Configure State Tax Withholding for Courtesy Taxes

Vertex provides the tax data that determines:

What resident state taxes the payroll process withholds for employees
When it withholds them

Each state has its own withholding and reciprocity rules. For further info about each state's default behavior, see Calculation Guide for the United States Vertex Payroll Tax Q Series.

These tax withholding rules determine the resident wage accumulation rules available to you. The federal and state withholding forms provide the default tax withholding info for the payroll process.

However, as their employer, you may not be required to withhold resident state taxes. In such cases, the withholding is considered a courtesy. For further info, see Override Vertex Rules for State Courtesy Taxes in the Help Center.

When using the Only states under state tax rules withholding rule for federal income tax (FIT), select the appropriate Resident Wage Accumulation rule for each state.

If you're using this FIT withholding rule	It does this	And you can select this for Resident Wage Accumulation
All states	Default withholding rule for all states.	The payroll process automatically withholds for all states using the default action for each state. This is described in the Calculation Guide for the United States Vertex Payroll Tax Q Series.
Only states under state tax rules	From the states you have configured on the card, this identifies which you're withholding resident taxes. For each state you add, you select the appropriate Resident Wage Accumulation rule.	Select one: Calculate tax independent of all other jurisdictions Credit resident tax by work tax, accumulate wages if taxed Credit resident tax by work tax, always accumulate wages No resident tax if work or residence mismatch, accrue if taxed No resident tax if work tax greater than zero No resident tax if work tax greater than zero, always accrue No resident tax if work tax on nonresident, accrue if taxed No resident tax if work tax on nonresident, always accrue Use default action For further info, see Calculation Guide for the United States Vertex Payroll Tax Q Series.

If you're using this FIT withholding rule

It does this

And you can select this for Resident Wage Accumulation

All states

Default withholding rule for all states.

The payroll process automatically withholds for all states using the default action for each state. This is described in the Calculation Guide for the United States Vertex Payroll Tax Q Series.

Only states under state tax rules

From the states you have configured on the card, this identifies which you're withholding resident taxes. For each state you add, you select the appropriate Resident Wage Accumulation rule.

Select one:

Calculate tax independent of all other jurisdictions
Credit resident tax by work tax, accumulate wages if taxed
Credit resident tax by work tax, always accumulate wages
No resident tax if work or residence mismatch, accrue if taxed
No resident tax if work tax greater than zero
No resident tax if work tax greater than zero, always accrue
No resident tax if work tax on nonresident, accrue if taxed
No resident tax if work tax on nonresident, always accrue
Use default action

For further info, see Calculation Guide for the United States Vertex Payroll Tax Q Series.