Miscellaneous State Taxes

The Annual Exemption Reduction field is now available for those cases where an employee's year to date withholding is behind schedule due to the mid-year rule change. Employers can use the Annual Exemption Reduction field to specify an amount to reduce the Personal Exemption used in the formula.

The 2023 Booklet IL-700-T specifies a $200.00 reduction be used to facilitate the catch up. The system will allow a reduction up $2,425.00 but will not reduce the personal exemption beyond that value if an amount exceeding $2,425.00 is entered.

If the filing status is married and both spouses are working, the spouses may divide the joint personal exemption of $12,000 between them, in multiples of $500. Therefore, the number of exemptions specified on this form need to be multiplied by $500 to reach the appropriate exemption amount (such as 24 x $500 = $12,000).

 

Consequently, enter the following numbers of exemptions in order to get the correct standard exemption amounts:

Single	12 Exemptions ($500 x 12 = $6,000)
Head of Household	19 Exemptions ($500 x 19 = $9,500)
Married	24 Exemptions ($500 x 24 = $12,000)
Dependents	3 Exemptions each ($500 x 3 = $1,500)

The Commonwealth of the Northern Marianas (MP) requires the calculation of two taxes - Chapter 2 taxes and Chapter 7 taxes. To accommodate these separate taxes, two state tax codes SWT and SWT2 - are created during the calculation process (Payroll>Processing>Process Payroll). These state tax codes are only available if you have set up the employee as a resident of MP (see Add Employee).

To view or modify these amounts, select the MP employee using the Payroll>Process Payroll>Review Calculated Payroll form. On the Taxes tab, the "Code" drop-down list displays "SWT-State Withholding Tax-C2" for Chapter 2 tax and "SWT2-State Withholding Tax-C7" for Chapter 7 tax.

In order to enter manual checks and/or set up or adjust entries, the employee must be established as an MP resident on the Payroll>System Setup>Employee Information>Employee Profile>Taxes tab.

For more information, see Payroll State Taxes.

If the employee files a blind exemption, this must be indicated in the "Blind Exemption Factor" box.

The Republic of Marshall Islands (MH) requires the calculation of a State Withholding tax and two separate Federal withholding taxes, Social Security and Medicare. Social Security and Medicare taxes are to be paid by the employee and employer as a percentage of employee wages and cannot exceed the Quarterly wage base limit (calculated on a calendar quarter basis).

To accommodate these separate taxes, you must set up a tax code for MH and specify the accounts the system should use to create entries for state withholding taxes (Payroll>System Setup>Taxes>State Taxes). The system calculates the state tax, Social Security, and Medicare using the Payroll>System Setup>Employee Information>Employee Profile> Taxes tab.

To view or modify the State Withholding tax amount, select the MH employee using the Payroll>Process Payroll>Review Calculated Payroll form. On the Taxes tab, the "Code" drop-down list displays "SWT - State Withholding Tax" and the Jurisdiction column displays "MH."

In order to enter manual checks and/or set up or adjust entries, the employee must be established as an MH resident on the Payroll>System Setup>Employee Information>Employee Profile>Taxes tab.

For more information, see Payroll State Taxes.

The Republic of Palau (PW) requires the calculation of an Income withholding tax, and a Social Security tax. The Social Security tax is to be paid by the employee and employer as a percentage of employee wages and cannot exceed the Quarterly wage base limit (calculated on a calendar quarter basis).

To accommodate the Income tax, set up a State Tax code (Payroll>System Setup>Taxes>State Taxes) using either the PW (Annualized) or P2 (Actual) code in the "State Tax Details" section.

The "Annualized" method should only be used if you are sure your employees will be employed with you for the entire year. Otherwise, use the "Actual" method to make sure you do not over withhold Federal Income Tax.

Be sure to specify the Liability Accounts for State Withholding. State Unemployment does not affect the Palau Income Tax withholding.

To view or modify the State Withholding tax amount, select the PW employee using the Payroll>Process Payroll>Review Calculated Payroll form. On the Taxes tab, the "Code" drop-down list displays "SWT - State Withholding Tax" and the Jurisdiction column displays "PW."

In order to enter manual checks and/or set up or adjust entries, the employee must be established as a PW resident on the Payroll>System Setup>Employee Information>Employee Profile>Taxes tab.

For more information, see Payroll State Taxes.