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Set up an employee's local tax

Learn how to set up an employee's local taxes.

You, as the employer, are responsible to determine which taxes an employee must pay according to local and state requirements. 

Note: Intuit QuickBooks Desktop Payroll Assisted, Basic, Standard and Enhanced cannot recommend to any business how they should set up their employee's local taxes and reportable wages. Contact your state agency or tax advisor for recommendations.

QuickBooks Desktop Payroll Assisted:  Assisted Payroll service does not debit, pay or file local tax payments or returns, except for the following as these are required to be paid and filed with the State Withholding or Unemployment agency:

  • Maryland
    • County Percent Rate
      • Once the rate is set up, it will be included with the Withholding taxes. To set up an MD employee correctly, for each employee, in Edit Employee window, click the Taxes button then choose the State tab.  Next to Subject to State Withholding choose Yes.  In the County % Rate enter the percent rate for your Maryland county.
  • New Jersey:
    • Family Leave Insurance
    • WF/SWF Company/Employee
  • New Mexico
    • Worker's Comp Fee Company/Employee
  • New York:
    • New York City Resident
    • Yonkers City Resident
    • Yonkers City Nonresident
    • MCTMT (Transit Tax)
  • Oregon:
    • Transit District (LTD)
    • Transit District (Tri-Met)

Intuit also support states with surcharges or assessments related to State Unemployment.  To learn more about the Unemployment in your state check out our State Unemployment: Details for Each State or our Payroll Tax Compliance site.  For information about paying local taxes or other liabilities in QuickBooks Desktop see Set up and pay scheduled or custom (unscheduled) liabilities for more information.

Local Tax Links

Use these resources listed below to help you determine the proper employee setup for the most common local taxes.

To determine local jurisdictions check out the Census Bureau website.  Website link: https://data.census.gov/cedsci/

Maintained by the U.S. Census Bureau, this website allows you to find local jurisdictions by address.

To use this site:

  1. Go to the data census website at https://data.census.gov/cedsci/.
  2. Select Advanced Search, then select Geography. Choose from specific summary levels.
  3. Enter the address (either work or home) in question, then select Search.

The results will display the appropriate jurisdictional information that may be necessary in determining local taxes.

Colorado

Local taxes in Colorado vary by city and are referred to as Occupational Privilege Taxes (OPT), or Head Taxes.  Contact your city to see what taxes apply to you.

Kentucky

Local taxes in Kentucky vary by city and county.  Contact your city and county to see what taxes apply to you.

Missouri

Local taxes in Missouri vary by city.  Contact your city to see what taxes apply to you.

Ohio

 The Ohio Local Tax Finder website can help locate rates and taxes. When using the website, click both of the following buttons: School District and Municipal Tax.

Oregon

  • Eugene: Beginning 1/1/2021, all employers who are paying wages to employees and self-employed persons with a physical address in the Eugene city limits must register and file with the City of Eugene. Select Eugene Community Safety Payroll Tax for more information. 
  • Portland: Beginning 1/1/2021, employees with taxable income of more than $125,000 for individuals and $200,000 for joint filers will pay this 1% tax. Select Portland Metro Tax for more information.

Pennsylvania

  • Select here for Pennsylvania Local Tax Finder. Enter the employee's home and work location addresses and click View Report. The report will display the local taxes and the associated rates.

Local Tax Names on the W-2

In some cases QuickBooks Desktop may create standard payroll items for local taxes, such as the "MI - Cities Res Tax" and "MI - Cities Work Tax".  These items have hard coded names that flow to the W-2 for QuickBooks Desktop Payroll Assisted.  Even if you add text to the "Print on W-2 as" field,  it will not flow to W-2 under that name.  Follow the steps below to create a new local tax item.

Create and add the payroll item to employees

To create a local payroll item:

  1. Go to the Employees menu, then Manage Payroll Items, then select New Payroll Item.
  2. Select Custom Setup, then select Next.
  3. Select Other Tax, then select click Next.
  4. Select the drop-down arrow and select the tax from the list. If the tax is not in the list, select User-Defined then choose:
    • Tax is to be paid by the employee; or
    • Tax is to be paid by the company.
  5. Select Next.
  6. Enter the name of the tax item and selectNext.
  7. Enter the name of the tax agency and the tax ID number. Skip the number if you do not know it; you can add it at any time.
  8. Select the Liability Account, then select Next.
  9. Select the Tax Tracking Type (check with your tax advisor if you do not know which to choose), then select Next.
  10. Select Calculate this item based on quantity or Calculate this item based on hours if applicable, then select Next.
  11. Enter Default Rate or Limit, if applicable, then select Next.
  12. If a tax might affect the wages for this local tax and you want to change the current settings, make the change and select next.
  13. If a payroll item might reduce the wages for this local tax, check the payroll item from the list. Then select Finish​​.

To apply tax to other employees:

  1. Go to the Employees menu, then select Employee Center.
  2. Select the employee's name twice.
  3. Select the Payroll Info tab.
  4. Select Taxes, then select the Other tab.
  5. Select the Item Name column (press Tab to go to the next available line), then select the local tax.
  6. Enter the rate and limit (if not added in the steps above), then select OK.
  7. Repeat steps 1-5 for other employees also subject to this tax.

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