Table of Contents

Setting up local withholding tax

Eric Updated by Eric

Employee tax withholding is controlled by adding Tax Items to the Employer/Payer setup screen. Federal and state taxes are included as Tax Items for each employer.

Currently local Tax Items for New York City and Yonkers are included automatically for New York state payroll employers. Local taxes for other states must be added by the user.

The addition of a Local Tax Item provides a column in the Payroll grid to enter the tax and subject wages. The program can calculate the amount of local tax if the Tax Item is properly set up.

Many local taxes are calculated using a single rate or flat percentage. To add a Tax Item with a flat percentage calculation:

  1. Double-click an employer. The Edit Employer/Payer Information dialog appears.
  2. Click Payroll Setup.
  3. Click Add below the Tax Item list on the Employer/Payer Setup screen. The Tax Setup dialog appears. Type the name of the local tax.
    Do not select an item from the dropdown list.
    1. For a single/flat rate, choose Percentage as the Calculation Method. Complete the remaining fields, including the percentage rate.
      Flat percentage tax calculations that have a standard deduction or allowance deduction to adjust taxable income cannot be calculated using this method.
    2. For a progressive or rate schedule tax, see Setting up a progressive or rate schedule tax.

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