If you have employees who live in one state but works in another, it is called multi-state payroll.
When we are talking about multi-state payroll in the tax world, several considerations must be taken into account when determining what taxes to withhold from an employee’s paycheck. One of these is nexus. If a business has ‘nexus’, it means the business has a tax presence in that jurisdiction and is subject to that state's withholding laws.
Adding nexus location
If you are required to withhold taxes for your employee's state, you can establish nexus in our system by adding the employee's location address as a work location to your company:
1. Go to your Company page
2. Click Company Locations
3. Add a new address with the employee's address
You only need to add 1 address per state. Once you add that state to the company, that state's taxes will be added to Employer Taxes
You don't need to do anything else.
For example, if your company is in California and your employee works from Michigan, add a Michigan address to your Company locations. Now your employee's State Taxes page will list taxes for both California and Michigan.
You can find the nexus settings in Application Settings, and the ‘Home nexus is determined by’ dropdown.
There are two options to choose between for how your business determines nexus. They are:
1. Work locations per company – Select this option if nexus applies to work locations for some of your companies
2. All work locations from all companies – Select this option if nexus applies to each of the work locations from all of your companies