Purpose

The purpose of this task is to enter federal, state, and local tax information for an employee.

The Federal Tax Data page is used to record federal tax data, such as Effective Date, Special Withholding Tax Status, Tax Status, FWT Additional Amount, and Tax Treaty/Non-Resident Data.

The State Tax Data page is used to record state tax data, such as Special Withholding Tax Status, Tax Status, and state Withholding Allowances.

The Local Tax Data page is used to record local tax data, such as Locality, Special Withholding Tax Status, Tax Status, and local Withholding Allowances.

Helpful Hints

• To update any of the tax pages, insert a row on the Federal Tax Data page and note the Effective Date. Once the row is inserted, any of the three tax pages can be updated.
• HIRE: The Payroll System automatically sets up tax records for the employee when an employee is hired through the Hire pages. Newly hired employee's federal, state, and local tax records are set at the default of a Tax Status of 'Single'. If this information is incorrect, changes to this data must be made by inserting a row on the Federal Tax Data page.
• CONCURRENT HIRE: For a Concurrent Hire in a different Company, the Payroll System will default the employee's current tax information. Tax information will only need to be entered if the employee submits a W-4 or IT-2104 form with different withholding.
• TRANSFER: If the employee transfers to a new Department within the same Company, the Payroll System will only set up new tax records when the transfer includes a new state or locality. If the transfer does not include a change in state or locality, tax information will only need to be entered if there is a change on the employee's W-4 or IT-2104 forms.

Entering Employee Tax Data

Navigation Path

Main Menu > Payroll for North America > Employee Pay Data USA > Tax Information > Update Employee Tax Data

Steps

1. Enter employee’s EMPLID.
2. Enter the desired information into the EMPLID field.
3. Check the Include History checkbox to view all rows for the employee.
4. Click the Search button. The Federal Tax Data page will be displayed.
   NOTE: If more than one record matching the search criteria is found, select the correct employee record from the Search Results list by clicking it once.
5. Add a new effective-dated row.
6. Click the Add a new row (Alt+7) button or click the plus (+) sign.
7. Enter the Effective Date.
   NOTE: The Effective Date should be the first day of a pay period.
   Exception: For new hires, enter the Effective Date as one day after the actual hire date.
8. Select the Federal Form W-4 Version:
   1. Select 2020 or Later when creating/inserting an employee Tax Data record that will include new or changed Federal Tax Data from 2020 Federal Form W-4.
9. Confirm or select the Special Withholding Tax Status.
   NOTE: If the employee's W-4 indicates exempt status, select 'Maintain taxable gross'.
10. Confirm or enter employee’s Tax Status.
11. Click checkbox Multiple Jobs or Spouse Works, if indicated on employee’s W-4. 
12. Enter Dependent Amount, Other Income, Deductions, and FWT Additional Amount from employee’s W-4, if applicable. Please note that all amounts except the additional withholding are annual amounts; the additional withholding amount is the amount per pay period.
13. Exempt from FUT defaults from Company Table.
14. Confirm or click the correct radio button for the employee's W-4 Processing Status, if applicable.
15. Confirm or enter the Lock-In Letter Details.
16. These fields are only used when an employer receives a letter from the IRS concerning an employee's Tax Status and Withholding information.
    1. Check the Letter Received box.
    2. Enter the withholding information stated on the letter from the IRS in Limit on Allowances.
17. State Tax Options fields are not used.
18. Entries to the Tax Treaty/Non-Resident Data and Educations and Government are only completed when non-resident alien employees are hired.
    NOTE: Refer to the Entering Tax Data for Non-Resident Alien procedures.
19. Confirm or enter W2 Reporting information.
20. Continue to the State Tax Data page, if applicable.
21. Click the State Tax Data tab.
22. Confirm or enter the employee's withholding state, or click the Lookup icon and select the state from the list.
23. Confirm that the Resident checkbox is checked.
    NOTE: This must always be selected regardless of the employee's actual residency status.
24. The Non-Residency Statement Filed field is not used in this procedure.
25. Confirm that UI Jurisdiction checkbox is checked.
26. The Exempt from SUT field (State Unemployment Tax) is not used in the Payroll System.
    The SDI Status field (State Disability Insurance) is not used in the Payroll System.
27. Confirm or select the correct Special Withholding Tax Status.
    NOTE: If the employee's IT-2104-E indicates exempt status, select 'Maintain taxable gross'.
28. Confirm or enter the Tax Status information for the employee from Form IT-2104. Valid values are 'S' for Single or 'M' for Married.
29. Confirm or enter the Withholding Allowances indicating the number of allowances the employee claimed for state withholding tax purposes. The Withholding Allowances must match the number of allowances indicated on the IT-2104 form.
    NOTE: If you enter a number greater than '5', a warning message will appear. Verify the number you entered is correct, then click OK in the warning message box and continue.
30. Confirm or enter the Additional Amount requested, if any, on the employee's IT-2104 form.
    NOTE: An Additional Amount, Additional Percentage or Additional Allowances cannot be entered if a Special Withholding Tax Status of 'Maintain taxable gross' has been selected.
31. Confirm or enter the Lock In Letter Details. These fields are only used when an employer receives a letter from the Department of Taxation and Finance concerning an employee's Tax Status and Withholding Allowances.
    1. Check the Letter Received box.
    2. Enter the number of allowances stated on the letter from the Department of Taxation and Finance in Limit on Allowances.
32. Continue to the Local Tax Data page, if applicable.
33. Click the Local Tax Data tab.
34. Confirm or enter the Locality in which the employee works or resides. Valid values are 'P0001' for New York City; '84000' for Yonkers; and blank for all others.
    NOTE: P0001 should only be selected for employees who live and/or work in the five boroughs of New York City.  Comment from Bill:  Without the above edit, this NOTE is in conflict with 41. Below.
35. If the employee is a resident of either New York City (P0001) or Yonkers (84000), ensure the Resident checkbox is checked. (Local taxes will be taken.)
36. If the employee works in New York City but does not live there, and P0001 is entered in the Locality field, uncheck the Resident checkbox. (No local taxes will be taken.)
37. If the employee lives in New York City and works in Yonkers (and a P0001 locality row already exists with the Resident box checked), insert a new row in the Locality section and enter the Locality of 84000 with the Resident box unchecked.
    NOTE: Remember to also go to the Update Tax Distribution page and insert a new row for the 84000 Locality using the same effective date.
38. Confirm or select the correct Special Withholding Tax Status.
    NOTE: If the employee's IT-2104-E indicates exempt status, select 'Maintain taxable gross'.
39. Confirm or enter the local Tax Status information for the employee from Form IT-2104. Valid values are 'S' for Single or 'M' for Married.
40. Confirm or enter the Withholding Allowances indicating the number of allowances the employee claimed for local withholding tax purposes.
    NOTE: The withholding allowances must match the number of allowances on the employees IT-2104.
41. Confirm or enter the Additional Amount requested on the employee's IT-2104 form.
    NOTE: Additional amounts cannot be entered if a Special Withholding Tax Status of 'Maintain taxable gross' has been selected.
42. Click Save to save the information if the employee has no additional local taxes.
    OR
    If the employee is required to pay taxes in an additional locality within this state (non-resident), take the following actions.
43. Click the plus (+) sign in the upper right hand corner within the Locality group box to insert a new row.
44. Enter the additional Locality.
45. Uncheck the Resident checkbox.
46. Click the Save button.

Result

An employee's tax record has been updated.