When employees live in a different state than the one where they work or if someone performs services in more than one state, the withholding rules can become quite complicated. There are reciprocal withholding agreements between states which must be considered and in the absence of those agreements, the "Nexus" or business connection between the company and the state where the employee resides must also be factored into the equation. Symmetry Tax Engine maintains a list of all the reciprocal agreements between the states. Using the setNexus method, this will provide a list of the nexus relationships for the employer. Based upon the residency of the employee, the locations where the employee worked, the nexus relationships of the employer, and the status of the employee having filed a Certificate of Non-Residency, the STE will determine the correct locations where taxes should be withheld.
In addition, a state may decide to withhold taxes on a resident employee who works in a different state if that state does not have a state withholding tax or does not require withholding on nonresidents (e.g. District of Columbia). Also, states may require that tax be withheld on employees working in a different (nonresident) state. In this situation, a state may allow credit for the tax which is withheld in the nonresident work state. The nonresident work state tax would be subtracted from the tax computed for the resident state. The default value for all nexus settings is false. In order to indicate the nexus relationship of the employer to an individual state, the Nexus for each State must be set.
The STE uses the flow chart on the following pages to determine which taxes to withhold in a multi-state scenario. STE begins by identifying the Resident State of the employee. STE then loops through all the Non-Resident States to determine how withholding will occur. There are 5 possibilities:
In situations where the withholding occurs in the Resident State, STE will take the wages and benefits assigned to the Non-Resident state and add them to the Resident State totals in order to perform the calculation.
The flow chart on next page refers to some specific data for each state under consideration. These factors are presented in a table following the flow chart. The factors are:
Symmetry uses this flow chart to determine which taxes are to be withheld in a multi-state scenario.
The following table (as of January 2011) shows the values used by STE for the multi-state withholding algorithm.
State | Has State Tax | Withhold on Nonresidents | Withhold on Residents Working Out of State | Withhold if Nonresident State Does Not Require Withholding | Allow Credit for Nonresident State Withholding | Reciprocal States |
---|---|---|---|---|---|---|
AL | TRUE | TRUE | FALSE | TRUE | FALSE | |
AK | FALSE | FALSE | FALSE | FALSE | FALSE | |
AR | TRUE | TRUE | FALSE | TRUE | FALSE | |
AS | FALSE | FALSE | FALSE | FALSE | FALSE | |
AZ | TRUE | TRUE | FALSE | FALSE | FALSE | |
CA | TRUE | TRUE | TRUE | TRUE | TRUE | |
CO | TRUE | TRUE | FALSE | TRUE | FALSE | |
CT | TRUE | TRUE | TRUE | TRUE | TRUE | |
DC | TRUE | FALSE | TRUE | TRUE | FALSE | MD, VA |
DE | TRUE | TRUE | TRUE | TRUE | TRUE | |
FL | FALSE | FALSE | FALSE | FALSE | FALSE | |
GA | TRUE | TRUE | FALSE | TRUE | FALSE | |
GU | FALSE | FALSE | FALSE | FALSE | FALSE | |
HI | TRUE | TRUE | TRUE | TRUE | FALSE | |
IA | TRUE | TRUE | TRUE | TRUE | FALSE | IL |
ID | TRUE | TRUE | FALSE | FALSE | FALSE | |
IL | TRUE | TRUE | FALSE | TRUE | FALSE | IA,KY,MI,WI |
IN | TRUE | TRUE | TRUE | TRUE | FALSE | KY,OH,PA,WI |
KS | TRUE | TRUE | TRUE | TRUE | TRUE | |
KY | TRUE | TRUE | TRUE | TRUE | FALSE | IL,IN,MI,OH,WV,WI,VA |
LA | TRUE | TRUE | FALSE | TRUE | FALSE | |
MA | TRUE | TRUE | TRUE | TRUE | TRUE | |
MD | TRUE | TRUE | TRUE | TRUE | FALSE | DC,PA,VA,WV |
ME | TRUE | TRUE | TRUE | TRUE | FALSE | |
MI | TRUE | TRUE | TRUE | TRUE | FALSE | IL,IN,KY,MN,OH,WI |
MN | TRUE | TRUE | TRUE | TRUE | TRUE | MI,ND |
MO | TRUE | TRUE | FALSE | TRUE | FALSE | |
MP | FALSE | FALSE | FALSE | FALSE | FALSE | |
MS | TRUE | TRUE | FALSE | TRUE | FALSE | |
MT | TRUE | TRUE | TRUE | TRUE | FALSE | ND |
NC | TRUE | TRUE | FALSE | TRUE | FALSE | |
ND | TRUE | TRUE | FALSE | TRUE | FALSE | |
NE | TRUE | TRUE | TRUE | TRUE | TRUE | |
NH | FALSE | FALSE | FALSE | FALSE | FALSE | |
NJ | TRUE | TRUE | TRUE | TRUE | TRUE | PA |
NM | TRUE | TRUE | TRUE | TRUE | FALSE | |
NV | FALSE | FALSE | FALSE | FALSE | FALSE | |
NY | TRUE | TRUE | TRUE | TRUE | TRUE | |
OH | TRUE | TRUE | TRUE | TRUE | FALSE | IN,KY,MI,PA,WV |
OK | TRUE | TRUE | TRUE | TRUE | FALSE | |
OR | TRUE | TRUE | TRUE | TRUE | FALSE | |
PA | TRUE | TRUE | FALSE | TRUE | FALSE | IN,MD,NJ,OH,VA,WV |
PR | TRUE | TRUE | TRUE | TRUE | FALSE | |
RI | TRUE | TRUE | TRUE | TRUE | FALSE | |
SC | TRUE | TRUE | FALSE | TRUE | FALSE | |
SD | FALSE | FALSE | FALSE | FALSE | FALSE | |
TN | FALSE | FALSE | FALSE | FALSE | FALSE | |
TX | FALSE | FALSE | FALSE | FALSE | FALSE | |
UT | TRUE | TRUE | TRUE | TRUE | TRUE | |
VA | TRUE | TRUE | TRUE | TRUE | TRUE | DC,KY,MD,PA,WV |
VI | FALSE | FALSE | FALSE | FALSE | FALSE | |
VT | TRUE | TRUE | TRUE | TRUE | TRUE | |
WA | FALSE | FALSE | FALSE | FALSE | FALSE | |
WI | TRUE | TRUE | TRUE | TRUE | FALSE | IL,IN,KY |
WV | TRUE | TRUE | TRUE | FALSE | TRUE | KY,MD,OH,PA,VA |
WY | FALSE | FALSE | FALSE | FALSE | FALSE |
When UPUTR is run, the Miscellaneous Identifier STATE_NEXUS will be generated with the value of DEFAULT for the selected States.
This IPUTP STATE_NEXUS Miscellaneous Identifier is applicable for the entire Company for the State defined.
If the Company has no specific requirement for Nexus Relationship at the State or Local level, there is no more set up required for Nexus Relationship.
If the Company has multiple Entities or State Registrations that require to set up different State Nexus Relationship, user must set up IDGV by State Registration. The IDGV State Nexus set up overrides the IPUTP set up.
If the Company has multiple Local Registrations that require to set up different Local Nexus Relationship, you must set up IDGV by Local Registration. The IDGV Local Nexus set up overrides the State Nexus set up.
US_State_Reciprocity_04.JPG
If the Company has multiple Entities or State Registrations that require to set up different State Nexus Relationship, you must set that up on IDGV screen. This setup overrides the IPUTP STATE_NEXUS set up. If IDGV is not set up, the IPUTP setup is used.
On IPRLUS State tab, an employee should set up the ‘Reciprocity Agreement’ if applicable.
From lexicon X_UST_RECIPROCATION
00 – Default (PPH Work/Res GEO)
01 – NR Certificate Filed
02 – Calc WORK Tax (PPH Work GEO)
03 – Calc RES Tax (PPH Home GEO)
04 – Calc WORK / RES (PPH 2 States)
IPRLUS STATE Tab | Reciprocity Agreement: | - Null, default to IMST, which uses Default Reciprocity |
IPUTP Michigan State | STATE_NEXUS | - DEFAULT |
IPUTP OHIO State | STATE_NEXUS | - DEFAULT |
IDGV ‘US State Regist 1’ | Govt Rate Type | - ‘US State Nexus Relationship’ is not set up |
IDGV ‘US Local Regist 1’ | Govt Rate Type | - ‘US Local Nexus Relationship’ is not set up |
WORK: | OH 39-049-1080996 | Columbus, Franklin, OH |
RES: | MI 26-107-1619197 | Big Rapids, MI |
IPPH | PAY LINES | Jurisdiction - 39-049-1080996 Columbus, Franklin, OH | - All Earnings |
Jurisdiction - 26-107-1619197 Big Rapids, MI | - NO Earnings |
PC 8130 RCITY Earn | 2564.10 |
PC 8131 RCITY SupEarn | 1000.00 |
PC 6951 Res CITY Reg Tax | 25.64 |
PC 6953 Res CITY Sup Tax | 10.00 |
IDGV MI ‘US State Regist 1’ | Govt Rate Type | - ‘US State Nexus Relationship’ is set up with Amount = 99 |
- this means Nexus Relationship does not exist |
The Nexus Relationship is set to NO for Michigan, therefore the Michigan Residence Earnings and Taxes are NOT returned.
You may optionally set up the IDGV Local Nexus Relationship to NO for Big Rapids City, the Michigan Residence Earnings and Taxes are NOT returned.
PC 8130 RCITY Earn | 0 |
PC 8131 RCITY SupEarn | 0 |
PC 6951 Res CITY Reg Tax | 0 |
PC 6953 Res CITY Sup Tax | 0 |
Screen captures are meant to be indicative of the concept being presented and may not reflect the current screen design.
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