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Set up a payroll item for Washington's Labor and Industries (L&I) tax

Washington's Labor and Industries (L&I) tax is a payroll tax generally paid by both the company and employee. It is based on hours worked with different rates for different occupations. In QuickBooks Desktop, two items are available to calculate the L&I payroll tax: one item for the company contribution and one item for the employee deduction. This article explains how to set them up.

Details

You will set up QuickBooks Desktop to calculate, track and remit Washington L&I tax.

Note: Although Washington L&I tax is not paid or filed by QuickBooks Desktop Payroll Assisted service, customers can use these steps to track L&I and create a liability to pay.

Starting August 2013, the state requires that L & I be electronically filed and paid. Employers who would like to opt out of this mandate will need to contact the state agency directly.

For more information about Washington L & I payments and rates contact the state or see the following state website Washington State Department of Labor & Industries.

To set up a company contribution item for Washington L&I tax:

To set up an employee deduction item for Washington L&I tax:

Add the payroll items you created to the employee profile under Additions, Deductions and Company Contributions on the Payroll Info tab so they appear on every paycheck.

When you create a paycheck, the system applies the tax rate to hours worked for the employee.

QuickBooks Desktop will not automatically exclude any earnings items from the payroll item calculation. If you need to exclude pay, you must manually modify the paycheck.

  1. In QuickBooks Desktop, choose Lists > Payroll Item List. Select Payroll Item on the lower left and select New, then Custom Setup.
  2. Choose Company Contribution and select Next.
  3. Name the payroll item and select Next.
  4. Enter the agency name and account number. Select the accounts you want to affect in your Chart of Accounts. Select Next.
  5. Select the Tax Tracking Type as None. Select Next.
  6. In the Taxes window, be sure no taxes are selected. Select Next.
  7. In the Calculate based on Quantity window, select Calculate the item based on hours and select Next.
  8. In the Default rate and limit window, enter the company-paid rate per hour for your company.

    If the amount is different for each employee, leave the amount blank. You can enter individual rates later when you add the item to each employee's payroll information. (You must enter this rate in the employee profile or the Washing L&I tax will not be calculated on the employee's paycheck.)
  9. Select Finish.
  10. Set up a payment schedule for Washington L&I tax.

Note: If the employee is paid on commission, this payroll item must be set to calculate based on quantity. Enter the number of hours under the quantity field, in other payroll items on the paycheck.

  1. In QuickBooks Desktop, choose Lists > Payroll Item List. Select Payroll Item on the lower left and select New.
  2. Choose Deduction and select Next.
  3. Name the payroll item and select Next.
  4. Enter the agency name and account number. Select the accounts you want to affect in your Chart of Accounts. Select Next.
  5. Select the Tax Tracking Type as None. Select Next.
  6. In the Taxes window, be sure no taxes are selected. Select Next.
  7. In the Calculate based on Quantity window, select Calculate the item based on hours and select Next.
  8. In the Gross vs. Net window, select Net pay and select Next.
  9. In the Default rate and limit window, leave the rate as $0.00. You must enter this information in the employee record under Payroll and Compensation information. (If you don't, the Washington L&I tax will not be calculated on the employee's paycheck.)

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