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Distribution Codes

State Taxes Tabs

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State Taxes - Tax Tab

Access this tab using Maintain>Payroll>State Taxes.

Use this tab to specify the accounts the system should use to create entries for state withholding taxes, and to specify the Expense and Liability Accounts to which the taxes apply. Also, you can specify a state’s federal unemployment tax credit rate information.

 

State Withholding Tax

  • Liability Account: Enter the General Ledger liability account for state withholding. This box is required if the State Withholding Tax box was selected on the State tab.

State Unemployment Tax

  • Employer, Employee: Select the party or parties that are responsible for paying State Unemployment Taxes.
  • Maximum Annual Subject Wages: Enter the maximum subject wages for the employer and/or employee.
  • Percent of Wages: Enter the percentage of maximum subject wages for employer and/or employee. If zero is entered here, no SUTA tax is calculated, however, subject earnings and gross earnings are accumulated for SUTA reporting purposes. Note that FUTA will be calculated at a rate of 6.0%.
    When entering percentages, do not include a decimal point. For fractional percentages, enter the leading zeroes. For example, enter the following numbers to indicate the following percentages:
    0005 = .5%
    005, 05, or 5 = 5%
    50 = 50%
  • Liability Account: Enter the General Ledger liability account to which the State Unemployment Taxes apply. The account should not be a subledger type account. This box is required if the State Unemployment box was selected on the State tab.
  • Expense Account: if the Employer pays the tax, enter the General Ledger expense account to which the state Unemployment Taxes apply. The account should not be a subledger-type account. This box is required if the State Unemployment box was selected on the State tab, and if Employer is selected on this tab.

Federal Unemployment Tax: Select the override check box, if you need to enter changes to the FUTA Credit Rate for the FUTA Tax. The system defaults to 5.4%, which is the maximum allowed by the federal government. Check the federal regulations as some states are required to reduce the amount of credit taken below 5.4%.

  • Override Default Credit Rate: Select this check box to enable the FUTA Credit Rate field, so that you can manually enter the credit rate information for the selected State.
  • FUTA Credit Rate: Accept the default of 5.4% or enter a rate that is lower than the maximum allowed for the Federal Unemployment tax credit. For example, if your state is required to reduce the Federal Unemployment tax credit by .3%, you would enter 5.1% in this field. This value must be greater than or equal to zero and less than the active Percent of Wages defined on the Maintain>Payroll>Federal Taxes>FUTA Taxes form.
  • Click Distribution Codes Information to open the Maintain>Payroll>Distribution Codes form, where you can create or modify a distribution code. Each time this button is selected, a new Distribution Codes form is opened.
  • All Expense and Liability Accounts must be existing General Ledger accounts, and should be either Active or Inactive. They cannot be subledger-type accounts.
  • If State Withholding Tax was chosen on the previous tab, the corresponding portion of this tab is available for entering accounting information. Likewise, if State Unemployment Tax was chosen on the previous tab, the State Unemployment Tax portion of this tab is available.
  • For State Unemployment Tax, if Employer is selected, the Employee-related Maximum Subject Wages and Percent of Wages are not available. Likewise, if Employee is selected, the Employer-related Maximum Annual Subject Wages, Percent of Wages, and Expense Account are not available. If both of them are selected, all boxes are available.
  • Even if State Unemployment Tax is employer paid, the appropriate state must be entered on the Employee Information form (Maintain>Payroll>Employee Information - State Tax Tab). Otherwise, State Unemployment Taxes are not calculated.
  • If your organization is not subject to SUTA and your state does not require SUTA reporting, then clear the State Unemployment Tax check box. If your organization is not subject to SUTA but your state does require SUTA reporting, select the State Unemployment Tax check box, then enter a percentage of "0" in the Percentage of Wages box on the Tax tab. In both cases, the amount of FUTA will be calculated at 6.0%. Otherwise, FUTA will be calculated at .6%.