Table of Contents

Set up tax calculations

Configure Income Tax Jurisdictions to define how OnePayroll calculates federal, state, and local income tax withholding.

Set up Income Tax Jurisdictions

Income Tax Jurisdictions define the taxing authorities and their calculation rules. Each jurisdiction has a level (National, Regional, or Local), a calculation method, and a linked pay type for posting withholding entries.

To create or edit jurisdictions:

  1. Choose the Lightbulb that opens the Tell Me feature. icon, enter Income Tax Jurisdictions, and then choose the related link.
  2. Select a jurisdiction or choose New to create one.
  3. On the General group, fill in:
    • Code — identifier for the jurisdiction (for example, US for federal, CA for California)
    • Description — display name
    • Level — National, Regional, or Local
    • Report-to Jurisdiction — the parent jurisdiction (for example, states report to the federal jurisdiction)
    • Withholding Definition — controls which W-4 fields appear and how values propagate (US)
    • Form Name — the tax form used (for example, W-4 for federal, DE-4 for California) (US)
  4. On the Calculation group, fill in:
    • Calculation Method — Standard, Simplified, or None
    • Pay Type No. — the pay type used to create withholding entries
    • Rounding Method — how to round calculated amounts
  5. Close the page.

Calculation methods

Method Description Typical use
Standard Full W-4 calculation with annualization, deductions, bracket tax, credits, and allowances Federal (W-4), states with their own forms
Simplified Bracket-based lookup using annualized wages States that inherit from federal and use simple rate tables
None No tax calculation Jurisdictions without income tax

Withholding definitions (US)

The Withholding Definition field controls which W-4 fields the employee sees and whether values propagate from a parent jurisdiction:

Definition Behavior
Standard form Employee fills in all applicable fields (Filing Status, Credits, Deductions, etc.) independently
Standard form with inherited filing status Same as Standard form, but Filing Status is inherited from the parent (federal) jurisdiction
Inherited from parent All withholding values are inherited from the parent jurisdiction; employee doesn't enter separate state W-4 data

Example jurisdiction setup

A typical US configuration includes:

Code Level Calculation Method Withholding Definition Form
US National Standard Standard form W-4
CA Regional Standard Standard form DE-4
ND Regional Simplified Inherited from parent —

Set up withholding rates

Tax rate brackets determine how withholding amounts are calculated for each jurisdiction and filing profile.

To configure tax rates:

  1. Choose the Lightbulb that opens the Tell Me feature. icon, enter Withholding Rates, and then choose the related link.
  2. Create entries with:
    • Valid From — the date when the rate becomes effective
    • Jurisdiction Code — the jurisdiction these rates apply to
    • Income Tax Profile — the filing profile (matches employee filing status)
    • Income From — the lower bound of the bracket
    • Rate — the marginal rate for income in this bracket
    • Base Amount — the cumulative tax from lower brackets
  3. Close the page.

Rates are configured by effective date, jurisdiction, and income tax profile. The Standard and Simplified calculators use these rate tables.

For category-specific flat rates on bonuses, commissions, and other supplemental earnings, see Set up supplemental withholding.

For local jurisdictions that are selected from employee district codes, see Set up local tax withholding (US).

Set up withholding setup

Withholding Setup stores supplementary calculation parameters per jurisdiction and filing profile.

To configure:

  1. Choose the Lightbulb that opens the Tell Me feature. icon, enter Withholding Setup, and then choose the related link.
  2. Create entries with:
    • Valid From — the date when the setup becomes effective
    • Jurisdiction Code — the jurisdiction the setup apply to
    • Income Tax Profile — the filing profile
    • Standard Deduction — the annual standard deduction amount
    • Per-Allowance Amount — the reduction per allowance claimed
  3. Close the page.

The Standard calculator uses these values during the calculation sequence (gross → subtract Standard Deduction → bracket tax → subtract credits → subtract per-allowance reductions → add additional withholding).

Set up Pay Type W-2 mapping

Each pay type can be mapped to a W-2 box so that earnings, deductions, and taxes are correctly reported on the Employee W-2 Statement.

To assign W-2 boxes:

  1. Open a Pay Type card.
  2. In the Tax Statement group, set:
    • W-2 Box — the W-2 box this pay type maps to (for example, 1 - Wages Tips Other Compensation, 2 - Federal Income Tax Withheld)
    • W-2 Box Code — additional code for boxes that require one (Box 12 Codes and Box 14 Other)

For the full list of W-2 box options, see Tax statements and reporting.

Verify the setup

Before processing payroll with income tax withholding:

  1. Confirm each jurisdiction has the correct Calculation Method and Pay Type No. assigned.
  2. Verify that Withholding Rates entries exist with a Valid From date on or before the payroll payment date, and that Withholding Setup entries exist for the current tax year and all applicable filing profiles.
  3. Open an employee's Withholding Information to confirm that withholding records were created for the expected jurisdictions.
  4. Process a sample payroll run to verify that the withholding amounts are reasonable.

Troubleshooting

No income tax calculated

  • Verify the jurisdiction's Calculation Method is not set to None.
  • Confirm the jurisdiction has a Pay Type No. assigned.
  • Check that Withholding Rates include a row with a Valid From date on or before the payroll payment date and the employee's resolved Income Tax Profile.
  • Open the employee's Withholding Information and confirm the record is not marked as exempt.

Withholding amount seems incorrect

  • Review the employee's Filing Status, Withholding Credits, Other Income, and Deductions on the Withholding Information page.
  • Confirm the correct Standard Deduction and Per-Allowance Amount are configured in Withholding Setup.
  • Verify that the correct tax brackets are entered in Withholding Rates for the applicable Valid From date.

State withholding not appearing

  • Confirm the state jurisdiction exists with Calculation Method set to Standard or Simplified.
  • Verify the employee's work location or home state is correctly assigned.
  • One of these must differ from None for the jurisdiction to be assigned automatically.

Next steps

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