Multi state payroll

Thanks for your inquiry about this Multi-state scenario, @Lindyw1,

I can provide some insights on how to handle this in QuickBooks Desktop.

While the option to assign multiple states under an employee profile is still unavailable, the transition must be done manually. This means that you need to switch the states manually the moment you create payroll for the employees working hours.

Don't worry, I'll be providing a step by step process so it's easier for you to track everything. For example, the default state is TX and you want to process a pay run for LA, here's how to change the state:

1. Go to the Employees menu, then select Employee center.
2. Double-click the name of the employee.
3. Choose the Payroll Info tab and then Taxes.
   
4. Choose the State tab and select the state you will be processing payroll.
   
5. Do this for State Worked and State Subject to Withholding fields.
6. When you're done, select OK.

When you will process payroll, the system will use the state assigned to calculate taxes. Here are some examples:

Payroll processed for Texas:

Payroll processed for Louisiana:

With this process, taxes will not be mixed up and are reported accordingly. Here is a sample report to show you how QuickBooks will treat Multi-state payroll:

For your guide with editing employees profile and running Excel payroll reports, see the following links:

• Update or delete employee info
• Excel based payroll reports

It's been nice assisting you today. If you need any help, please let me know so I can share some more insights to resolve your concern. Have a lovely day!

Thank you so much!

Will the use of the proposed method under withhold federal income taxes?  If the federal taxes withheld are based upon the pay period length and the gross wages, the calculations will assume the annual income is less and under withhold.  If the employee is paid by direct deposit, will this also result in two payments each pay period?

Thanks for chiming in on this thread, ABELLETETE.

I have some details about the Federal Tax Withholding.

The Federal Income Tax (FIT) amount are calculated based on the following:

• Agency's wage and tax calculation table.
• Employee's filing status, number of allowances, or extra withholding amount in the employee setup.
• Pre-tax deduction items included on the paycheck.
• Changes in pay frequency (creating extra paycheck outside of normal pay schedule).
• Creating a paycheck with wages that has lesser or larger amount than what the employee normally gets in a pay period.

In some cases, if the previous amount deducted on the paycheck is underpaid or overpaid, QuickBooks automatically catch up on the next paycheck. This is why you see two payments are created for each pay period. 

To learn more about the process, you can read this article: How QuickBooks calculates payroll taxes.

If you have an incorrect payroll liabilities, check out this link to use a liability adjustment to fix them: Adjust payroll liabilities in QuickBooks Desktop.

Please don't hesitate to reach out to us here if there's anything else you need. We're always around to help you out. Have a good day ahead. 

I am confused. Other QB postings say QB does not support “roaming” workers who work in multiple states, but your explanation seems to contradict that - it appears relatively simple. Am I missing something, or are the other posts incorrect?

Hi there, @RK46. Let me share with you some clarification about multi-state payroll in QuickBooks Desktop (QBDT).

Yes, the system currently doesn't support multi-state payroll to avoid messing up your payroll records. However, if you happen to have roaming workers, you can create a paycheck for the other state first. Then, go to the employee's profile and change the employee's state information manually. Once done, create another paycheck for the second state.

To change the employee's work or state payroll information:

1. Select Payroll Center from the Employees tab.
2. Double-click the name of the employee and proceed to the Payroll Info tab.
3. Click Taxes.
4. Proceed to the State tab and change the details. 
5. Click OK.

On top of these, I recommend consulting the states involve for more tips in handling the payroll taxes and forms.

You may watch this video tutorial to learn more about processing paychecks in QBDT: How to Create Paychecks using Desktop Payroll.

And, here's how you can learn more about paying and filing your state taxes and forms: E-file state forms & e-pay state taxes separately.

If you have any other questions about multi-state payroll, let me know by adding a comment below. I'm more than happy to help. Keep safe!

So just to clarify, there is no way to pay employees who travel and work in several different states over the course of one week?

So to clarify, there is no way to process employees who travel to multiple states in one week?

Hi AHunter1!

Thanks for joining us here. I understand that you need to process payroll for multiple states. I'm here to assist you.

You're correct. QuickBooks Desktop Payroll currently doesn't support roaming employees. You'll want to consider the workaround shared by Jen_D but I also suggest seeking some help from your tax professional so it won't cause issues with your state tax forms.

You can also check this article on how to handle payroll taxes in a new state: Set up employees and payroll taxes in a new state

Post your replies or comments if you have other concerns. Here to offer help again. 

I have employees that also work in multiple States.  Please, consider linking Unemployment tax to Job Costing.  It's my understanding Unemployment tax should be paid to the State the Employee works.  So if the Job is set up with an address, when the job is put on the time ticket it could then pick up that State's Unemployment.  I have over 200 employees and to go in weekly to change the State for Unemployment Tax is very cumbersome.

We're taking notes of your feedback and suggestion, @8132Pitt.

I can see how helpful to you to link unemployment tax to job costing. This way, you don't have to go through each of your employees to change the state for unemployment tax.

For now, I suggest submitting feedback directly to our product engineers. They may look into this suggestion and consider adding back the option in the future update. To send feedback, please follow the step below:

1. Open your QuickBooks Desktop company file.
2. Go to the Help menu, then select Send Feedback Online and choose Product Suggestion.
3. Enter your feedback and click Submit.

Once you're ready to file your state taxes electronically, you can check out this article for the detailed steps and information: E-file and e-pay state forms and taxes in QuickBooks Desktop Payroll Enhanced.

Please touch base with me here for all of your QuickBooks needs, I'm always happy to help, @8132Pitt.

Concerning Jen_D's example. TX wages = $100, LA wages = $160. In LA payroll, LA withholding deducted $5.46 supposedly for LA wages $160. However, see LA withholding in the tax report, the ISTT and Wagebase are $260, included not only LA wages $160 but also TX wages $100. Subsequently when Quickbooks generates W-2, LA state wages (Box 16) would be $260 instead of $160, while LA withholding (Box 17) is $5.46, then wouldn't LA state agency misunderstand and impose a higher tax thinking that the employee earned $260 in LA when in actual fact they only earned $160 in LA? 

Thanks

Hey there, @JTNYL. 

Thanks for following the thread and sharing your concerns here in the QuickBooks Community. 

In this case, I recommend contacting our Payroll Support Team. This way, one of our payroll agents can review your account in a secure environment and investigate this matter further using their specialized tools. You can connect with our payroll team using the link I've included below. 

• QuickBooks Online Payroll Support 

Please don't hesitate to let me know if you have any additional questions or concerns. Take care! 

In the recent 2 weeks, I have contacted Quickbooks Intuit Payroll and talked to at least 3 agents with easily over 4 hours of conversations, but no one so far could help me resolve W-2 problem for the scenario I mentioned. Their final reply was QB Desktop does not support multi state.

I have this same problem.  We are registered in 3 states, so the employees who might be working in those 3 states actually have 3 payroll records.  I put in parenthesis behind their name the state (i.e. John Doe (KS)) and then put KS as the state withholding.  I do this for their Missouri & Nebraska records as well.  Basically, if an employee works in all 3 states in one week, that employee is getting 3 paychecks with their gross wages separated for each state worked in.  They also get a W-2 for each state that they've worked in at the end of the year.  It's a pain but we haven't figured out a better way.

How does Quickbooks take care of garnishments if you set up an employee for state 1 and then again in state 2?

Thanks for joining in the thread, 2stateissue.

I'll share some information in handling garnishment for employees that work in various states.

The software doesn't support multi-state payroll. With this, you can process payroll for a specific state manually. You can create two different garnishments payroll items and be sure to select the right one for the targeted state.

Here's how: 

1. Go to the Lists menu, click Payroll Item List.
2. Select the Payroll Item button, then New.
3. Follow the steps in this article to set up garnishment deduction through EZ setup: Set up a payroll garnishment item.
4. Repeat the same process for the other state.

You may also review this material to learn more about processing paychecks in QuickBooks Desktop: Create and run your payroll.

Please don't hesitate to reply if you need further assistance setting up a garnishment deduction. I'll be here to help you.

In the proposed solution, it is dividing up an individual's wages to two separate states for unemployment reporting purposes.  It is my understanding that an employer can only report the unemployment taxes to one state per individual worker.  Please correct me if I'm wrong.  So I'm thinking that if the employee lived in Texas; and the employer was located in Texas, but the employee worked occasionally in Louisiana, the withholding would be reported to Louisiana for the portion of wages earned there, but the unemployment would be reported to Texas.

JTNYL - I think you may be misreading the reports showing taxable wages for LA and TX in JenD's example.   The LA wages are not including the $100 from TX...they are including $160 from hourly wages, and $100 from FMLA for a total of $260 for LA.   The Texas wages are showing a total of $200 in wages ($100 from hourly wages and $100 from FMLA).    Or, am I missing something?  

How were you able to set up someone three times with the same social security number?

It doesn't appear that the same SSN was used 3 times. Instead the single SSN was used, but the state listed was changed. - Using the same SSN was allowed in the past, but this year QuickBooks decided to not allow this anymore. Thus making this workaround valuable unless one wants to change the software.

Quickbooks allowed me to use the same SSN 3 times, it just gave me a "warning" about it when I would save the information. Now it won't let me do that anymore.  The only way to get around this is to "deactivate" the records, make any changes, save the information and then reactivate the record(s).  I spoke with Intuit on this and that is the only way to get around it at this point. I also use the desktop version so it's my understanding that the online version is very different from this.

There is an issue with the unemployment tax according to the rules unemployment is paid to the state that you live not in the state that you work, because the state that you live in is where you collect your unemployment not the state you work.  I can not seem to change that in QB

Hello there.

Thank you for reaching out with your concern regarding the unemployment tax setup in QuickBooks Desktop Payroll. I can see that you're experiencing an issue with ensuring the unemployment tax is paid to the correct state, based on residence rather than work location. I understand how important it is to get this right, so let's address your concern.

First, ensure each employee's tax setup is correctly aligned with their home state. Here's how:

1. Go to the Employee Center.
2. Select the employee's name.
3. Navigate to the Payroll Info tab and click on the Taxes button.
4. Select the State Tax tab. Here you can ensure the employee's State of Residence is correct.

QuickBooks Desktop allows you to specify which state should receive the unemployment taxes during the setup of each employee. You can modify it by going to the Edit Employee section and adjusting their State Worked and State Subject to Withholding settings under the Payroll and Compensation Info, Taxes, then State Tab.

For more information about managing and changing SUI rate in QBDT, check out this article: Update your State Unemployment Insurance (SUI) rate.

You can browse our compliance page to ensure that you entered the correct tax rate in QBDT: Access state agency websites for payroll. It also provides details about your tax forms, unemployment tax, E-file and Pay, and Employer registration.

Let me know if you need additional concerns about adjusting Unemployment tax in QuickBooks Desktop. I'm always here to assist you.