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Paying state disability insurance (SDI) to a private agency

Each state that offers state disability insurance (SDI) operates its program according to its own rules. In some states, you pay SDI to a private agency instead of the state. Some states give the employer the choice of paying the state or a private agency.

Important: If you pay SDI in Hawaii or New York, use the QuickBooks preset SDI payroll items because QuickBooks Assisted Payroll does not pay SDI for you.

Assisted Payroll does not make payments to private agencies. If you are using Assisted Payroll and you pay SDI for other states to a private agency, use the following procedure to track SDI withholding and make the SDI payments to the private agency yourself.

  1. Set up an employee-paid or company-paid other tax payroll item to track SDI. (In some states, you may need one of each.)

    Name the payroll item SDI or something similar. (If the tax is employee-paid, QuickBooks displays this name on the employee's Form W-2.) For employee-paid deductions, use the "Other" tax tracking type. For company-paid tax use the "None" tax tracking type.

  2. Edit each employee record. In the Edit Employee window, choose Payroll and Compensation Info from the Change tabs drop-down list..

  3. Click the Taxes button and click the State tab.

  4. Clear the SDI checkbox.

  5. Click the Other tab.

  6. Click the Name drop-down list and choose the other tax payroll item(s).

  7. Click OK.

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