The settings on this window affect the tax amounts QuickBooks calculates on
If you are setting up a new payroll item, QuickBooks displays default
settings built into the tax table. Generally, you should not need to change the
settings unless you have local taxes that are not built into the tax table.
A deduction reduces the selected taxes because it reduces
gross wages subject to these taxes.
A salary item, wage item,
commission, addition, or company
contribution increases the selected taxes because it increases gross
wages subject to these taxes.
For a tax payroll item, the selected taxable compensation
items are included in the gross wages subject to this tax. The selected pre-tax
deductions reduce gross wages subject to this tax.
Note: If you are setting up a user-defined local tax, check with your
accountant or the taxing authorities to determine which items affect gross
wages subject to this tax.
Research payroll tax calculations
Learn more about payroll tax law at Payroll.com