I live in a state (Oregon) with both federal and state W4s. None of my employees want any type of different state deduction. My question is, can I just setup their requested W4 allowances under the federal section or do I have to set it up in the state section also?
If I do have to set it up under federal and state, should I only set the federal to the requested allowances and leave the state at zero or should I make them both the same?
Federal and state withholdings are calculated separately based on the employee's W4 information, including the number of allowances. You will need to enter them when setting up the state taxes for the calculation to be based on what they've declared on their W4.