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T
tframer10-gmail-
March 21, 2023
Question

Can I set up multi-state tax withholding for projects?

  • March 21, 2023
  • 1 reply
  • 0 views
We are contractors who operate and reside in Massachusetts, but do some work in New York.

1 reply

LieraMarie_A
LieraMarie_A
March 21, 2023

Welcome to the Community, tframer10! 

 

Are you referring to sales tax? If you're required to track sales tax for more than one tax agency, you may consider setting up a combined tax rate. With this, your customer sees only one tax rate on their sales form. However, the sales Tax Center keeps track and splits out the appropriate amounts for each agency.

 

Here's how:

 

  1. Go to Taxes, then select Sales tax.
  2. Click Sales Tax Settings.
  3. In the Custom rates section, click Add rate.
  4. Select New.
  5. Choose Combined tax rate.
  6. Enter a name for the combined rate and the different sales tax requirements.
  7. If necessary, select Add Another rate to add more than two components.
  8. Select Save.

 

When you record sales transactions for projects, make sure to include the appropriate tax code. It's important to note that sales tax laws and regulations can be complex and vary by state and locality. You may want to consult with a tax professional or accountant to ensure that you are complying with all applicable laws and regulations.

 

When it's time to pay sales tax, go to the Taxes menu and click on Sales Tax.

 

Otherwise, if you're referring to the withholding tax of your employees, you may need to change the work location when running payroll. You can refer to this link: Set Up Employees and Payroll Taxes in a New State.

 

I'd be glad to see you again. Don't hesitate to add a comment below if you need further assistance with managing sales tax. Have a nice day!

T
tframer10-gmail-Author
March 21, 2023

No I am not referring to sales tax.  I am referring to tax withholding on wages earned in another state.  We a re a contractor and our employees sometimes work in another state where they are required to pay income taxes even though they do not live there.  We can't be the only company who does this.

JoesemM
JoesemM
March 21, 2023

I appreciate your prompt reply and sharing additional details of your concern, @tframer10. Allow me to chime in and help you with the tax withholding of your employees.

 

Since your employees work in another state, you'll need to change the work location every time you run payroll for each state. This way, you can add the tax withholdings of the state they're working.

 

Here's how:

 

  1. Go to the Payroll menu and proceed to the Employees tab.
  2. Click the name of the employee and look for the Employment details section.
  3. Scroll down to the Work location area, then select Add work location or select an existing one.
  4. Select Done.

 

Here's an article you can read to learn more about your employee's work location: Set up and assign a new work location.

 

Also, I'd suggest contacting your accountant or the state they're working for the tax forms. This way, you can prepare the forms to be needed in the future since QuickBooks are unable to file both states at the end of the year. 

 

Additionally, let me share these articles you can utilize to help manage your employee's paystubs and run payroll reports in QBO:

 

 

I've got your back if you have more questions. Just add your reply in the comment section so I can assist you further. Have a good one.

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