New Jersey Payroll Setup

Greg Hatfield Updated by Greg Hatfield

New Jersey has four tax items. Each item has separate worker and employer rates (FLI has only a worker rate) making seven tax rates in all that are specified on the Employer's Quarterly Report received from the state. Form NJ-927 combines the worker and employer rates for UI and WF into one box, and the worker and employer rates for DI into another box in order to calculate two tax amounts. The worker rate for FLI is in another box. The four worker rates are the same for all workers and the program includes them so the user does not have to make these entries. The worker rates for UI and WF are combined into one Tax Item called "NJ UI/WF/HC (worker)" for convenience. (Note: The HC rate has been zero for several years but is still included in the name of this tax item.) The worker rate for DI is in Tax Item "NJ Disability Ins. (worker)". The user does not have to enter rates or edit the worker tax items. The amounts withheld from employee paychecks for these two items will transfer to Form W-2, Box 14, for year-end filing.

Employer rates for the three tax items (the FLI rate for employers is zero) may be different for each employer and the user must enter the rates into the appropriate program provided Tax Items. The employer DI rate should be entered into the Tax Item called "NJ Disability Ins. (employer)". Instead of combining the two remaining tax rates, the employer's UI rate is entered separately on the State Setup tab. The remaining employer rates, WF, should be entered into the Tax Item called "NJ WF/HC (employer)". If the user chooses not to enter the employer rates into the program provided Tax Items, the State Liability Summary Report cannot calculate the employer's liability properly and the user will be required to enter the sum of the tax rates on Form NJ-927 manually.

The diagram below shows the relationship between the rates listed on the Employer's Quarterly Report received from the state and the data entry screens for the UI rate and Tax Items in the program. Remember, only the employer UI rate, employer DI rate, and employer WF rate (examples are marked in RED below) need to be entered by the user. The worker rates are already entered by the program and require no further action from the user.

Note: In 2009 New Jersey added Family Leave Insurance (FLI) as an employee tax. The rate is the same for all employees, but subject to change each year, and is supplied by the program. It has no employer component or numbers that must be entered by the user.

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Income Items

Opening the Payroll Data Grid