Showing results for 
Search instead for 
Did you mean: 
Level 2

Local taxes for non-residents in MI

We are a contractor with employees working in multiple locations.  Some of those locations are in cities with local income tax.  Taxes are paid by the employee so must be withheld from their paychecks.  Because they are not residents of these cities nor do they work in these cities all the time, I need to be able to have the local taxes calculated only on the compensation items that pertain to work done in those cities, not on all compensation items for that employee.  Currently, QB does not appear to allow the selection of only certain compensation items for local taxation.  How can I set up the local payroll so that it only calculates the local tax on the wages earned in that city?  

6 Comments 6
QuickBooks Team

Local taxes for non-residents in MI

Hello there, @svryhof.


If you have employees who perform work in more than one state during a pay period or periodically during the year, we can review the localization of work provisions. This will help you determine which state's payroll taxes the employee services are subject to and how to set them up in QuickBooks Desktop (QBDT).


Though, QBDT can track more than one state's payroll taxes if the employee is transferred from one state to another. However, it does not support roaming employees (employees who report multiple work state taxes when working in more than one state during a pay period or periods during the year).


Also, if the employee should be taxed in multiple states, you'll have to get a reciprocal agreement before calculating tax with the employee.


You can refer to this article for more information: Multi-State Employer Unemployment Insurance Requirements.


I've added this article about calculating payroll taxes in QBDT: How QuickBooks calculates payroll taxes.


Don't hesitate to drop a comment below if you have other questions. I'm more than happy to help. Take care!

Level 2

Local taxes for non-residents in MI

Thank you for your reply.  However, our issue is local taxes, not state taxes.  Employees only owe taxes when working in a particular city for the period of time that they work there.

Level 1

Local taxes for non-residents in MI

Were you able to get this figured out?  I am having the same issue right now.


Local taxes for non-residents in MI

Hi @kconn13,


Welcome to the Community. I'm here to share what I know about entering local taxes in QuickBooks Desktop.


Currently, the ability to track multiple local income taxes simultaneously is unavailable. There's no option to only calculate the local tax on the wages earned in a specific city.


For additional guidance on how to create and add a local tax item to employees, please visit this page: Set up an employee's local tax in QuickBooks Desktop Payroll.


Also, It would be best to consult an accountant for expert advice. One of them will be able to guide you on how to track the payroll and at the same time ensure your books are accurate.


Though, it would be beneficial to have direct options for roaming employees in QuickBooks Desktop. Our engineers might be working to bring this feature over to this platform in the future.

As we assess this, I suggest sending feedback directly to our product engineers. Here's how:


  1. Click the Help tab at the top menu bar.
  2. Hover your cursor to Send Feedback Online.
  3. Select Product Suggestion.
  4. Enter your suggestion.
  5. Hit Send Feedback1.JPG


I've attached an article you can use to learn more about liability adjustments, as well as how to enter them correctly in QuickBooks: Adjust payroll liabilities in QuickBooks Desktop.


Fill me in if you have additional questions concerning tracking local taxes. I'm always here to help. Take care always.

Level 1

Local taxes for non-residents in MI

I have a business in Indiana and and employee who lives in Michigan.  They fall under the exempt and I'm not required to withhold MI or IN tax.  When w2 is filled out it is asking for state id #  what do i put here?


Local taxes for non-residents in MI

I can help you with adding your state account number, @Congused.


You'll be adding your state identification number. A state account number is used to pay and file your payroll taxes and forms for you, or if you want to use e-file and e-pay in QuickBooks Payroll. If an employee had tax withheld for more than two states, multiple-page W-2s will be produced.


To add your state account number:


  1. Go to Lists and click on Payroll Item List.
  2. Double-click your state Withholding. 
  3. Click on Next and enter your state account number in the Enter the number that identifies you to agency box.
  4. Select Next until you can select Finish.


For more information about adding or editing your state account numbers, check out this article for detailed guidance: Add or change your payroll state account number.


From here, you can submit your W-2 forms to Federal and state agencies. See this article to learn more about deadlines, and filing your W-2s electronically: File your W-2 forms


Leave a comment below if you have other concerns regarding your payroll. The Community and I will be around to help you!

Need to get in touch?

Contact us