next.

    Click the drop-down arrow and select the tax from the list.  If the tax is not in the list, choose User-Defined and select:

    • Tax is to be paid by the employee; or
    • Tax is to be paid by the company.

    Click Next.

    Enter the name of the tax item and click Next.

    Enter the name of the tax agency and the tax ID number. Skip the number if you do not know it; you can add it at any time.

    Select the Liability Account and click Next.

    Select the Tax Tracking Type (check with your tax advisor if you do not know which to choose), and click Next.

    Select Calculate this item based on quantity or Calculate this item based on hours if applicable, and click Next.

    Enter Default Rate or Limit, if applicable, and click Next.

    If a tax might affect the wages for this local tax and you want to change the current settings, make the change and click Next.

    If a payroll item might reduce the wages for this local tax, check the payroll item from the list and click Finish.

    To apply tax to other employees:

    Choose Employees > Employee Center. Double-click the employee's name.

    Click the Change tabs drop-down arrow, and select Payroll and Compensation Info.  (In QuickBooks 2013 and higher versions: Click the Payroll Info tab).

    Click Taxes, and then click the Other tab.

    Click the Item Name column (press Tab to go to to the next available line), and select the local tax.

    Enter the rate and limit (if not added in the steps above), and click OK.

    Repeat steps 1-5 for other employees also subject to this tax.

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    Top Answers

    Resources

    Most Used Forms

    Find and download individual and federal forms required for your business.

    Payroll Tax Support

    Stay in compliance, ensure you're up to date on all necessary tax agency information from Federal to State agency

    ViewMyPaycheck

    Give employees 24/7 access to payroll information they need.