How does a MD employer set up a local EIT tax for an employee from PA?

Hello there, dorimatalia.

I appreciate all your efforts in trying to set up the employee’s PA (Pennsylvania) local tax. Let’s go to the worker’s Pay tab and add the local tax. It only takes a few clicks to get there.

Before performing any troubleshooting steps, allow me to share some information about local taxes. When the worker is exempted from the mentioned tax, you’ll not be able to see the rate field. In the employee’s Local taxes settings, the PSD code is automatically added based on the location for your state.

You can read through this article to learn more about the local tax for the state of Pennsylvania: Local Services Tax (LST). From there, you'll learn when to stop withholding the LST and process an exemption. 

To enter the deduction for the mentioned tax, follow the steps below to accomplish the task. Here’s how:

1. In QuickBooks Online (QBO), tap the Payroll menu and select the Employees tab to see the list of all your workers.
2. From the list, click on the employee’s name to view their profile.
3. Click the Pencil icon for Pay and navigate to the Does [employee] have any deductions? section.
4. Press the Add/edit deductions link to open the Deductions/contributions screen.
5. Tap the Add deduction/contribution link to display the Add deduction/contribution window.
6. Click the drop-down to choose Other taxable deductions and Other after tax deductions as the type.
7. Type LST in the Description field.
8. Then select Flat amount or % of gross pay in the Calculated as drop-down and enter the figure in the Amount per paycheck box.
9. For Annual Maximum, enter the jurisdiction's annual maximum amount of LST.
10. Press the Save button to keep the changes.

Check the following article for more details: Set up PA Local Services Tax (LST). Additionally, these links will guide you on how to set up local tax withholding for your company and employees. You'll also see answers to common questions about adding and assigning work locations for your workers.

• Set up local taxes in Online Payroll 
• Set up and assign a new work location 

Reach out to me if you have additional concerns about local taxes. I’m always ready to assist further. Have a good one.