Multi-State Employees

Let's begin with a definition of terms:

Multi-state employee: an individual who is subject to taxation by more than one state in a given payroll period. (An example of a multi-state employee would be a construction crew that works on various jobs in various states.) If you have employees in more than one state, but they are not required to pay state taxes other than to their states of residence, they would not be multi-state: each employee would be set up for state taxation based solely on his or her state of residence. See the Employee Form for details.

Multi-state company: an employer who will pay state taxes (W/H, SUTA, etc.) to more than one state during the course of a payroll year.

CCS Pro can automate the various state and local tax deductions for multi-state employees and multi-state companies. In addition, it can automate the disbursement of these taxes to the various taxing agencies. CCS Express, however, has some limitations.

CCS Express Version

State Withholding Tax: The CCS Express version is limited insofar as multi-state employees are concerned. Each Employee is assigned to a single State Tax Table. Furthermore, you are only able to create one State Withholding Deduction Code (Code 96, Employee # 0) and you cannot assign a State Tax Table to the Deduction Code in the Express version. If an employee changes states for one or more entire pay periods, you can reassign that employee to a different State Tax Table before generating his/her paycheck. However, if an employee is subject to taxation by more than one state in a given pay period, the Express version cannot handle it.

State SUTA, Worker's Comp, etc.: These employer's taxes are normally paid to an employer's state of residence; CCS Express will always calculate these liabilities for the Companies resident state. Via the express version, an employee cannot be assigned to a Suta or Worker's comp. state other than the the Companies resident state.

CCS Express can handle state w/h tax deductions for a multi-state company. If, for example, you have one group of employees that works and pays taxes in New York and another group that lives and pays taxes in New Jersey, simply assign the correct State Tax Table to each employee. The program will keep track of the tax obligations in each state and print all W2's and W3's accordingly.

Although the Express Version is fully capable of handling state and local tax liabilities on an employee-by-employee basis, it is incapable of reporting to multiple states. Disbursements can only be automated for the company's state of residence. You will have to run reports and then manually retire obligations to states outside your company's state.

CCS Pro Version

The CCS Pro Version is fully capable of handling multi-state employees and multi-state companies from tax deductions to disbursements, including multiple Suta states and multiple W/Comp. states. Here are the steps required to set it all up:

  • Go to the Company Form and check the Multi-State Employees checkbox on the Payroll tab. This enables controls throughout the program that handle multi-state deductions.
  • If Local Taxes are to be deducted, create the Local Tax Tables for each locality in which your employees work. (State tax tables ship with the program.)
  • Create the Deduction Codes for each state or locality.
    • Code 96 (State Withholding): Create multiple Company-level Code 96's, one for each state. Enter the proper State Tax Table in the upper right hand corner of the code, and mark each code as Global. Only the Code 96 for the state code that best matches the Employee's assigned state will apply to any given Employee. Note: For states having multiple state w/h tables, you do not need to create a code 96 for each w/h table, just choose any one of the state w/h tables. For instance, Missouri uses the state w/h tables MO1 and MO2. Defining a deduction code 96, 0, MO1 is all that is necessary and will be used with all Missouri employees, even those who have been assigned to the tax table MO2 in their employee file. The table they are assigned to in their employee file will still be used (unless there is a job override -- see below), when calculating a Missouri state tax.

     

    • Code 93 (SUTA) and Code 94 (Worker's Comp): SUTA and Worker's Comp are always assumed to be taken out for the state in which the Company is located, unless you enter a different state in the Suta field of the employee rates tab. Create multiple Company-level Code 93's, one for each state. Enter the proper State Tax Table in the upper right hand corner of the code, and mark each code as Global. Only the Code 93 or code 94 for the state code that best matches the Employee's assigned state will apply to any given Employee.

     

  • Complete each employee's Suta, State W/H and Local W/H Tax information on the Employee Form.

 

If you have employees who truly move from state to state doing work (a construction crew or a film crew, for example), the following scenario illustrates the proper setup. Let's imagine that your company is based in Arizona. All of your employees live there, but some of them occasionally work in Los Angeles, California and are subject to all California state taxes and Los Angeles local taxes:

Company Form:

Click the Multi-state employees check box on the payroll tab.

Deduction Code Records:

  1. CCS Payroll ships with State Tax Tables already defined. However, you must create a Local Tax Table for Los Angeles and assign it an ID of LA.
  2. Create a Deduction Code 96-0 (Company Level) and assign it to Table CA. Mark it as global.
  3. Create a Deduction Code 96-0 (Company Level) and assign it to Table AZ. Mark it as global.
  4. Create a Deduction Code 93-0 (Company Level) and assign it to Table CA. Mark it as global.
  5. Create a Deduction Code 93-0 (Company Level) and assign it to Table AZ. Mark it as global.
  6. Create a Deduction Code 94-0 (Company Level) and assign it to Table CA. Do not mark it as global
  7. Create a Deduction Code 94-0 (Company Level) and assign it to Table AZ. Do not mark it as global.
  8. Create a Deduction Code 97-0 (Company Level) and assign it to Table LA. Do not mark is a global.

TIP: All codes 93 and 96(Suta and and State W/H) should generally be marked global.

Job Records: Create a Job record for each job that your employees work on in Los Angeles. Be sure to complete the Suta, State w/h and Local w/h location fields of the Job record as CA and LA, respectively. Insofar as paychecks are concerned, Jobs can be assigned in one of two ways:

  1. By assigning a Job to a timecard.
  2. By entering a Job directly into a paycheck during its creation.

If a paycheck is then generated for a JOB in Los Angeles, the program will automatically apply all applicable state and local tax deduction codes to the employee's paycheck. If you are using timecards and the AutoCreate mode, the program will then create a separate check for every different state that an employee is taxed in during that pay period. Continuing our example, if an employee worked both in Arizona and in California during a pay period, he or she would receive two paychecks: one for the Arizona portion and another for the California portion.

Employee Records:

Simply enter the employee's normal suta state (if different than the company state). Enter the state and local w/h table in the employee file (rates tab.) If the employee is not normally subject to state or local taxes (They are residents of Texas or Florida for example), then leave these fields blank. When you create a paycheck using a Job that has a state or local withholding assignment, the paycheck will be given the job associated state and local withholding taxes, even for employees who are normally not subject to such taxes.

If you link an employee to a State Table, by putting the specific state code in their deductions list (payroll tab), instead of using the state or local assignment areas on the rates tab, then these state taxes will always be deducted from every paycheck, even when another state w/h code is present on the same check. This is generally not the behavior you would want, therefor, you should normally assign state withholding taxes to employees via the rates tab.

Note: Many states have taxes other than Suta or State W/H, which must be withheld (or accumulated), for anyone working in the state. For instance, California has an SDI and ETT tax. Because these taxes need to be "Activated" on the fly when a California Job is processed, there needs to be a mechanism for linking miscellaneous taxes to a Suta or State W/H tax. Please see Links with Code in the Earning and Deduction form, for further information. In the case of California simply link the ETT and SDI tax codes to the California Suta code.

Note: The local table for Los Angeles could have been any given any 2 or 3 digit ID, 'LA' was used here as an example only.

Note: We did not mark the Workers compensation codes as global, this is because we will want to link the WComp codes to the Suta codes so that the correct state WComp. code is processed for each state. Please read the Setting up Worker's Compensation for more Information:

 

Also see the topic on Tax Entities Overrides for complex taxation override handling for multi-state employers who have earning or deductions that are taxed differently from state to state.

 

 

Paying Multi-State Taxes:

The CCS Pro version can completely automate the disbursement of taxes to their respective State (and Federal) agencies. See Disbursements Form for details.