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6
62MoaKane
August 4, 2023
Question

Set up Tax Liability Accounts

  • August 4, 2023
  • 1 reply
  • 0 views

My employees relocated to Colorado from Hawaii. I am trying to set up income tax properly so I can run payroll. I'm not overly knowledgeable in setting this up so, I'm mimimicking how it was done in the past. I have two tax liability accounts for Hawaii:

 

212 HI Income Tax

213 HI Quarterly Tax

 

I set up two new ones to handle Colorado

212.1 CO Income Tax

213.1 CO Quarterly Tax

 

Under Settings > Tax Liability Accounts - I've found HI ones mapped to the appropriate accounts. However, there is no way to add the new accounts for Colorado. What am I doing wrong? Thank you.

1 reply

J
JamesAndrewM
August 4, 2023

I'll share some information and guidelines to help you get through this.

 

The location of your employee's residence and workplace dictates the state payroll taxes you and your employees must adhere to. These state taxes encompass State Withholding, State Unemployment Insurance, local taxes, State Disability Insurance, and Paid Family Leave. You will also want to review the reciprocity agreement and determine to which state it is needed to withhold. When you have an employee working in a different state, follow these steps to include the new state in your payroll system.

 

First, figure out which correct state taxes apply and get the info. Depending on the state taxes that apply, you will need to have the following info to set up the new state in your payroll product:

 

  • Account number(s)
  • How often you are required to pay the tax (deposit frequency)
  • Tax rates

 

Next, set up or make changes to your employees. Here is how:

 

1. Go to Payroll, then Employees.

2. If your employee is new, choose Add an employee. If an existing employee moved to a new state, select your employee from the list. 

3. From Employment details, select Start or Edit. Select or add the work location where you are required to pay State Unemployment Insurance. If you have remote employees, the work location may be different than where your employee physically works. Then select Save.

4. From Tax withholding, click Edit. Go to the State withholding section. If you see two states:

 

  • If you don’t need to collect state withholding in one state: in the Filing Status ▼ dropdown, select Do not withhold (exempt). 
  • If there’s a reciprocity agreement between the two states, select if your employee gave you a Certificate of Nonresidence form. The form determines which State Withholding is collected. 

 

5. If you see a Local Taxes or Other Taxes section, choose the applicable taxes and enter the rates. 

6. If you or your employee are exempt from any taxes (not common), from Tax Exemptions, select the applicable tax(es). 

7. Click Save.

 

Then, set up your new state taxes. You can refer to this article for more details of the entire process: Set up employees and payroll taxes in a new state.


Please take time to check these articles about managing employees in QBO:

 

 

For additional QuickBooks-related concerns, don't hesitate to post them here in the Community. We're always available and willing to lend a hand to your queries. Have a great day ahead.

6
62MoaKaneAuthor
August 4, 2023

Thank you for the reply JamesAndrewM. I did all of those steps and when I preview payroll, I see Colorado taxes taken out and nothing for Hawaii as expected. For step #4 in your instructions, I did not see two states, only CO. 

 

However, my question is more on the accounting side.  At the bottom of Payroll Settings >> Accounting Preferences (Edit) there is a connection between two Payroll (payroll liabilities accounts) and two accounts in my chart of accounts (Payroll Liabilities: Income Tax/Payroll Liabilities: Quarterly Tax). See attached screenshot. I do not see a way to connect the CO payroll liabilities accounts to my newly created payroll liabilities accounts. Perhaps this step isn't needed and this setting is no longer used? as I have not found any references to it and my previous bookkeeper set this up many years ago.

 

Julie

R
ReymondO
August 4, 2023

Thanks for getting back to the thread, @62MoaKane.

 

Once you set up new state taxes in QuickBooks Online (QBO), you should be able to see their corresponding state taxes and map them under the Tax Liability Accounts section.

 

Since the Colorado tax liability accounts aren't showing on the list, I'd suggest performing some troubleshooting steps. Sometimes too much cache accumulation in a browser can cause unexpected behavior in the program and this might be the cause of the issue.

 

To check, I suggest opening your QuickBooks account within a private browsing window. By doing so, we can systematically isolate the problem and implement a solution. You can easily access this mode using the following keyboard shortcuts:

 

  • Chrome: Ctrl + Shift + N
  • Firefox: Ctrl + Shift + P
  • Safari: Command + Shift + N

 

If it works, go back to your regular browser and clear its cache. If you're still getting the same result, switch to other supported browsers.

 

Additionally, QuickBooks offers the functionality to generate various payroll reports. This will provide you with valuable insights into your business and employee-related information.

 

Should you have any further concerns or inquiries related to payroll matters, please don't hesitate to share them by adding a comment below. I'm here and ready to offer further assistance. Wishing you an excellent day ahead!

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