Use the information below to ensure you are compliant with local and state payroll tax laws.

If you're an Intuit Full Service Payroll or QuickBooks Full Service Payroll customer, please contact Support for help with changing or adding work locations to your account.

Payroll account

Getting help

Multistate employment is complex. Contact Payroll Support for assistance with your particular situation. You should also contact your accountant, or other tax advisor, for advice regarding your particular payroll tax situation.

Payroll service levels

Only our Enhanced service enables you to set up additional work locations in and outside your primary work-location state. Additionally, only our Enhanced service calculates payroll taxes for states other than your primary work-location state. Other levels of service calculate payroll taxes for your primary work-location state only, regardless of where your employee lives. Analyze your multistate payroll tax calculation needs carefully to select the level of service that is right for you. This document assumes that you have selected the Enhanced service.

Setting up work locations

The first business address that you enter in your account is your primary work location. Unless you indicate otherwise, we assume that all of your employees work here. If, however, you have employees at other locations, you can set up additional work locations.

To set up an additional work location for your company:

  1. Go to Setup > Work Location > Add a Work Location.
  2. Enter the work location address.
  3. Click OK.

You can add work locations as needed.

You can also set up a new work location when setting up an employee: When entering basic information for an employee on the Edit Employee Address page, select Add a new work location.

Employee works outside primary work location

If your employee works at a work location in a state outside your primary work-location state, your employee is subject to work-based taxes (such as state unemployment insurance) in that other work-location state, regardless of where your employee lives. Our Enhanced service calculates work-based payroll taxes for each state in which you have a work location.

To specify an employee's work location:

  1. Go to Employees.
  2. Click the employee's name.
  3. In the Employment section, select Edit.
  4. From the Work Location drop-down, select the work location.
  5. Select OK.

Employee lives outside their work location state

Some payroll taxes, such as state and local withholding taxes, are based on your employee's residence location as well as your employee's work location. These taxes are calculated and reported differently, depending on the laws of the particular states where your employee lives and works.

Some states have reciprocity agreements. To find out whether there is a reciprocity agreement between your employee's work location state and your employee's residence state, see the following section, States with reciprocity agreements.

Multistate rules

States with reciprocity agreements

If there is a reciprocity agreement between your employee's work state and your employee's residence state, we ask you whether your employee has given you a certificate of nonresidence. (You can find a form for a certificate of nonresidence for your primary work state in the Intuit payroll service: choose Taxes & Forms > Employee & Contractor Setup.)

If your employee does give you a certificate of nonresidence, we do not deduct state withholding (if any) for the employee's work state from this employee's paychecks. Instead, we give you the option of deducting state withholding (if any) for the employee's residence state from this employee's paychecks. To elect withholding for the residence state, enter the appropriate filing status and allowances on the Tax Information page for the employee.

To decline withholding for the residence state: on the Tax Information page for the employee, choose Do Not Withhold as the state filing status.

Notes:

  • Some employers are required to withhold taxes for the employee's residence state. If you have employees who make sales or perform services in your employee's residence state, you might have the sort of business connection, or nexus, that makes you subject to that state's laws. Alternatively, some employers and employees agree to withhold taxes for the employee's residence state, even though it is not required. That way, the employee does not have to pay estimated taxes or a large tax liability at the end of the year.
  • However, be careful! In some cases, registering for withholding in a second state can cause you to receive inquiries from that state about other taxes for which you are not liable, such as sales tax or corporate income tax. Also, in some states, withholding and paying over taxes can make your company liable in the courts of that other state. Consult your legal and tax advisors before making the decision to withhold taxes for a state other than your primary work state.
  • If your employee does not give you a certificate of nonresidence, the reciprocity agreement does not apply, and your payroll taxes are calculated as though there were no reciprocity agreement between your work state and your employee's residence state (see the following section, States without reciprocity agreements).

 

The following states have reciprocity agreements:

Business Location Employee Residence State
Arizona California, Indiana, Oregon, Virginia
Arkansas Texarkana, Texas and Texarkana, Arkansas
Illinois Iowa, Kentucky, Michigan, Wisconsin
Indiana Kentucky, Michigan, Ohio, Pennsylvania, Wisconsin
Iowa Illinois
Kentucky Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, Wisconsin
Maryland District of Columbia, Pennsylvania, Virginia, West Virginia
Michigan Illinois, Indiana, Kentucky, Minnesota, Ohio, Wisconsin
Minnesota Michigan, North Dakota
Montana North Dakota
New Jersey Pennsylvania. Effective 1/1/2017 New Jersey and Pennsylvania will no longer have a withholding reciprocity agreement.
North Dakota Minnesota, Montana
Ohio Indiana, Kentucky, Michigan, Pennsylvania, West Virginia
Pennsylvania Indiana, Ohio, Maryland, New Jersey, West Virginia. Effective 1/1/2017 New Jersey and Pennsylvania will no longer have a withholding reciprocity agreement.
Virginia District of Columbia, Kentucky, Maryland, Pennsylvania, West Virginia
West Virginia Kentucky, Maryland, Ohio, Pennsylvania, Virginia
Wisconsin Illinois, Indiana, Kentucky, Michigan

States without reciprocity agreements

If your employee does give you a certificate of nonresidence, we do not deduct state withholding (if any) for the employee's work state from this employee's paychecks.Instead, wegive you the option of deducting state withholding (if any) for the employee's residence state from this employee's paychecks. To elect withholding for the residence state, on the Tax Information page for the employee, enter the appropriate filing status and allowances.

To decline withholding for the residence state: on the Tax Information page for the employee, choose Do Not Withhold as the state filing status.

Note: Some employers are required to withhold taxes for the employee's residence state. If you have employees who make sales or perform services in your employee's residence state, you might have the sort of business connection, or nexus, that makes you subject to that state's laws. Alternatively, some employers and employees agree to withhold taxes for the employee's residence state, even though it is not required. That way, the employee does not have to pay estimated taxes or a large tax liability at the end of the year.

States that have no withholding taxes

Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming

  • If your employee lives in one of these states, enter W4 information for the work-location only.

States that do not withhold from residents who work in a state that has withholding

Alabama, Arkansas, Colorado, Georgia, Idaho, Illinois, Louisiana, Mississippi, Missouri, North Carolina, North Dakota, Ohio, Pennsylvania*, South Carolina, and West Virginia

  • If your employee lives in one of these states and your business is located in a state that has no withholding taxes (see above), enter W4 information for the work-location state only.

States that do withhold from residents who work in a state that has withholding, but only to the extent (if any) that their withholding exceeds the amount withheld by the state where the resident works

California, Connecticut, Delaware*, Indiana, Iowa, Kansas, Kentucky, Maine, Massachusetts, Minnesota, Nebraska, New Jersey*, New York, Oklahoma, Rhode Island, Utah, Vermont, and Virginia

  • If your employee lives in one of these states, enter W4 information for both the work-location state AND the state of residence. We'll calculate the difference and withhold accordingly.

States that withhold in full from residents who work in another state, regardless of whether the state where the resident works also has withholding

Arizona, District of Columbia, Hawaii, Maryland*, Michigan, Montana, New Mexico, Oregon, and Wisconsin.
If your employee lives in one of these states, enter W4 information for both the work-location state AND the state of residence:

All cases
*Note (all cases): Special rules apply for New Jersey-Pennsylvania and Maryland-Delaware relationships. For questions regarding these states, check with your legal advisor.

New York employers

New York does not have reciprocity agreements with other states. New York income tax withholding is required from all nonresidents who work in New York. Depending on the employee's residence state, income taxes may be withheld from both New York and the residence state, or from New York only. For example, a resident of New Jersey who works in New York will have New York income tax withheld from all wages. The employee would also have New Jersey income taxes withheld to the extent they exceed the New York amount. If the calculated New Jersey withholding is less than the New York withholding, no New Jersey tax would be withheld. For more information, see section I (New York State nonresident employees) of the New York Employer's Guide.

If the employee of a New York employer works outside the state of New York for the employee's convenience (rather than because of the employer's business necessity), the employee is subject to New York withholding taxes as though the employee worked in New York. If you are in this situation, contact us to make sure your setup is correct.

Michigan, Minnesota, and North Dakota employers

Michigan, Minnesota, and North Dakota each require separate reporting of wages paid at multiple work locations within the state. Our service does not support separate reporting for multiple work locations within a state. If your primary work location state is Michigan, Minnesota, or North Dakota and you have multiple work locations in your primary work state, you must prepare wage reports for each location yourself, using our form as a guide.

Special Situations

Local taxes

Some local taxes are based on where an employee works, while others are based on where an employee lives. Enhanced service gives you the option of calculating all local taxes that apply to you and your employees. When you assign an employee to a work location, we offer you the option to activate work-based local taxes (if any) that apply to employees at that work location, and residence-based local taxes (if any) that apply to employees at that residence location. The Enhanced service calculation database also credits local taxes against other local taxes, as is appropriate. In general, reciprocity agreements affect only state withholding, not local, taxes. (For more information about local taxes and our Enhanced payroll service, see Enhanced Service Setup Information for Small Business in Help on the Help/Setup Information page.)

Multiple worksite reporting

If you have 10 or more employees who work at locations other than your principal worksite, you are subject to multiple worksite reporting. We provide the information that you need to complete the form in the Reports section under Multiple Worksite Report (MWR). Note that this information includes only employees who worked during or received pay subject to unemployment insurance for the payroll period that includes the 12th of the month.

States that require you to report on the standard Form MWR are California, Colorado, Florida, Georgia, Iowa, Kansas, Louisiana, Maine, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oregon, Vermont, Virginia, and West Virginia. You can obtain the form from the Department of Labor in the state where your business is located. We do not provide it.

Opt out of a secondary state

There are several reasons why you may wish to opt out of Multistate Plus support for a secondary state:

  • You no longer have an active work location in that state.
  • You no longer have active employees who reside in that state.
  • Your employees in that state are commuter employees, and don't have income taxes withheld for their residence state.
  • You wish to handle the tax payments and form filings for that state yourself, and not through your Online Payroll account.

In order to opt out, you'll need to do the following:

  • Inactivate all work locations in that state.
  • Set the tax status for all employees to "No Not Withhold" for that state.
  • Confirm that you wish to disable Multistate Plus support for that state.

If you do opt out of a secondary state, our system will only provide the tax liabilities for that state. It will no longer provide support or reminders for tax payments and form filings to that state. You will no longer be charged the additional Multistate Plus fee for that state.

To inactivate a work location in a secondary state:

  1. Verify that no active employees are currently assigned to the work location.
  2. Click Setup.
  3. Under Business Information, click Work Locations.
  4. Click on the work location address.
  5. Mark the Inactive checkbox.
  6. Click Save.

To update an employee's tax status and opt out of a secondary state:

  1. Click Employees.
  2. Click on the employee's name.
  3. Click Edit in the Taxes & Exemptions section.
  4. In the section for the secondary state, select Do Not Withhold from the Filing Status dropdown.
  5. Zero out any additional amount for the secondary state.
  6. Mark the checkbox to opt out of payments and forms for the secondary state.
  7. Click OK.
  8. Repeat steps 1-7 for any other employees who reside in the secondary state.

In some situations, the opt out checkbox may not appear, or it won't disable Multistate Plus support even after being marked. In those cases, contact Payroll Support to complete the opt out process.