Multi-state Withholding

I too, am grappling with this issue. I live on the border of WA and OR, with WA having no income tax, and Oregon having income tax and requiring withholding for employees that earn more than a couple thousand dollars throughout a year in Oregon. We have many jobs (construction) in Oregon, and will continue to do so. I even called ADP, and their basic service also does not offer multi-state payroll. To get that level of service with ADP you must have at least 25 employees. We have just 2 employees. All is not lost, however: After an Intuit "Payroll expert" flatly told me that NO QB Payroll service accommodates multi-state payroll, I closed that chat and proceeded to set it up as follows: The work-around solution is to simply set up 2 employees of the same name. You will have to differentiate them as follows (add a code enclosed with [for example in my case {OR}] in the last name. Put the full real name in the Legal Name field. Simply enter the hours for each state in the applicable employee. The employee will receive 2 paychecks per pay period that they work in two (or more) states. At the end of the year they receive a W-2 for each state they worked in. Dang, I should bill Intuit a fat consulting fee for this advice on how to use their product to accomplish something that "people have been asking for for 20 years." :-)

Thanks for your answer -- creativity is appreciated. For how long have you been managing it that way? are there any other issues or problems to watch for?

dkarl789

How did this work for you?  Were there any problems when you did your W-2's for your employees or other issues that you ran into.  I have a similar situation.  We're an electrical contractor in SD; have a project in ND and 2 Employees that live in SD, work on a project in SD and the one in ND.  ND has W/H; SD doesn't.  Waiting to hear about your problems if there were any.  Thank you for your comments.

Does anyone know for sure if Quickbooks Online supports multi state employees?

Thank you for joining the thread, @cmrapp.

Yes, QuickBooks Online (QBO) supports multi-state employment. However, consulting with an accountant or a tax professional is highly recommended to help set up the employees correctly so QuickBooks will calculate and deduct taxes accordingly.

Also, you can contact our QBO Support Team with regards to your payroll questions. From the Help menu, select Contact us to connect to a payroll representative.

This article is another great resource to know more about multi-state employment payroll situations in QBO: About multistate employment payroll situations.

Drop a post if you have any other concerns and clarifications, I'm always here to help however I can. Wishing you continued success!

Any updates to the DESKTOP PAYROLL in being able to handle multi-state payroll?   This is a very common issues these days - I sure hope that Quickbooks doesn't forget about their Desktop payroll users - I've used the Online Payroll before, I don't like it, and much prefer the Desktop version.  PLEASE update the Desktop payroll version to accommodate multi-state payroll for employees who work in multi-states within one pay period!

Jumping in to help with your question about the multi-state feature, acctggirl.

For now, multi-state function is still not supported in QuickBooks Desktop Payroll. You can create the paycheck for the other state first. Then, go to the employee's profile and change the employee's state information. Once done, create another paycheck for the second state.

Here's how to change the employee's work  or state payroll information:

1. Go to the Employees menu and select Payroll Center.
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.

While the feature is still not available, I'd suggest sending a feature request about supporting multi-state. You can send it directly to our engineers from your company file. Here's how:

1. Go to the Help menu, scroll-down to Send Feedback Online, and then click Product Suggestion. 
2. Enter all required details.
3. Click Send Feedback.

Submitted feature requests are collected and reviewed by our engineers for future updates.

You can always count on us if you ever need more help when working in QuickBooks Online. Just drop a comment below or post another question in the Community. We'd be glad to assist you again.

What effect would this have on the W-2 at year-end?   Washington State does not have state income tax withholding, so doesn't require a W-2.   Oregon State DOES have state income tax withholding, so they would require a W-2 showing the OREGON wages.   Would what you are suggesting, creating two paychecks in one pay period, calculate the proper amount of Oregon wages for the W-2?

Thanks for joining the thread, @PacMech. Allow me to share more information about how it affects the W-2 reporting in QuickBooks Desktop (QBDT).

The given workaround by my colleague is also for documentation purposes. At the end of the year, you are going to manually file the W-2 to the state. I'd also recommend speaking to your accountant or tax advisor. They know what's the best process you can do that fits your business' needs.

For more details on how to file the W-2 form, you can refer to this article: File your W-2 forms.

I'll be around if you have any questions about this process. Let me know in the comment section. Take care!

I have handled our multiple state employees as listed above. All employees are set up twice but the second one has {OR} after their name. I just manually combine the two at the end of the year for W-2 reporting.

Since the upgrade to Enterprise 2022 any employee with {} after their name cannot receive a paystub by email. I have exhausted support with several attempts to fix this. I was told to remove the {}. If I do this, does anyone have a suggestion how to represent an employee twice? They need to get their paystubs. 

Any suggestions are welcome!

Thank you,

clake

Hello there, @clake. I know a way that'll help you represent an employee twice in QuickBooks Desktop (QBDT), and I'm here to show you how.

You'll want to edit the employee's name by removing the special characters {} and replace them with a letter or numbers before sending them an invite to QuickBooks Workforce. This way, they'll be able to get their paystubs and W-2s. Here's how:

1. Go to the Employees menu.
2. Select Employee Center.
3. Double-click the name of the employee with {}.
4. In the Personal tab, remove the special characters {} in the employee's name and replace them with a letter or number.
5. Click OK. Repeat steps as necessary.

Once you're done, you can invite your employees to see their paystubs and W-2s online. For the detailed steps, please see this article: Invite your employees to QuickBooks Workforce to see pay stubs, W-2s, and more.

Also, you may want to check out these articles as your reference in case you need further assistance in managing employees working in other states and submitting W-2s using QBDT: 

• Set up employees and payroll taxes in a new state
• File your W-2 forms

Please keep me posted on how it goes in the comments below. If you have other payroll concerns and questions about managing employees in QBDT Payroll, I'm always ready to help. Take care, and I wish you continued success, @clake. 

Thank you very much. I'll look into this. My quick fix for now: I replaced the {} with an @. This seems to be working.

Best Regards,

Clake

Hooray, clake. 

We from the Community and Intuit are always here to make sure that we were able to help fix your issue anytime.

Here's a great resource that you can check on for more detailed About multistate employment payroll situations.

You can always get back here in the Community. Cheers to more success in your business. Have a great day!

Hello,

I have been processing payroll for multiple states each payroll period for about 8 years...the following has worked for me and I have no issues with my w2's (for the most part) 

Simply create "Payroll Schedules" and called them by the States you currently have employees working in.

No need to create an extra employee profile for the same person.

Go to the employee profile and payroll tab then change the payroll schedule and state tax information. 

Yes but does this allow you to pay one employee for multiple states in one pay period? For example, we have an employee who is paid weekly - but soon he will work 3 days a week in Washington state and 2 days a week in Idaho state. I'm trying to figure out how to properly withhold from him when he is working in multiple states within ONE pay period?

Yes, you can do this easily with QB Pro desktop Enhanced payroll. All you do is create two different sets of pay types: For example:

RegWA

RegID

OTWA

OTID.

Enter the hours for each pay type on pay day

You will need to set the lived in State as WA and worked in State as ID to also pull in the Idaho state taxes

You will probably need to over-ride the taxes calculated by QB because it  may assume all pay is in the Idaho tax jurisdiction. (I used an Excel spreadsheet.) All pay from both states will be subject to WA Employment Security and PFML. With the lived in state set to WA it should calculate those correctly. I processed payroll with EEs going back and forth between WA and OR so I learned this process very well.

PacNWSon - I don't see how that would work on the W-2 - wouldn't that show as all wages being in Idaho for the state W-2 portion?   If you have to "override the taxes" as it would assume all wages were Idaho, then I would assume it's going to include all of the wages as Idaho on the W-2...or am I missing something?

Run an Annual payroll wage & tax report just for your Idaho employees. Then generate W-2's. Then you can edit the forms. Put the Idaho wages into the State wages Box, and save. That's all there is to it.

I went thru and set up an additional employee with a NJ on the name. However, it will still not let me save the employee because it has the same social security number. I have one employee who lived and worked in NJ thru July and has since moved to SC for the remainder of the year. How can I get this to work with two states?

I'll share info and steps with handling multi-state employees in QuickBooks, carolinapayroll.

Assigning multi-states under employee information is unavailable in QuickBooks Desktop Payroll. You'll have to manually switch to another state when creating payroll for the employee who moved to SC.

Let me guide you on changing 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. Click on OK to save your work.

The system will use the state assigned to calculate taxes when processing your payroll.

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

• Edit or change employee info in payroll.
• Excel-based payroll reports.

In addition, check our year-end checklist to prepare your tax forms in QuickBooks Desktop Payroll.

I've got your back if you have more questions about managing your employee in QBDT. Just add your reply in the comment section so I can assist you further. Have a good one.

If they are in multiple states each week, do you process one schedule completely. Then go back and do another state's payroll schedule?  So they end up with 2 paystubs then?

I've got your back, @rensberger.

Yes, you're right. Since QuickBooks doesn't allows you to assign multiple states under an employee profile, you'll have to process it manually. This means that you need to switch the states manually the moment you create payroll for the employee's working hours. 

Firstly, you'll want to change the state of your employee's profile. Here's how:

1. Go to the Employees menu, then select Employee center.
2. Open the employee's profile.
3. Go to the Payroll Info tab and click 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. Click OK once done.

After changing the employee's state, the system will use the assigned state to calculate taxes when you process payroll.

Just in case you want to learn more about how QuickBooks calculates payroll taxes, you can check out this article for more information: Understand how your payroll taxes are calculated.

Don't hesitate to leave a comment below if you have other concerns or follow-up questions on managing employees working on multi-state. I'll be around to provide further assistance.

And now they've killed that work-around that many of us have been using for years be not allowing employee records to be updated if the SSN is used more than once. Talk about "upgrading" to make a product less useful and more difficulty--without even offering a solution!!