Tax Information
The Taxes section of the Employee window is used to set up the tax information for your employees.
1. From the Filing status pop-up menu, select the marital status of this employee.
2. Click the Payment Eligible checkbox if this employee is eligible to receive advance Earned Income Credit payments added to his/her paycheck. Refer to IRS Circular E, Employer's Tax Guide to verify EIC requirements
If this employee's spouse has also filed to receive advance EIC payments, click the Both spouses filing checkbox.
3. Set up the claims, extra withholding, and exempt settings.
The Number of claims fields is used to enter the number of allowances that the employee claimed on the W-4 for Federal, State, and Local taxes. If nothing is entered, the program calculates taxes based on zero exemptions claimed.
The Extra Withholding fields are for any extra withholding the employee may wish to have taken out of his paycheck for federal, state or local taxes. The extra withholding will be above and beyond what is normally taken out for taxes based on the tables you are using. You can enter a different amount for each of the three taxes, or leave them at zero.
Select the appropriate Federal, State and/or Local Exempt checkboxes if this employee is exempt from any Federal, State and/or Local taxes.
4. Mark the 1099 Recipient checkbox if you are giving this individual a 1099 form.
This is a good way to remind yourself that the individual is a 1099 recipient.
5. Click the Save button.
6. Click on the Go to Payroll Items button and select the employee you are setting up.
7. Mark (√) the payroll items that you want assigned to this employee and modify if necessary.
Some states require you to set up a special employee tax status. In Payroll 17, this is easier than ever since once your enter your employee's State and go to the Tax tab window, the proper selections for filing status and claims, based on State, appear automatically in the pop up list.
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