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Set up local taxes in Online Payroll

SOLVEDby QuickBooksIntuit Online Payroll62Updated 1 month ago

Learn how to set up local tax withholding for your company and employees.

Local taxes are payroll taxes employees and/or employers must pay in several states. These are in addition to required State Withholding tax. They can be city, county, municipality or school district taxes. 

States with local taxes

These states have local tax withholding: Alabama, Colorado, Delaware, Indiana, Kentucky, Maryland, Michigan, Missouri, New York, Ohio, Oregon, Pennsylvania and West Virginia. Not all cities in these states collect local taxes.

To get started setting up your local taxes, see the steps below and select your payroll plan.

Note: Not sure which payroll service you have? Here's how to find your payroll service.

Step 1: Determine which local taxes you and your employees are required to pay

To make sure you get the most accurate local tax jurisdictions, get the physical address for your employees’ home and work locations. If you aren’t sure what city, municipal, or school district taxes your employee should pay:

  • Contact your local tax agency
  • Use the local tax resources below 

Here are some local tax resources and info

All states with local taxes:
Use the USPS Address and ZIP code locator to determine the best city/ZIP code combo. We recommend Cities by ZIP code.
IndianaIndiana requires local taxes based on where the employee lived and worked on January 1 of the current year.  

Employees should complete Form WH-4.
MarylandMaryland local taxes are included when you set up State Withholding, so there’s nothing extra you need to do.
OhioOhio local tax finder. Use the ZIP code link and enter the 4-digit ZIP code extension for employee’s residence and work locations to find the specific applicable local taxes.  
If you don’t know the 4-digit extension, use the USPS Address and ZIP code locator.  

Note: School district taxes with 0.00% rate will not appear on the employee local tax setup.
OregonEugene Community Safety Tax
Lane Transit District (LTD) tax
Multnomah Preschool For All
Portland Metro Supportive Housing Services
TriMet transit tax
PennsylvaniaLocal Income Tax requirements for employers and link to employee residency certification form
Find your PSD Code by address
Set up PA Local Services Tax (LST)

Step 2: Add the local taxes to your employees

  1. Select Payroll, then Employees.
  2. Select Add Employee or select the employee’s name to edit. 
  3. Your employee’s local tax settings are In What are [Employee’s] withholdings? 
  4. Enter or review your employee’s physical home address 
  5. In the Local taxes section, select the applicable local taxes based on step 1. 
    • If you don’t see the expected local taxes, select Edit location. Enter the city and ZIP code combination for the local tax jurisdiction you need. If you’re in PA, you can enter the specific PSD code. 
  1. Select the Employees tab.
  2. Select the employee's name.
  3. From the Taxes and Exemptions section, select Edit ✎. 
  4. In the Local section, select all local tax options, then select OK.

Step 3: Add your local tax account number and deposit frequency

Once your employees’ local taxes are added, you’ll need to provide your local tax account number and tell us how often you’re required to pay these taxes.  This info is needed to pay and file your taxes in QuickBooks. Contact your local tax agency if you don’t have this info. 

If you’ve already run first payroll and are adding new employees

  1. Select Settings ⚙, then Payroll Settings
  2. In the [State] section, select [State] local taxes.
  3. Enter your local tax account number and select your frequency.
  4. Select Save

If you’re new to QuickBooks Online Payroll and getting set up

  1. Select Payroll, then select Overview.
  2. Select Let’s Go on the Set up your local taxes task. 
  3. Select Edit ✎.
  4. Enter your local tax account number and select your frequency. 
  5. Select Save

Intuit Online Payroll Full Service

Contact us to add your local tax account number and deposit frequency. 

Intuit Online Payroll Enhanced

You don’t need to provide this info to us. You’ll need to pay and file your local taxes manually outside of your payroll product.

Step 4:  Pay and file your local taxes

QuickBooks Online Payroll Core

Local taxes are calculated and tracked based on your setup.  However, you’ll need to pay and file your local taxes manually outside of QuickBooks.

You can use the Payroll Tax Liability report to see your local tax liabilities. Then record any local tax payments you’ve made to balance out the report.

QuickBooks Online Payroll Premium and Elite

Your local tax payments and forms will be handled automatically when:

You’ll need to pay and file your local taxes manually outside of QuickBooks if you turned off automated tax payments and form filings. You can view the Payroll Tax Center to see your local tax liabilities due.

  1. Select Taxes, then Payroll tax.
  2. From the Payments list, you can select Mark as paid on the local taxes you paid.

Intuit Online Payroll Full Service

We pay and file most local taxes for you. 

Intuit Online Payroll Enhanced

You’ll need to pay and file your local taxes manually outside of your payroll product.

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