Solution Properties
Solution ID:
224924550063128
Last Modified Date:
Mon Jul 25 13:11:23 UTC 2022
Taxonomy Path:
Category//Setup and configuration
Author:
LegacyAuthorUS
How do I set up tax reciprocity between states or local tax jurisdictions?
Description

Below are the options for Agreement Type to specify how the Reciprocal Tax ID affects the Tax ID:

  • Replace: The Reciprocal Tax ID replaces the Tax ID. The tax calculation for the Reciprocal Tax ID is performed instead of the tax calculation for the Tax ID. If the Reciprocal Tax ID is blank, no tax is calculated for either tax ID.
    Example: If the Tax ID XXSWH and the Reciprocal Tax ID is YYSWH. With the Agreement Type of Replace, the Tax YYSWH would be taken, and no XXSWH would be taken.
  • Balance: The calculated amount for the Tax ID is subtracted from the calculated amount for the Reciprocal Tax ID. The amount for the Tax ID is not affected by balance reciprocity.
    Example: If the Tax ID XXSWH for $50 and the Reciprocal Tax ID is YYSWH on the same subject to amount would calculate at $90. With the Agreement Type of Balance, the Tax YYSWH would be taken for $40, and XXSWH would take $50.
  • Take Both: The full tax amount for both the Reciprocal Tax ID and the Tax ID is calculated. This option is only available when setting up reciprocity agreements between states.
    Example: If the Tax ID XXSWH for $50 and the Reciprocal Tax ID is YYSWH on the same subject to amount would calculate at $90. With the Agreement Type of Take Both, the Tax YYSWH would be taken for $90, and XXSWH would take $50.

Cause
Resolution

To enter in a tax reciprocity in Payroll, do the following:

  1. In Payroll, go to Setup, Taxes, Reciprocity.
  2. Select either State or Local as the tax level for the reciprocal agreement you are setting up.
  3. Enter Residence and Work place tax group IDs.
  4. In the grid, enter the tax ID for the state or local assigned by the Work Place taxes.
  5. Enter the reciprocal tax ID for the tax that comes from the Resident taxes.
  6. Select an Agreement Type to specify whether you want the reciprocal tax to replace or balance with the tax ID.
  7. Click Accept line for each tax entry.
  8. Click Accept table, then Close.
    Note: See additional information or the Help Topic for additional information on Agreement types. You can find more about Agreement Type in Payroll, Help Topics, Reciprocity, Window, Agree type.
DocLink: How do I add a reciprocity in employee setup?
DocLink: How do I set up tax reciprocity between two states?
DocLink: How did the state withholding tax calculate if the state is not setup in the employee setup?
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