If applicable for your payroll, the following steps will ensure proper deduction of City Taxes for employees:
1. Click "Utilities" on the main menu bar.
2. Click "Withholding Rates".
3. Click "Local Tax Settings"
4. Enter a 5 digit abbreviation for the tax locality in the “Enter Name of Tax Locality” box.
5. Click the down arrow on the “Select Locality Tax Base” box, and make the appropriate selection (usually “Gross (Taxable)”).
6. If a second local tax withholding is required, enter a 6 digit name for the tax locality (for example: enter SD1904 for school district 1904) in the "Enter name of Local2 Tax Locality" box. The Locality Tax Base for all Local2 deductions will be "Gross (Taxable)".
7. Click the “Save” button to save the changes.
For the First Local deduction, the withholding tax rate (for example: 0.02 for 2%) is entered in the Employee Record for each employee in the box to the right of “Local Tax Rate as a Decimal Number or Dollar Amount per pay period”.
If a second local tax withholding is required (for example: school district withholding tax), the first Miscellaneous deduction in the Employee Record will be given the deduction title "Local2". Enter the tax rate as a decimal in the box to the right of the "Local2 Deduction..." for each employee.
The City tax percentage can be found for your state on the website below: