Issue/Symptom/Question

Which Federal Withholding Employee settings are used for State Withholding, when the Employee doesn't have an existing record for the State?

Applies To

Payroll Gross To Net

State Withholding (SIT)

Payroll > Setup > Employee Payroll Information > Withholding Tab

Resolution/Fix/Answer

Currently, if an employee works in a State that does not have an existing Withholding record setup, PENTA defaults the Federal Exemptions/Dependents and Withholding Filing Status to that State to calculate the amount to withhold.

For example, John Smith lives in WI and works on a MN Job, and no MN withholding is setup for John.  John is Married with 2 Exemptions in PENTA for Federal Withholding.  The Married status and 2 Exemptions will be used when calculating the amount to withhold in MN.

The Additional Withholding, Fixed Withholding, etc., from the Federal Withholding setup do not default to the States when PENTA calculates the State Withholding Amount.

To prevent the automatic defaulting, the Employee can have a record created to have a different Status and/or Dependent # for each State they would be anticipated to work in.

Penta is investigating a change to the defaulting the Federal to the State.  The change would be to have States use Single Status and Zero Dependents if the Employer does not have a W-4 for that State on record.