1. Implementing United States Courtesy Taxes
  2. Override Vertex Rules for State Courtesy Taxes

Override Vertex Rules for State Courtesy Taxes

Vertex defines the default rules for how the payroll process handles state withholding taxes. However, there are cases where you may want to override them as a courtesy.

For this example, you have employees working in Alabama and living in Mississippi. Neither Alabama nor Mississippi have any reciprocal agreements.

  • Mississippi doesn't require withholding for residents working in other states that collect work place taxes.

  • Alabama requires withholding for employees who work there, even though they may not live there.

Your employees have requested you withhold Mississippi state income tax (SIT) in addition to the required Alabama SIT, and you agree to withhold them as a courtesy.

The following steps establish rules that:

  • Override the default setting for all employees in a tax reporting unit (TRU)

  • Withhold taxes for Mississippi SIT for the difference of the total calculated tax minus the work state tax

    Note: To override the default setting only for select employees, use the Calculation Cards task to override this rule on their Tax Withholding cards. For further info, see Override Vertex Rules for Courtesy Taxes at the Employee Level in the Help Center.

How to Get Started

To set up courtesy withholding rules for Mississippi at the TRU level:

  1. Start the Legal Reporting Unit Calculation Cards task from your implementation project.

  2. In Calculation Components, select Federal Income Tax.

  3. In Calculation Component Details, expand Federal Income Tax Organization Information.

  4. For Tax Withholding Rules, select Only states under state tax rules.

Add Mississippi

To add Mississippi:

  1. In Calculation Card Overview, select Regional.

  2. Select Add from the Actions menu.

  3. Select Mississippi, and click OK.

  4. Click Save.

Define the Wage Accumulation Rule

To define the wage accumulation rule for Mississippi:

  1. In Calculation Card Overview, select Mississippi.

  2. In Calculation Components, select State Income Tax.

  3. In Calculation Component Details, expand State Income Tax Organization Information.

  4. For Resident Wage Accumulation, select Credit resident tax by work tax, always accumulate wages.

  5. Click Save and Close.

    Note: To undo this courtesy tax support, change the rule on the Mississippi SIT to Use default behavior. With this setting, the payroll process stops collecting courtesy taxes.

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