Employee Tax Setup

Our API processes the employee tax setup the same way as the company tax setup, so you can reuse code for both setups. However, with a distinct difference - Employees don't have local taxes as companies solely use them. Very importantly, employees need to fill same data as they filled in on the W-4 form.

The Update Employee Tax Setup Values endpoint updates relevant attributes of federal and state taxes peculiar to the employee. As stated during employee onboarding, employees, if working from home, must provide accurate work locations, which forms the foundation of their state tax attributes.

Employees' various state taxes will also influence the company tax setup. More significantly, our API uses the employee tax setup to calculate the federal and state taxes that will be withheld from the employee's wage on the payroll.

In the employees' tax setup, you need to set the following information:

Federal Taxes

The system uses specific tax reporting entities based on the company's location, thus providing an array of federal taxes to which the government subjects an employee. You must set employees' Federal taxes as indicated on their W-4 forms. However, the system requires you to select the checkboxes for exempted taxes of each employee.

Multi-state calculation override

If an employee has a multiple-state tax return, you can overwrite any automatic tax calculation that they may have. Setting this field appropriately determines the employee's multi-state withholding calculations. You can select from the options below the conditions for the multi-state calculation override:

• None
• Resident only
• Non-resident only
• Zero in both
• Full
• Difference
• All

Filing Status

You set this to determine which tax return form an employee will use and also determine the employee's taxable income. You can set an employee's filing status to any of the following:

• Single or Married filing separately
• Married filing jointly or Qualified widow(er)
• Head of household
• Non-resident alien

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Filing Status

The exact value for this field depends on the state where the employee works, as some employees may not have some of the above values or may have different options.

Claim dependents

Depending on the number of dependents employees input on their W-4 form, they can claim allowances, which you use to calculate the tax withheld from their paycheck. The number of dependents the employee has, factors into their overall W-4 allowances.

Other incomes

If an employee's other income does not come from your company's primary business, you can input the income in this field for proper tax setup consideration.

Deductions

You set this field to the items deductible from the employees' taxable income, which lowers the amount of taxes they owe or their income subject to taxation.

Extra withholdings

Setting this field to an amount will increase the employee's income tax withholding but reduce the amount on their paycheck and reduce the amount of tax they owe when filing their tax return will reduce. The employees must specify their filing status and the number of withholding allowances on their W-4 forms.

State Taxes

Like the federal tax setup, you need to set employees filing status and withholdings from state taxes. The state taxes depend on the employee's work location and residential address. You also need to set taxes from which the employees are exempted.