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603
Level 1

business location in NH occasional work completed in Mass. Income tax question

Our electrical contracting business is located in NH.There are times throughout the year where work is completed in Mass.  NH does not have a state income tax but Mass. does.  How to I set up my payroll so that only the Mass. wages earned are taxed? 

10 Comments 10
Anna S
QuickBooks Team

business location in NH occasional work completed in Mass. Income tax question

Nice to have you here in the Community, @603.

 

Since your company completes work in both states, I suggest reaching out to your accountant to make sure your company is complying with both the state's taxes correctly. As for setting up the payroll, that part can be a little tricky, especially if both states don't have reciprocity agreements. You can reference this article about setting up your multi-state payroll for more information.

 

I'm only a post away if you have any other questions. Wishing you continued success now and in the future.

603
Level 1

business location in NH occasional work completed in Mass. Income tax question

I do know that my company is complying with both state's taxes correctly.  My problem is that I am not sure which item name should be used in the income section of the employees info and which item name should be used in the taxes section of the emplyees info.  I currently have mass wages earned in the income section and MA non resident in the taxes section.  I have had MA taxes in that section also but either way Quickbooks does not accurately calculate the tax amount to be deducted.  I have to manually enter the correct amount.

JessT
QuickBooks Team

business location in NH occasional work completed in Mass. Income tax question

You can use the same payroll item if they do the same work in multiple states, 603.

 

You can change the State Worked in the employee's tax information every time they work in another state. That way, you get the right tax calculation. For example: If the employee works in Massachusetts this month, assign MA for the State Worked.

  1. From the Employees menu, click Employee Center.
  2. Double-click the name of the employee.
  3. Click on Payroll Info and select the Taxes button.
  4. Choose the State tab and select MA in the STATE WORKED section.
  5. Click OK to save your changes.

If your employees work in multiple states in the same month and you need to pay them in that month, just change the state worked, create a paycheck. Then, change the state worked again and create a paycheck.

 

I can see that Anna had shared articles about working in multiple states. Those are good resources.

 

Lastly, please have your accountant check your setup to know if they have something to add to it.

 

If you have additional questions, you can always go back to this thread.

603
Level 1

business location in NH occasional work completed in Mass. Income tax question

So if an employee worked a total of 40 hours and 10 hours was in Mass.  30 hours would be entered in the hourly wage column and 10 would be entered in the Mass hours worked and the Mass. tax withholding will only be on the Mass hours worked? 

 

In the past when I have done this the Mass. Tax calculation has been on the total 40 hours worked.  That is incorrect.  Also if there are no Mass. hours worked in a particular week, an amount is being calculated any way and appears in the MA withholding column.

Michael K
Moderator

business location in NH occasional work completed in Mass. Income tax question

Hey there, @603. Thanks for providing an update.

 

While we'd love to help out here, we recommend consulting with your accountant to ensure everything is tracked correctly. Both of my colleagues above have provided some great resources on the topic. To clarify on what my colleague @JessT was suggesting, they were recommending that you run one payroll for one state and running a separate run for the other.

 

If you'd like some great resources on complying with state taxes, I recommend checking out: 

 

Massachusetts Payroll Tax Compliance

New Hampshire Payroll Tax Compliance

 

 

I'll only be a click away should you have any further questions. Thanks for bringing us your questions!

603
Level 1

business location in NH occasional work completed in Mass. Income tax question

It seems to me that none of you have any idea how to answer my questions.  The questions I am asking do not require my accountant they require the "experts" of Quickbooks.  Please provide me with a telephone number in which I can call to speak with an expert.

RenjolynC
QuickBooks Team

business location in NH occasional work completed in Mass. Income tax question

Hello again, 603.

 

Dealing with employees that work with multiple state can be complex. This is the reason why we recommend consulting an accountant or tax advisor to determine the withholding responsibilities. 

 

The steps given by my colleague JessT will be the same steps that our specialist will provide you. I'd also like to share this article for reference: Change state taxes for an employee. This will help you track more than one state withholding tax per employee if they transferred from one state to another.

 

If you still want to talk to our Customer Care Team for further assistance, you can get in touch with us by following these steps:

 

  1. Click Help located at the top.
  2. Choose QuickBooks Desktop Help.
  3. Enter a brief description of your issue and click Continue.
  4. You can choose Message an Agent or Talk to a Specialist.

 

Please know that we are always around to help you some more. Thank you. 

dac2
Level 2

business location in NH occasional work completed in Mass. Income tax question

Did this question ever get properly answered?  I have the same issue in that we are on the border of MA and NH with employees residing and working in both states during the same paycheck period.  I would like to think that this is an age old problem and there must be a practical QB solution.  Manipulating each paycheck run seems overly burdensome and prone to mistakes.  Referring users to tax accountants is avoiding the issue of QB not being able to provide a QB solution.  We know that the employee who lives in NH and who works for a MA employer is not subject to withholding tax for his/her work in NH.  There is no agreement between MA and NH.  That same employee can be working in MA one day and in NH the next day.  This is a programming matter for QB.  What have and are the many other employers in this situation doing to properly manage this situation?  

Adrian_A
Moderator

business location in NH occasional work completed in Mass. Income tax question

I appreciate you for getting in touch with us, dac2.

 

You'll have to apply the tax as to where your employee worked. However, I'd still recommend reaching out to the State to verify if there's a need for you to file a tax.

 

Also, it would be best if you can consult your accountant to determine the withholding responsibilities.

 

If you'd like to talk with one of our Phone Support team, you can follow the steps shared by RenjolynC.

 

I've also added this article for more information when tracking more than once state withholding tax per employee.

 

I'm just a post away if there's anything that I can help you with!

dac2
Level 2

business location in NH occasional work completed in Mass. Income tax question

Thank you for your response, but I think that you are still dodging the question. I have spoken with the State of MA.  I was told that I should not be withholding MA tax for the portion of pay in a pay period that an employee earns for work in NH if the employee resides in NH.  The customer and job site address is in QB as NH for NH work and MA for MA work.   The employee’s time is entered in QB.  How can QB differentiate the hours worked in NH from those worked in MA in a given pay period, and only withhold the MA tax for those hours worked in MA  and not withhold MA tax for the hours worked in NH.  You shouldn’t have to manipulate every paycheck to manually calculate the correct withholding for each State.  

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