If you need to set up all of your payroll (compensation, benefits, employees, taxes, and payroll history), run the Payroll Setup interview.
For each state where you withhold state income tax, you need to set up a
QuickBooks tracks each state tax separately, so you know exactly how much you
owe for each tax and each state. You need to set up a state withholding payroll
item for your W-2 forms to be complete.
To do this task
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 State Tax as the type of tax you want to create and click Next.
Click the state's two-letter abbreviation from the drop-down list.
Click State Withholding and click Next.
Follow the onscreen instructions.
If you need to go back to a previous window, click Prev.
Note: To compute payroll taxes on paychecks, you must have a payroll service subscription.
Setting up all payroll taxes for a
Entering the filing
status and other withholding information for an employee