Support for states requiring resident state withholding tax for out-of-state wages

Starting in version 27.3, Sage 100 Contractor supports states that require withholding tax for residents earning wages in another state, based on updated requirements.

How Sage 100 Contractor applies payroll tax rules

The system applies payroll tax rules based on the state in the State field of the 5-2-2 Payroll Record header for each employee. For non-resident state rules, it uses the state tax locality in the Locale column of the timecard lines.

Enable out-of-state income tax withholding

To enable this functionality:

1. Create a state withholding payroll calculation in 5-3-1 Payroll Calculations for every state where employees work.
2. Create a state tax locale in 5-3-6 Local Payroll Tax for each of those states.
   • Leave the Resident Rate, Non-Res Rate, and Differential fields blank.

How rules apply when option is turned on

When you turn on the option to use out-of-state income tax withholding rules, Sage 100 Contractor applies rules for the resident state. These rules include:

• Resident state doesn't withhold tax on any out-of-state earnings.
  States: AZ, DE, ID, IA

• Resident state withholds tax on out-of-state earnings only if the other state is tax-exempt.
  States: AL, AR, CO, GA, IL, LA, MS, NC, ND, PA, SC, WV

• Resident state withholds income tax only on the amount that exceeds the income tax from the other state.
  States: CA, CT, IN, KS, MA, ME, MN, NE, NJ, NY, UT, VT

• Resident state withholds tax on all out-of-state earnings.
  States: DC, HI, KY, MD, MI, MO, MT, NM, OH, OK, OR, RI, VA, WI