Learn the things you need to know if you have multiple work locations in different states.
Dealing with multistate employment situation can be complex. Consult an accountant or a tax advisor for an advice. You can also contact us with regards to your payroll. From the Help section in your online payroll, select Contact us to connect to a payroll support.
Setting up work locations
The first business address that you enter in your account is your primary work location. You can set up and assign a new work location as needed.
If your employee works in a state outside your primary work location state, your employee is subject to work-based taxes such as State Unemployment Insurance.
Our payroll service calculates work-based payroll taxes for each state in which you have a work location.
Payroll taxes such as state and local withholding taxes are based on your employee's residence location as well as your employee's work location. These taxes are calculated and reported differently, depending on the laws of the particular states where your employee lives and works.
Some states have reciprocity agreements. To find out whether there is a reciprocity agreement between your employee's work location state and your employee's residence state, see the following section, States with reciprocity agreements.
If there is a reciprocity agreement between your employee's work state and your employee's residence state, we ask you whether your employee has given you a certificate of nonresidence.
If your employee does give you a certificate of nonresidence, we do not deduct state withholding (if any) for the employee's work state from this employee's paychecks. Instead, we give you the option of deducting state withholding (if any) for the employee's residence state from this employee's paychecks. To elect withholding for the residence state, enter the appropriate filing status and allowances on the Tax Information page for the employee.
If the employee is exempt from state withholding, select Do Not Withhold as the state filing status in the tax information page.
- Some employers are required to withhold taxes for the employee's residence state. If you have employees who make sales or perform services in your employee's residence state, you might have the sort of business connection, or nexus, that makes you subject to that state's laws. Alternatively, some employers and employees agree to withhold taxes for the employee's residence state, even though it is not required. That way, the employee does not have to pay estimated taxes or a large tax liability at the end of the year.
- In some cases, registering for withholding in a second state can cause you to receive inquiries from that state about other taxes for which you are not liable, such as sales tax or corporate income tax. Also, in some states, withholding and paying over taxes can make your company liable in the courts of that other state. Consult your legal and tax advisors before making the decision to withhold taxes for a state other than your primary work state.
- If your employee does not give you a certificate of nonresidence, the reciprocity agreement does not apply, and your payroll taxes are calculated as though there were no reciprocity agreement between your work state and your employee's residence state (see the following section, States without reciprocity agreements).
The following states have reciprocity agreements:
|Business Location||Employee Residence State|
|Arizona||California, Indiana, Oregon, Virginia|
|Arkansas||Texarkana, Texas and Texarkana, Arkansas|
|Illinois||Iowa, Kentucky, Michigan, Wisconsin|
|Indiana||Kentucky, Michigan, Ohio, Pennsylvania, Wisconsin|
|Kentucky||Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, Wisconsin|
|Maryland||District of Columbia, Pennsylvania, Virginia, West Virginia|
|Michigan||Illinois, Indiana, Kentucky, Minnesota, Ohio, Wisconsin|
|Minnesota||Michigan, North Dakota|
|New Jersey||Pennsylvania. Effective 1/1/2017 New Jersey and Pennsylvania will no longer have a withholding reciprocity agreement.|
|North Dakota||Minnesota, Montana|
|Ohio||Indiana, Kentucky, Michigan, Pennsylvania, West Virginia|
|Pennsylvania||Indiana, Ohio, Maryland, New Jersey, West Virginia. Effective 1/1/2017 New Jersey and Pennsylvania will no longer have a withholding reciprocity agreement.|
|Virginia||District of Columbia, Kentucky, Maryland, Pennsylvania, West Virginia|
|West Virginia||Kentucky, Maryland, Ohio, Pennsylvania, Virginia|
|Wisconsin||Illinois, Indiana, Kentucky, Michigan|
If your employee does give you a certificate of nonresidence, we don't deduct state withholding (if any) for the employee's work state from this employee's paychecks. Instead, we give you the option of deducting state withholding (if any) for the employee's residence state from this employee's paychecks. To elect withholding for the residence state, on the Tax Information page for the employee, enter the appropriate filing status and allowances.
To not withhold for the residence state, on the tax information page for the employee, choose Do Not Withhold as the state filing status.
Note: Some employers are required to withhold taxes for the employee's residence state. If you have employees who make sales or perform services in your employee's residence state, you might have the sort of business connection, or nexus, that makes you subject to that state's laws. Alternatively, some employers and employees agree to withhold taxes for the employee's residence state, even though it is not required. That way, the employee doesn't have to pay estimated taxes or a large tax liability at the end of the year.
The following states have no withholding taxes. If your employee lives in one of these states, enter W4 info for the work location only:
- New Hampshire
- South Dakota
- North Carolina
- North Dakota
- South Carolina
- West Virginia
States that do withhold from residents who work in a state that has withholding, but only to the extent (if any) that their withholding exceeds the amount withheld by the state where the resident works
If your employee lives in one of these states, enter W4 info for both work location state and the state of residence. We'll calculate the difference and withhold accordingly.
- New Jersey
- New York
- Rhode Island
States that withhold in full from residents who work in another state, regardless of whether the state where the resident works also has withholding
- District of Columbia
- New Mexico
Note: Special rules apply for New Jersey-Pennsylvania and Maryland-Delaware relationships. For questions regarding these states, check with your legal advisor.
New York does not have reciprocity agreements with other states. New York income tax withholding is required from all nonresidents who work in New York. Depending on the employee's residence state, income taxes may be withheld from both New York and the residence state, or from New York only. For example, a resident of New Jersey who works in New York will have New York income tax withheld from all wages. The employee would also have New Jersey income taxes withheld to the extent they exceed the New York amount. If the calculated New Jersey withholding is less than the New York withholding, no New Jersey tax would be withheld. For more information, see section I (New York State nonresident employees) of the New York Employer's Guide.
If the employee of a New York employer works outside the state of New York for the employee's convenience (rather than because of the employer's business necessity), the employee is subject to New York withholding taxes as though the employee worked in New York. If you are in this situation, contact us to make sure your setup is correct.
Michigan, Minnesota, and North Dakota require separate reporting of wages paid at multiple work locations within the state. Our service does not support separate reporting for multiple work locations within a state. If your primary work location state is Michigan, Minnesota, or North Dakota and you have multiple work locations in your primary work state, you must prepare wage reports for each location yourself, using our form as a guide.
Some local taxes are based on where an employee works, while others are based on where an employee lives. Our online payroll service calculates all local taxes that apply to you and your employees. When you assign an employee to a work location, we offer you the option to activate work-based local taxes (if any) that apply to employees at that work location, and residence-based local taxes (if any) that apply to employees at that residence location. Our payroll service also credits local taxes against other local taxes, as is appropriate. In general, reciprocity agreements affect only state withholding, not local, taxes.
If you have 10 or more employees who work at locations other than your principal worksite, you are subject to multiple worksite reporting. We provide the information that you need to complete the form in the Reports section under Multiple Worksite Report (MWR). Note that this information includes only employees who worked during or received pay subject to unemployment insurance for the payroll period that includes the 12th of the month.
States that require you to report on the standard Form MWR are:
- New Hampshire
- New Jersey
- New York
- North Carolina
- North Dakota
- West Virginia
You can obtain the form from the Department of Labor in the state where your business is located. We do not provide it.
There are several reasons why you want to opt out of Multistate Plus support for a secondary state:
- You no longer have an active work location in that state.
- You no longer have active employees who reside in that state.
- Your employees in that state are commuter employees, and don't have income taxes withheld for their residence state.
- You wish to handle the tax payments and form filings for that state yourself, and not through your online payroll account.
In order to opt out, you'll need to do the following:
- Inactivate all work locations in that state.
- Set the tax status for all employees to "Do Not Withhold" for that state.
- Confirm that you wish to disable Multistate Plus support for that state.
If you do opt out of a secondary state, our system will only provide the tax liabilities for that state. It will no longer provide support or reminders for tax payments and form filings to that state. You will no longer be charged the additional Multistate Plus fee for that state.
Note: If you are using QuickBooks Online Payroll Full Service, QuickBooks Online Payroll Enhanced, or Intuit Online Payroll Full Service, you can change the filing status of the secondary state but can't opt out the multistate support. Contact us for the opt out process. From the Help section in your product, select Contact us to connect to a payroll support.
To inactivate a work location in a secondary state:
To update an employee's tax status: