Changing city income taxes after employee moved

Good morning, @JBHU103. 

Welcome to the Community! I'd be more than happy to help you sort this out with your employee's local taxes. 

To clarify, is the employee living in a new city, or both living and working in a new city? 

You can also send us screenshots of the page you're stuck on so we can help you determine the next steps to get this resolved and changed properly. 

I'll be waiting for your response! 

Thanks for addressing this.

The employee is living in a new area which does not have local tax.  They are still working at our site which is in a city which has a work and a resident tax.

They used to live in that city, and were subject to both the work and resident income tax.  Now they should just be responsible for the work tax.

I've changed their residence address, and I now see what's in the attachment.

Thanks for confirming and returning to this thread about updating your employee's tax withholdings, @JBHU103. Since you've already changed their address, our goal is to ensure they're correctly set up to withhold only the necessary work tax moving forward. Let's walk through the steps to make sure everything is accurate and compliant with tax regulations.

First, you'll need to navigate to the Tax withholdings section to update and edit your tax settings. This way, you can ensure that only the appropriate work tax is applied. It not only supports your employee in managing their finances but also helps your organization maintain accurate payroll records.

To review local tax withholding, here's how:

1. On the left navigation panel, look for the Payroll tab.
   
2. Select Employees.
   
3. Find and select the employee whose address you've changed by typing in the Find an employee search box.
   
4. Once you select your employee, scroll down to the Tax withholdings section and click Edit. 
   
5. In the Local Taxes section, ensure that only the checkbox for the work tax (for the city where the employee works) is checked. Note: If the resident tax is still showing as applicable, and since they no longer reside in the city that imposes that tax, you may need to uncheck or remove that entry.
   
6. When you're ready with everything, hit Save.

Moreover, if there's a specific entry for resident tax that hasn't been automatically updated, you'll want to manually remove or deselect it. However, if you don't see a separate option for resident tax and only have a checkbox for "city, county," ensure that the employee's resident status reflects their current address.

For more information about local tax withholding for your company and employees, you can check this out: Set up local taxes in QuickBooks Online Payroll.

Lastly, I've included an article that'll help you view your local tax liability amounts: Run payroll reports.

I really appreciate you taking the time to work through this with me, @JBHU103. I know how important it is to get your employee's tax situation sorted out, especially after their move. If you have more questions or need assistance with anything else in QuickBooks, please feel free to reach out. I want to make sure you have everything you need.

I'm still confused.  As my attachment shows, there is only one checkbox, checked, next to something that says "Hudson, Lenawee County".  That is where our worksite is located, but the screen does not say anything about work taxes or resident taxes.  It just says the city and county name where our company is located.

My question is: Is Quickbooks going to know that this is now just for the work tax and not for the resident tax?  To do so, it would have to check the employee's residence and notice that it is not in the same city/county.

If you've updated the new home address of the specific employee and assigned that employee to the correct work location, then QuickBooks will determine the correct taxes, @JBHU103. I'd be more than happy to discuss this with you so you can have accurate tax calculations.

QuickBooks Online classifies city tax or resident tax for an employee as local taxes that may be withheld based on the employee's place of residence. Since your employee has moved to a new residence, let's update their home address under their personal information. This will ensure the system correctly identifies any applicable resident tax for the specific address.

To begin with, kindly follow these steps:

1. Sign in to QBO.
2. Go to the Payroll tab and select Employees.
3. Select the specific employee.
4. In the Personal Info section, click on Edit.
   
   
   
   
5. Enter the new address for the employee.
6. Select the correct City, State, and ZIP code if necessary.
   
   
   
   
7. Once done, click Save.

Additionally, you can contact the local tax agency or check out this article for further guidance to confirm if the area your employee moved to has a local tax: Access the state agency website for payroll.

Furthermore, I’ll share this resource that guides you on how to effectively set up your payroll system and schedule it to run automatically, ensuring timely and efficient payments without the hassle of manual processing: Manage your Auto Payroll in QBO Payroll.

Did you know that we offer a same-day direct deposit feature? You can control when your team gets paid, ensuring that your financial planning aligns with your business needs. Consider reaching out to our QuickBooks Live Expert Assisted service for more info.

By confirming these details, you can ensure that the employee's payroll will be processed correctly with the appropriate local and resident taxes. If you have any questions, feel free to leave a comment below.