How to review or update employee tax settings to ensure the proper filing and payment of tax returns
How to Review or Update Tax Settings
- In Fuse, you can review all tax settings applied to all employees under Team > Payroll > Employee Payroll Maintenance > Taxes.
- You can also review or update one employee's settings by going to Employee Information > Payroll Tab > Tax Information Widget. Once you have found the correct tax to review, click on the ellipses and choose View Account Tax Jurisdiction.
- You can import these changes if you need to adjust many employees at once.
- Download the import template under Settings > Imports > Overview and search for the Employee Tax Settings import type. When preparing this import template, it is important to review the Instructions and Account Tax Jurisdiction tabs.
- Once your template is complete, import it under Settings > Imports > Payroll > Employee Tax Settings.
If you need to change any of these settings that apply to previously processed payrolls, please reach out to support@fuseworkforce.com so we can discuss the necessary corrections. Erroneous tax settings can result in late tax filings, late taxes, amendments, or penalties and interest applied by these tax jurisdictions.
When to use the Exempt Status
The exempt status on any tax field will stop all wage and tax calculations and reporting for that tax. Employees with exempt status marked in any tax field will not show wage reporting or tax reporting for that tax jurisdiction.
Some common reasons that someone may be marked as exempt:
- Clergy may have special tax exemptions
- Certain types of VISA employees may have special tax exemptions
When an employee should NOT be marked as exempt:
- Employees who list 'exempt' on their W4 form. If you mark this employee as exempt from Federal Income taxes in the system, their form w2 at the end of the year will show zero wages in box 1, which is rarely correct. An employee who doesn't need withholding but does need wages reported should instead have their status marked as block withholding (see below).
- It is best to have your employees submit all Withholding Forms directly in the Fuse system, as this will ensure proper handling of the updates to the employee's tax settings once the form is approved.
If the system tries to calculate wages or taxes you do not think are correct, please contact support@fuseworkforce.com with the specifics so we can help you review your settings.
If you have any questions or are unsure how your employees should be taxed, contact your tax advisor to confirm.
When to use Block Withholding
The block withholding status will calculate wages for the tax jurisdiction but will not allow taxes to be calculated.
Common reasons that someone may be marked as block withholding:
- Employees who list 'exempt' on their form W4 form. These employees need wages to report on their W2 form but do not want to withhold.
When an employee should NOT be marked as Block Withholding:
- Any percentage-based taxes should never have withholding blocked. If a tax is percentage-based and we report wages, the taxes should also be processed using that percentage.
- Employer taxes, as they are also percentage-based, should not be blocked for withholding.
If the system tries to calculate wages or taxes you do not think are correct, please contact support@fuseworkforce.com with the specifics so we can help you review your settings.
If you have any questions or are unsure how your employees should be taxed, contact your tax advisor to confirm.