Republic of Marshall Islands Tax Code

The Republic of Marshall Islands (MH) requires the calculation of a State Withholding tax and two separate Federal withholding taxes, Social Security and Medicare. Social Security and Medicare taxes are to be paid by the employee and employer as a percentage of employee wages and cannot exceed the Quarterly wage base limit (calculated on a calendar quarter basis).

To accommodate these separate taxes, you must set up a tax code for MH and specify the accounts the system should use to create entries for state withholding taxes (Maintain>Payroll>State Tax). The system calculates the state tax, Social Security, and Medicare using the Maintain>Payroll>Employee Information>State Tax tab.

To view or modify the State Withholding tax amount, select the MH employee using the Activities>Payroll>Review/Modify Calculated Payroll form. On the taxes tab, the Tax Type drop-down list displays "SWT - State Withholding Tax" and the Jurisdiction column displays "MH."

In order to enter manual checks (Activities>Payroll>Enter Manual Checks) and/or set up or adjust entries (Activities>Payroll>Set Up/Adjust Employee Balances), the state code must be MH on the Maintain>Payroll>Employee Information>State Tax tab.

For more information, review the documentation for the Maintain>Payroll>State Taxes form.