I am not required to pay PA UI taxes but require to pay PA withholding -- QBO won't let me set up payroll without the UI information. Is there are workaround?

Good morning, @joy-riversidetre. 

I hope your Friday is going great so far. 

In QuickBooks Online, you can exempt your employees from Unemployment tax. I've included the steps to do this below. 

1. Go to the Payroll or Workers menu, then select Employees.
2. Click your name, proceed to the Employee Details or Pay section, and select Edit (pencil icon).
3. Proceed to the Withholdings section and click the Edit (pencil icon) again.
4. Scroll down to the Tax exemptions section. Then, uncheck the unemployment tax.
5. Click Done.

I also wanted to share some steps to update your SUI rate at any time in QuickBooks. Here's how: 

1. Go to Settings, then select Payroll settings.
2. Next to the state you want to update, click on the Edit icon.
3. In the State Unemployment Insurance (SUI) Setup section, hit Change or add a new rate.
4. Enter your new rate and its effective date. For most states, the effective date is 1/1. For TN, VT, and NJ, the date is 7/1.
   • Contact us if you have already created paychecks with the wrong rate or need to correct a prior quarter rate.
5. If you have a surcharge or assessment tax rate, enter it here.
6. Enter your new rate and its effective date.
7. Hit OK to save your changes.

For more information about this process, check out Update your State Unemployment Insurance rate. 

I'm here if you have any additional questions or concerns. Take care, and have a great weekend! 

Hi Tori,

Thanks for the info, however, those employees still have to pay into NJ UI since they work in NJ. I was able to run payroll by making them exempt from STATE UI but now they are missing the deduction for NJ UI as well as PA withholding.

Here's the breakdown:

• EE resides in PA and works in NJ
• Per PA UI laws, EE gets deductions for NJ UI taxes and PA withholding
• Employer is responsible for NJ UI taxes as well as PA withholding and NJ withholding

Furthermore, QBO will not allow me to "sign my tax documents" without entering a PA ID number for UI (I do not have since we don't pay that) as well as percentage for deduction for PA UI (which is 0%). I will never be able to sign my tax docs without a workaround for this. 

Thanks for following up with the Community, joy-riversidetre.

Since you're saying your payroll isn't configured properly, I'd recommend getting in touch with our Customer Care team. They'll be able to pull up the account in a secure environment, conduct further research with you, and help make sure it's set up correctly.

They can be reached while you're signed in.

Here's how:

1. Use the Help (?) icon.
   
2. Click Contact Us.
   
3. Enter a description of your situation in the What can we help you with? field, then hit Let's talk.
   
4. Select Start messaging or Get a call.
   

Be sure to review their support hours so you'll know when agents are available.

I've also included a detailed resource about setting up deductions which may come in handy moving forward: Set up, change, or delete employee-paid payroll deductions

Please feel welcome to send a reply if there's any questions. Have a great day!

Well.... I did that, multiple times and no one has been able to assist me. No one seems to understand my predicament. I spend upwards of 2 hours on the phone or chat and get no resolution. That is why I'm turning to the community now. I was able to fix this in QBD but now that I'm using QBO there is no fix.

Hi there, joy-riversidetre.

I understand how you want to get answers to your questions. I'm here to help you provide information about multi-state payroll to help you successfully set this up. I can provide some insights on how to handle this in QuickBooks Online.

QuickBooks is dependent on state and IRS regulations. Taxes are calculated and reported differently depending on the laws of the particular states where your employee lives and works. There are some states with a reciprocity agreement, this is an agreement between your employee's work state and your employee's residence state. If your employee does give you a certificate of nonresidence, we do not deduct state withholding for the employee's work state.

Next, make sure to set up your QuickBooks Online payroll account so you can electronically pay your state payroll taxes and file state forms. Then, register with your agency. They will provide you with an account number, your tax rates, deposit frequency, and if necessary, login credentials to their websites for payments and forms. We can check this article: Access state agency websites for payroll. 

Lastly, setting up your work location can be done under your employee profile. Also, our payroll service calculates work-based payroll taxes for each state if your employees are working outside the primary work location. I recommend reviewing the employee information in the system. Please check if there are any changes to the state details.

Here's how:

1. On the left navigation bar, click Payroll.
2. Go to the Employees tab.
3. Click the employee's name.
4. Go to the Employee details tab.
5. Press the pencil icon next to Pay.
6. Scroll down to step 6, then hit the pencil icon to edit.
7. Review the state information.
8. Make the necessary changes.
9. Hit Save.

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. 

Hi TirzahC - This is just the fix I'm looking for! Only problem is the instructions don't match my version of QBO. I'll do my best and thanks again!

Hi there, joy-riversidetre.

I'm glad to know that my colleague was able to provide you with the information you were looking for. We'll always make every effort to provide you with the best possible assistance.

Please don't hesitate to let us know if you require any additional assistance or have any further questions about taxes and payroll. We'll be here to assist you. Enjoy a wonderful day!

Hi,

I'm having the same issue. Were you able to fix it? I used "apliedfor" per their instructions, but it is not working. 

I am having the same problem with QBO.  We are an employer in the District of Columbia.  As a 501(c)(3) nonprofit religious organization, we are exempt from paying UI taxes.  We do, though, have employees in DC., Maryland, and Virginia and withhold state taxes.  QBO won't allow me to set up all three state accounts without entering the unemployment insurance tax account number.  When I look at our individual employees, I only see DC SUI.  How do I by-pass all three jurisdictions?  I'm not able to process payroll until this is fixed, and may have to use my QB Desktop to pay employees until this is resolved.  Please advise.  Thanks.

Nancy

We appreciate you for joining this thread, @NK-919.

Let me help you tax-exempt your employees so you can set up your three state accounts.

First, let's ensure that your employees are set up as SUI-exempt. 

Here's how: 

Step 1: Exempt your business from SUI

1. Select Settings ⚙, and then select Payroll Settings. 
2. From your [State] tax, select Edit ✎.
3. Leave the SUI account number blank.
4. Enter your SUI rate: 0.00%
5. If applicable, select any tagalong or surcharge rates: 0.00%
6. Select OK, and then select Done.

Step 2: Exempt your employees from SUI

1. Select Payroll, then select Employees.
2. Select your first employee from your employee list, and then select Edit Employee.
3. From What are [Employee’s] Withholdings?, select Edit ✎.
4. From the Tax Exemptions section, select SUI and any applicable SUI tagalong or surcharge taxes.
5. Select Save, and then select Done.
6. Repeat steps 2–6 for each employee.

Feel free to read this article for more details: Set up federal and state unemployment insurance for churches and nonprofits.

However, if an unemployment insurance tax number is necessary to proceed, I recommend contacting the QuickBooks Online (QBO) Payroll Team to assist you. 

Also, I'm adding this link for additional resources about processing year-end Payroll and tax forms in QBO: Year-end checklist for QuickBooks Online Payroll.

I'm just a post away if you have any other questions about managing your employee's taxes. Keep safe.

Thanks for your reply.  I've followed the instructions but still get the "you need to finish up/more info is needed" message under state taxes in the Setup Tasks.  So, unfortunately, I can't move forward.  I do have QBO support, so will see if I can get in touch with someone tomorrow to get this resolved.  Of course, I have to process payroll tomorrow/Tuesday, so it was necessary to keep my enhanced payroll subscription with QBD so that I can prepare payroll through the desktop version.  I don't think that my employees would be willing to accept a delay in getting paid!    May also need to process payroll liabilities through QBD until this is resolved.  Needless to say, my migration to QBO hasn't been particularly smooth.  I don't think that the on-line version is necessarily designed for non-profits, and I certainly don't find it to be intuitive or easy to use.  Thanks again for trying to help!  Nancy

[email address removed] email me  if you need help

Thanks.  I think part of the problem is that I have state tax liabilities with three difference jurisdictions - District of Columbia (where the church is located) and also Virginia and Maryland (where employees work).  Will see what happens tomorrow.  How would you proposed to help?

We are a church and are exempt from SUI.  The instructions on how to make an entity SUI exempt for QBO Payroll are clear -- they just don't work.  QBO does not allow an entry of 0.00% to be entered under SUI rate.

Can you please help us?  Certainly we aren't the only church that uses QBO Payroll!

Hello there, DCO 1.

I'll provide some information and assist you in setting the State Unemployment Insurance (SUI) rate for exemption in QuickBooks Online.

If the system does not allow you to enter 0.00% for the SUI rate in QuickBooks Online Payroll, you can either remove the rate entirely or leave it blank. Also, make sure that the UI employer Number is removed or left blank as well. Since your church is exempt from SUI taxes, there is no need to provide a State ID Number associated with those taxes.

Otherwise, if it still doesn't work and the system requires a value to be entered, I recommend reaching our Payroll Team to ensure your SUI tax rate is set up properly.

Like this:

1. Log in to your QuickBooks Online company.
2. Click on Help (?).
3. Select the Search tab, then Contact Us.
4. Enter a description of your concern, then hit Continue.
5. Choose a way to connect:
    

• Start a chat with a support.
• Get a callback from the next available support.

I've also added the following articles as a reference:

• Set up federal and state unemployment insurance for churches and nonprofits
• Update your State Unemployment Insurance (SUI) rate

If you have any further questions or need additional assistance regarding SUI tax, feel free to ask. I'll be here to help. 

Thank you for the quick reply, Archie, but that did not work.  QBO does require that a rate be entered and it cannot be 0.00%.  I am sure that a lot of churches use QBO payroll, and entering a 0.00 rate should be allowable.  

I'll contact support as you suggested.

You are not alone. I am starting to rethink about having signed up to use QBO Payroll. It's requiring an accountant number, but we are exempt from UI as a religious organization here in Texas. So no account number is provided. Additionally, when hovering over the info icon it mentions either using an EIN or state tax ID. EIN will not work in this field. While under the rates 0 has been entered in the fields, I can't save it because QBO says I have to enter a larger rate. Hopefully the fix will come sooner than later. 

I first tried contacting your support team, and when I explained that the Texas Workforce Commission does not require small 501(c)3 Non-Profit Organizations to pay SUI, they first acted like they didn't know what I was talking about, then proceeded to ask their manager, who then put in a seemingly random code in to the TWU number field.

Everything was okay, but now QBO is saying:

"Your Q4-2023 TX UI C-3 was rejected. According to the agency, the account number you provided is invalid. Prior to making this payment and filing this form, please contact the state to verify your account number. They can be reached at 512-305-9667.

Please follow the steps below to ensure this filing and payment are made timely and accurately.

1. While logged into your payroll account, run a Tax Liability Report for Q4-2023. Please note, the agency requires zero wages/tax reports.
2. Go to https://apps.twc.state.tx.us/UITAXREG/security/selfRegister.do to register your business if you have not already done so.
3. Follow the steps on https://apps.twc.state.tx.us/UITAXREG/security/logon.do to submit/file the report and make any required payments.
4. Mark this task as completed.

Please contact Customer Care to provide the correct account number so that can file and pay for you going forward."

I just attempted to follow your instructions to make our business tax exempt, but QBO isn't letting me make those changes.

I understand how you want to make your business tax-exempt in QuickBooks Online (QBO), @NMWHM. Let me route you in the right direction to ensure you can complete your task on time. 

I recommend reaching out to our Phone Support team again. I'm aware that you've already gotten in touch with them, but it's the best we can do right now given that they have all the tools required to safely look at your account through screen sharing to more precisely pinpoint the tax-related difficulty you've been experiencing. You can ask our representative about the prompt steps you're getting in your QBO account and guide you through the process. 

Here's how:

1. Go to the Help icon in the top right-hand corner.
2. Select Search, then press the Contact Us button.
3. Enter your question in the box and hit Continue.
4. Choose the best way you'll want to reach out to us.
   
   

Be sure to review their support hours so you'll know when agents are available. 

Moreover, I'm adding these articles for reference to guide you in your future tasks: 

• Set up federal and state unemployment insurance for churches and nonprofits
• Update your State Unemployment Insurance (SUI) rate

I want to make sure you have the resolution you need. Let me know how it goes by clicking the Reply button below. 

For my part, I was finally able to get around this - but it took me nearly 3 hours on the phone with "Live Bookkeeping."  Thankfully, the Intuit professional stuck with me until it was finally resolved.  But it was very frustrating .....

Nancy