On the Tax Settings tab of an employee record, you can define federal, state, and local taxes, as well as W-2 information for each employee.

  1. Before adding the tax to the employee, set up specific tax information for federal, state, and local taxes in Configuration. 
  2. In Records, click Employees. 
  3. Open the employee's record. 
  4. Select the Tax Settings tab. 
  5. Highlight the type of tax to add on the left-hand side
    • To enter Federal Tax Settings:  
      1. In the Withholding status field, select Married or Single. 
      2. In the Number of exemptions field, enter the number of exemptions using the up and down arrows.
        Note: Exemptions should not exceed 10. If an employee's exemptions are greater than 10, you should file a separate form with the IRS.  
      3. In the Withholding adjustment field, you can manually enter an adjustment amount. 
      4. In the Federal income tax field, Social security tax field, Medicare tax field, and FUTA tax field, you can use the default settings from the pay types assigned to the employee or select an option from the list. 
      5. Mark the Eligible for Advanced Earned Income Credit checkbox if the employee is eligible for advanced earned income credit, and you plan to make advance EIC payments. You can add part of an employee's EIC to every paycheck, and the employee gets the remaining credit after filing a tax return. 
      6. Mark the Both Filing? checkbox if the employee is filing jointly with his or her spouse. This option is disabled unless you select the withholding status of Married. 
    • To enter State Income Tax Settings:
      1. Select an existing tax in the State Income Tax Setting grid and click Open or click New State Income Tax.
        Note: The fields on the New State Income Tax screen may vary from state to state. 
      2. In the State income tax for field, select the state for which you are entering the tax information. 
      3. In the State income tax field, you can use the default settings from the pay types assigned to the employee or select an option from the list. 
      4. In the Withholding status field, select 0 exemptions or 1+ exemptions. 
      5. In the Number of exemptions field, enter the number of exemptions using the up and down arrows.
        Note: Exemptions should not exceed 10. If an employee's exemptions are greater than 10, you should file a separate form to the IRS. 
      6. In the Withholding adjustment field, you can manually enter an adjustment amount. 
    • To enter State Labor Tax Settings:
      1. In the State Labor taxes for field, select the state for which you are entering labor tax information.  
      2. In the SUTA tax field, enter the state's SUTA tax rate.
        Note: Only one state labor tax can be attached to an employee record.  
    • To enter Local Tax Settings:
      1. Click Open to open existing local tax settings or click New Local Tax.
        Note: The fields on the State Labor Tax Settings screen may vary from state to state. 
      2. In the Local income tax for field, select the state for which you are entering local tax information.
      3. In the Local tax ID field, enter the local tax ID. 
      4. In the Local tax field, you can use the default settings from the pay types assigned to the employee or another option from the list. 
    • To enter W-2 Information:
      1. In the Check Applicable W-2 Boxes frame, mark Statutory for a statutory employee, for example, an agent or a traveling salesperson who is allowed to report income and expenses as a business. 
      2. Mark Retirement plan if the employee contributes to a retirement plan. 
      3. Mark Third-party sick pay if the employee receives third-party sick pay. 
      4. In the Box 14 Labels fields, you can enter additional employee information, such as health insurance premiums deducted, moving expenses paid, nontaxable income, and educational assistance payments. The information you enter in these fields appears on the employee's W-2.
  6. Click Save and Close to save the tax information on the employee record.