Create or set up local taxes
PrintOverview
This article explains how to set up an employee's local taxes.
Assumptions
You know for which jurisdictions you are responsible for withholding and paying.
Expected Outcome
You will be able to make payments to the local tax agency.
Details
To create a local payroll item:
Open the Add new payroll item window:
- In QuickBooks Pro and Premier:
- From the menus at the top, choose List > Payroll Item List.
- At the bottom left, click Payroll Item> New.
- In Simple Start:
- From the submenus at the top, click Payroll.
- In the Payroll Center, click Setup and Maintain > View/Edit Payroll Items.
- On the left, under Related Activities, select Add a payroll item.
Select Custom Setup, and click Next.
Select Other Tax and click Next.
Click the drop-down arrow and select the tax from the list.
Note: 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 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:
Open the Edit Employee window:
- In QuickBooks Pro and Premier:
- From the menus at the top, choose Employees > Employee Center.
- Double-click the employee's name.
- In Simple Start:
- From the submenues at the top, click Payroll.
- On the left of the Payroll Center, under Related Activities, click View or edit employees.
- Double-click the employee's name.
Click the Change tabs drop-down arrow, and select Payroll and Compensation Info.
In QuickBooks 2013: 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 step 12 above), and click OK.
Repeat steps 1-5 for other employees also subject to this tax.
