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DS127
October 20, 2021
Question

Please explain local taxes setup for payroll in PA

  • October 20, 2021
  • 1 reply
  • 0 views

Can someone please explain. I am in PA and have inherited a client's PR tax set up and I'm not sure that they have it right.  Here's the scenario:

Work location:  Grove City, Mercer County

Home location and school district:  Mercer (Mercer County), Mercer PA Area School District (NOT GC where the business is).

There are two boxes I could check on the W4 setup screen for local taxes. Plus two circles I could check. I'm attaching a screen shot.  

What should I do? Thanks!

 

1 reply

M
mv32
October 20, 2021

I'll be glad to share a few insights about Pennsylvania local taxes, @DS127.

 

To ensure and determine which employee's local state taxes to choose, I recommend contacting the PA local state tax agency to confirm what local taxes to select. You can contact them through this website: Pennsylvania Local Services Tax (LST).

 

That said, you would be able to pick the correct employee local state tax information in QuickBooks Online. You can also find more information about adding local taxes to your client's employees through these articles:

 

 

Should you have other concerns about setting up employee taxes, please let me know. I'll get back to assist you. Stay safe and healthy!

D
DS127Author
October 20, 2021

Thanks for your quick reply, but honestly, I'm just trying to understand what the tick-off boxes mean in QBO! Did you see my screen shot?  I understand that in PA, the employer has to withhold at the higher local tax rate of employer location vs employee home.  I'm assuming (maybe I shouldn't?) that QBO will do this correctly if the setup is correct.

 

As I said in the post, employee works in Grove City PA and lives in a different PSD, Mercer. So there's 4 options to tick off on the Local Taxes part of the W4 in QBO PR.  Which do I check off?  Thanks.  

MariaSoledadG
MariaSoledadG
October 20, 2021

Allow me to jump into this thread and guide you on what you'll have to do, DS127.

 

Thanks for the screenshot. QuickBooks is dependent on state and IRS regulations. Taxes are calculated and reported differently depending on the laws of the particular states where your employee lives and works. There are some states with a reciprocity agreement, this is an agreement between your employee's work state and your employee's residence state. If your employee does give you a certificate of nonresidence, we do not deduct state withholding for the employee's work state. Thus, as mentioned by @mv32, it's better to reach out to your state so you'll be able to determine which local tax to withhold. This way, they can also guide you on how much is the rate that you'll have to pay.

 

Once, you've chosen the correct options and set up your employees' information, everything will just have to flow correctly. Again, check out your state information through this article: Payroll Tax Compliance Links.

 

Additionally, for you to take a closer look at your business and payroll information, I've added this article for your reference: Run Payroll Reports In QuickBooks Online. 

 

Reach out to us if you have any questions about local taxes. Remember, we're here to make sure we'll be able to address your needs. 

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