Using the Tax Codes Exempt Form

Use the Tax Codes Exempt form to maintain tax code details for federal, state, and city jurisdictions. The Exempt tab includes the tax liability account and the valid pay and exemption types. The exemption types differ for federal, state, and city tax codes.

The rest of the tabs are enabled or disabled depending on whether the Tax Authority for the selected tax code is federal or state/city.

If the Tax Authority for the current tax code is Federal:

  • The Federal Basis tab is enabled and displays the FICA and wages accounts.
  • The first (Federal) Basis-Account tab is enabled and displays the FICA and wages accounts.
  • The first (Federal) Tax Tables tab is enabled and displays tax tables where you can set up both a Single Withholding Table and a Married Withholding Table, and based on the employee's marital status, determine what table is used during tax calculations.

    In accordance with IRS guidelines (Circular E, Section 9), the system processes income tax withholdings for Single and Head of Household employees identically.

    Taxpayers who earn less than a certain amount per year receive a tax break. Earned Income Credit (EIC) tables describe this tax break. A one-certificate arrangement refers to one spouse making less than the specified amount. A two-certificate arrangement refers to both spouses make less than the specified amount.

If the Tax Authority is State or City:

  • The State/City Basis tab is enabled and shows tax basis information.
  • The second (State/City) Basis-Account tab is enabled and shows tax basis information.
  • The second and third (State/City) Tax Tables tabs are enabled and display tax tables where you can set up a Single Withholding Table, a  Married Withholding Table, and a Head of Household Table. Based on the employee's marital status, the application determines what table is used during state or city tax calculations.