How do I set up withholding from two states on one pay check.

I'm here to lend a hand, @gblock1.

When you have employees that live in one state and work in another, they may be subject to income tax in both states. There are states that have reciprocity agreements that would require an employer to only pay income tax to one of the two states. 

To help determine what income taxes you may be subject to, I recommend consulting your state agency. Since dealing with multistate employment situation is complex.

To learn more about your withholding responsibilities, visit this article: Multi-State withholding responsibilities.

If there’s anything else you need help with concerning payroll, please feel free to reach back out. Have a great day!

RE: I can not determine how to do that. 

It cannot be done in QuickBooks.

I am trying to set up employee direct deposit and get error 20102

Hi there, @gblock1.

The error code 20102 usually comes up when signing up for Direct Deposit (DD) but already has an existing one that's still active. To investigate the root cause of this issue, it would be necessary to look at your account details.

I'd recommend contacting our payroll support team. They have the tools to check your account securely and your previous DD service.

Here's how to contact them in your QuickBooks Desktop (QBDT):

1. Go to the Help menu.
2. Select QuickBooks Desktop Help.
3. Click Contact Us.
4. Enter a brief discussion of your concern and click Continue.
5. Choose your preferred way to get in touch with them.

I've also added this article for additional details on setting up a direct deposit: Set up direct deposit.

You can always get back to us if you need more help in setting up a direct deposit. I'm always here to help.

This did not actually answer the question.  Can I withhold from two states on one paycheck?  I am sure this happens all the time with employees.  How is it done?  Can it be done with QB desktop?

Hello, Lisa Galvin.

I have information regarding the multi-state support in QuickBooks Desktop. 

As mentioned before, QuickBooks Desktop doesn't support multi-state withholding, so we're unable to withhold two states on one paycheck. 

More details can be found here: 

• Multi-State withholding responsibilities
• QuickBooks Desktop Payroll: Multi-State Employer Unemployment Insurance Requirements

If your employee simply transferred from one state to another, you can track the details in QuickBooks Desktop. You'll to set up a new payroll item for the tax withholding. You can check this article for the full guide: Set up payroll items for new state taxes.

When you're ready to pay your employees, you'll want to run payroll as you normally would. 

If you need to manage your employees, check their payroll data and year-to-date taxes, you can check our articles here. Browse for an article or look for a specific topic at the bottom of the page. 

Post your replies or comments if you have other concerns with your QuickBooks Desktop company file or your payroll service. Here to offer help again. 

That is so bad - I mean people have been asking about this for years - I am trying to convert my payrolls from accounting CS to all QB - how do you sell a product to accountants that can't do this.  That is really not good.  Now I am going to have to use something else for these clients.  Again can't recommend this to clients to use if it is not robust enough.  This should be a simple programming fix.  It is so common, especially in this current economy.  Very dissatisfied.  And the fix that has been mentioned about giving the employee two checks - how ridiculous.

I agree.  We are a construction company and work in multiple states within the same week sometimes.  I've been asking about this for years and can't believe they don't have this available yet.  

You didn't answer the question.  She asked how to set it up.  Not what the liability is.  

I have employees who work hours in multiple states each week. 

So,  how do you set that up in QB Online? 

Hi HammiBookkeeper!

We can set up multi-state employment in QuickBooks Desktop Payroll and track more than one state withholding tax for each employee.

However, we're unable to track more than two state withholding taxes for an employee who works in multiple states simultaneously.

I suggest checking these three links on how QuickBooks handles multi-state employment:

• Multi-State withholding responsibilities

• Set up payroll taxes in a new state

• About multistate employment payroll situations

Let me know if you have more clarifications by leaving a comment below. We'll respond as soon as we can.

So if I've determined that there is a withholding requirement for residency state and worked in state to withhold at the same time, and there is not a reciprocal agreement, you mentioned that QuickBooks Desktop does allow withholding for two states. How do you do it?? The links referenced above do not give instructions on HOW to set up an additional withholding, only to determine if there is a requirement. You can select the state worked (which only tracks state and local taxes [SUTA etc]), and you can select one withholding state. Is it possible to include an additional state income tax withholding in 'Other' taxes? Where do you set up the additional withholding??

Joining the thread to help with your question about multi-state setup in QuickBooks Desktop, epayne.

There's no option to add a second state withholding in the employee's profile. QuickBooks can't track two separate states withholding taxes if he/she works in two states simultaneously. 

As a workaround, you need to toggle or change the state worked and SUI details before creating a paycheck for the other state. You also need to create a separate payroll for the hours or salary amount for the second state. This is to make sure that taxes are calculated correctly for each state and mapped to the correct tax forms as well. 

Here's an article as a guide: Set Up Payroll Taxes in a New State.

I'd also like to share these articles for additional guidance and future reference:

• Payroll Tax Compliance Links
• Local Tax Setup and Support

Don't hesitate to join us again in the Community or reply to me if you have other questions while working in QuickBooks. We're always here to help and guide you again

Thank you for the reply. However, I do know about toggling between two states to separate the time worked in each. My question, is how to set up withholding in QB desktop for the employee's residency, simultaneously with the employee's 'working in' state. Currently you can only set up one withholding state, and one 'working in' state in the state tax setup, but the 'working in' state only tracks payroll taxes like SUTA, not withholding if there is an additional requirement. Here is an example of what I mean:

 Employee works in Colorado but lives in New Mexico
What state taxes would be withheld?
 Colorado State Law-Non residents that work in the
state are applicable to withholding
 New Mexico State Law-Residents that work in another
state are applicable to withholding.
 Conclusion: There is no reciprocal agreements between
the states. The law in Colorado is that a non-resident
working in the state is subject to withholding. The law
in New Mexico is residents that work in another state
are required to withhold taxes. Ultimately both CO
and NM taxes would be withheld for this employee.

Thanks for getting back to us, @epayne.

As mentioned by my colleagues in this thread, the option to add employees' second state withholding is currently unavailable in QuickBooks Desktop (QBDT).

I can see how having this option would be helpful for you, and I'll take note of this. Our Product Engineers are always looking for ideas to consider on how to improve QBDT.

In the meantime, I recommend visiting our Blog site. This is where we share recent happenings and future developments, such as updates to newly added features. Here's the link: https://www.firmofthefuture.com/product-industry-news/product-updates/.

For tips and other resources, you may also check our website for future reference: Self-help articles.

Don't hesitate to post again or leave a comment below if you have any other questions or concerns. I'm more than willing to assist. Have a good one!

I am in a very similar situation as epayne.  I am very surprised QBDT Payroll doesn't have a solution to this yet.  I need to be able to pay an employee for time work in two different States during the same pay period.  No reciprocal agreement between the States.  The resident state wants Income Tax withheld on ALL wages from both states.  And I have to withhold for the work state.  

I may have to outsource our payroll to a different company.  I have used and love QB's for many years but I need to stay up with tax compliance laws.

I would love it if you could offer a solution.

I appreciate your feedback, @jensenl. I'll do my best to keep up with your request. 

I'll personally make sure your idea of paying an employee for time work in two different States during the same pay period will get to our developers. Please know that all our suggested plans are subject to study to make sure they would work on the platform. 

In the meantime, you can also submit feedback from the Help menu on your QBDT file. Here's how: 

1. Click on Send Feedback Online, then choose Product Suggestion.
2. Enter your feedback or suggestions from the QuickBooks Feedback window.
3. Hit on the Send Feedback button.

I'm also adding these articles to help you learn more about managing your employees living or working in different states: 

• Multi-State Withholding Responsibilities
• QuickBooks Desktop Payroll: Multi-State Employer Unemployment Insurance Requirements

Feel free to ask us if you have additional concerns, and I'll make sure our team will get back to answer them for you. Take care!

How do you set up multi state withholding in quickbooks desktop?  Thank you

I’m curious to know if you decided to go with another payroll company and if so, who? I am in the same predicament as you and have also considered which from QBOL. 

So, I have always, since 1996, when I first started using QB, had to set up two employee records, one for each state, and then process a paycheck for each state. Today, I just had a software patch update and after I installed the patch, it won't allow me to have two separate employee files for one employee!! It always gave me a warning that there was already another employee with same social security number and was I sure I wanted to save, which I just click on YES and all was well. NOW it won't even allow me to do that. In the freaking middle of the year! I have no way to keep wages from each state separate from each other so the proper tax goes to each state, our employees work in both KS and MO almost every single week! From what I can tell, I'm supposed to run one payroll, then change the state worked to the other state and run a second payroll???  The W4 information is different for each state, so am I just supposed to pull their W4 each time I do payroll, to see what the other state exemptions are??  And then they tell me I'm supposed to run a payroll report at the end of the year and modify the W2 so that I can add the second state to the W2. So I'm paying for a payroll service that I'm basically doing all the work myself...  I can see all kinds of nasty IRS mistakes happening by hand-entering data myself!!!       I am so stinking mad right now!!!

sorry, did not mean to post twice

Yessir! Moved everyone out of QB Payroll into Gusto. Also, moved out of QB Online to Xero. Both are more intuitive, less expensive and far better customer service. 

Try Gusto payroll. The quick journal entry into QB is a breeze and Gusto will handle everything for you. Customer service is very helpful with setup. 

Unfortunately Gusto is a stand-alone payroll, and I have to have it tied into all the other work we do--construction projects. I also don't have time to do payroll in one program and transfer over to the other. Xero doesn't have the advanced features I have to use. I use the Enterprise version of QB in order to have more power behind the software. I got off the phone with QB payroll support and the lady did a Glance session and could totally see what the problem is and is going to pass it on to tech support. She did try to tell me the change was made "for compliance reasons". I just talked to my accountant and he said he had no idea what compliance there was that required you to put all wages on one W2 instead of two, like we've always had to do. This is a complete nightmare and the only workaround I can figure is to alter the social security number temporarily in one record and change it to the correct number at the end of the year when I do my W2's. Which of course, would then require me to alter the SSN in the other record temporarily while I do the second set of W2. But there is no IRS regulation that requires all wages to be on one W2. This is infuriating....

Gusto is a stand-alone payroll, but it integrates with a number of other apps, though I haven't directly used that feature. I agree - QB desktop is pretty robust and I used it for a large & very complex non-profit foundation that, for all intensive purposes, is similar to job tracking for construction. We used Paychex for payroll, and that allowed me to create a quick Journal Entry that took me all of 5-10 minutes to run and enter into QB. There was some additional setup we had to do with Paychex to get the job & program reporting we needed, but once set up, it worked well (as long as employees clocked in where they were supposed to, of course).

I have managed to use Xero similarly, and Gusto and Xero work hand in hand and merge relatively seamlessly. I would still use QB Desktop, never QB Online. But when I changed organizations and one of my clients was set up in QB Desktop with payroll, I was entirely unimpressed with the QB payroll. Also a non-profit, though only with a small number of separate programs, we pulled them when the QB payroll version expired and put them into Gusto. The report and JE is faster than dealing with the back-end in QB. And if something doesn't go right, it's a lot easier to fix than it is within the QB software, which affects both the payroll records and the books (and often you can't fix one without messing up the other). 

Good luck! I hope you find a solution! It confounds me that an industry leader like QB is struggling with something that should have had a solution from the beginning.