If you need to set up all of your payroll (compensation, benefits, employees, taxes, and payroll history), use the Payroll Setup interview.
You need to set up a payroll
item for each local payroll tax that you pay. QuickBooks includes a few local taxes on its list of
common miscellaneous state and local taxes. For all other local taxes, you can
set up a user-defined, other tax payroll item.
Go to the Lists menu and then click Payroll Item List.
Click the Payroll Item button and then click New.
Choose Custom Setup then click Next.
Click Other Tax and click Next.
Click the drop-down list and choose User-Defined Tax.
Do one of the following:
If the tax is withheld from employee wages, select Tax is paid by the
If the tax is paid by the company, select Tax is paid by the
Follow the onscreen instructions to complete the display name on paychecks
and tax agency information.
On the Tax tracking type window do one of the following:
If the tax is withheld from employee wages, choose Loc. 1 Income
Tax or Loc. 2 Income Tax. This tax will be reported as a
local tax on W-2 forms of employees subject to the tax.
If the tax is paid by the company, choose Co. Paid Other
On the Calculate based on quantity window, select the checkbox
only if this tax is based on days or hours worked.
On the Default rate and limit window, follow the onscreen
Important tip about entering an annual
On the Taxable compensation window, be sure all compensation
items subject to this tax are selected.
On the Pre-tax deductions window, be sure that the only items
selected are the ones that are deducted from wages before the tax is
calculated. Check with your accountant or local tax agency if you are not sure
what effect your deductions have on this tax.
Setting up a predefined miscellaneous state
or local tax
Adding a local tax to the
Adding a local tax to an