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Dynamics 365 Community / Forums / Microsoft Dynamics SL (Archived) / Setting up Payroll Wit...
Microsoft Dynamics SL (Archived)

Setting up Payroll Withholding Tax When Employee Lives in One State and Works in Another State

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Posted on by RedStorm 1,350

How do you set up payroll withholding taxes when an employee WORKS in one state (example, MD) and LIVES in another state (example, DE), and the states don't have reciprocity so you have to take tax in BOTH states, but you want to give them a CREDIT to the tax that is being withheld for the state they live in?

We think that it is done within the Deduction Maintenance screen (02.290.00), on the Exemptions/Credits tab.  But we are looking for confirmation.

We think we would add a line to the DE Withholding Tax that include:  a Type of:Credit, an exemption/credit ID of:MDPER, a Base Type of:Deduction Amount, a Base Deduction ID of:MDPER, a Calculation Method of:Fixed Percentage, Fixed Pct/Rate/Amt of:100.0000.  But again we are looking for confirmation.

If you can even share a real-life example with us, we would be very grateful.  (I believe you can actually attach an IMAGE to your reply by using the "insert/edit image" icon.)

We appreciate any input you have to offer.  Thanks!  Dave Simon

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  • RedStorm Profile Picture
    RedStorm 1,350 on at
    Re: Re: Setting up Payroll Withholding Tax When Employee Lives in One State and Works in Another State

    Laura, Thanks for weighing in on the subject.  It is always nice to have someone who has done it before confirm you aren't missing anything.  I'd love to have a screenshot(s) if you are willing to share.  My email is dsimon@jmt.com.  Thanks!  Dave

  • Laura Barber Profile Picture
    Laura Barber on at
    Re: Setting up Payroll Withholding Tax When Employee Lives in One State and Works in Another State

    Hi,

    What you are saying sounds right, but I can't confirm whether MDPER is the right Base Deduction ID without seeing your options.  The demo 0060 database has many MD state tax deductions, including one for people who live in DE. If MDPER is your MD state tax that you are reducing the DE withholding by, then what you said is correct.

    You may also need to add  a Deduction Sequence to the state deductions so that Maryland calculates first, and when it goes on to calculate DE it already knows the MD amount.  It seems like that field did the opposite of what I expected the last time I had to use it... believe the deduction you want calculated first has to be higher, and the one you want last has to have the lowest number.

    Insert Image asks me for a URL - I don't have the image hosted anywhere, so I'm not sure how to post it.  I'll email it to you if you want. 

    Laura B.

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