I have an employee that has an out of state address, even though he works in our state (we have no operations in his state). How do I turn off withholding for his state?

Allow me to share a few information about turning off withholding for your employee state, WB19681.

A reciprocal agreement is an agreement between two states that allows employees that work in one state but live in another to request exemption from tax withholding in their employment state. This means that the employee would not have income tax withheld from their paycheck for their employment state; they would only pay income taxes to the state where they live.

QuickBooks generates the forms and taxes to set up based on the employees’ residence and work locations. We want you to stay compliant with your tax regulations, that

's why the software will require and prompt you to enter the information for each state. Even if the business and employees are in different states, some agencies have reciprocity agreement and may require employers to file and pay taxes for each one.

You may want to contact your state agency about this matter. Or, you can consult your legal adviser or accountant about this. However, if you still wish to turn off withholding for his state, you can set it to inactive. To do this, here's how:

1. Go to the Gear icon, then choose Payroll Settings.
2. Under Company and Account, click Work Locations.
3. Select the exact state, then mark the Inactive checkbox.
4. Click Save.

For more information about filing your W-2 forms, please check this article: File Your W-2 Forms.

Keep me posted if you have any concerns about state withholding taxes. I'll be here to help.