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Vickie1353
June 19, 2025
Question

QuickBooks Online Payroll question on state tax withholding of location vs residence

  • June 19, 2025
  • 1 reply
  • 47 views

In QBO payroll, we have a company location in TN which is where the employee works.  The employee's home address is NC.  There is no reciprocal agreement between these states.  We have the work location set up as TN.  The employee's home address is NC.  QBO Payroll is correctly calculating TN Unemployment taxes based on work location; however, it is showing taxable wages for NC state income taxes and withholding NC state income taxes.  The client isn't required to register and withhold NC state income taxes.  Marking the employee as exempt from NC state income taxes in their profile still reports taxable wages on the returns and W2.  How can we resolve this?.    .

1 reply

K
KimberlySModerator
Moderator
June 19, 2025

We truly appreciate the details you've provided, Vickie1353. You can connect to our Live Payroll Support team to fix the issue with the reported income tax for an exempted employee. Let me walk you through the process.

 

Changes to an employee’s profile, such as updates to their tax exemption settings, will apply only to future transactions in QuickBooks Online Payroll (QBOP).

 

If they're marked as tax-exempt before running payroll, a thorough review of this matter is necessary to determine why taxable wages are reported on returns and form W-2. Our chat and support team can help, as they have the appropriate tools and expertise.

 

Here's how to contact them:

 

  1. Sign in to your QBOP company.
  2. Click (?) Help, then proceed to the Search tab.
  3. Utilize the search field or open an article.
  4. Select Contact Us at the bottom of the Help panel.
  5. Choose the Ask about something else and enter your concern to Continue.
  6. Decide how you would like to talk with an expert: Chat with us or Have us call you.


As you initiate the connection, please also observe their support hours for convenience.

 

If you want to gather insights from your business and workers, there are different reports available that you can use. To determine which data best suits your needs, explore this material: Run payroll reports.

 

We recognize how essential it is to ensure accurate tax reporting to avoid any discrepancies in the future. If you have other questions, comment below and don't hesitate to tag us in the Community. We're always around to lend a hand.

V
Vickie1353Author
June 25, 2025

We did contact QuickBooks Online Support.  We were told to send in the information on the NC taxes reported and withheld for correction.  Also, to mark the employee exempt from NC state tax withholding.  We did mark the employee as exempt from NC withholding but it's still showing earnings in NC, which there are none.

M
MichaelaSQuickBooks Team
QuickBooks Team
June 25, 2025

Thank you for providing updates, Vickie1353. Please note that the changes made will only apply to your future transactions.

 

To ensure that the issue with the NC state tax withholding is addressed and corrected, I recommend that you reach out directly to the QuickBooks Correction team. They can provide you with the most current updates and assistance regarding this matter. Please let them know about the situation, including that you've marked the employee as exempt, yet the earnings are still displayed incorrectly. This way, they can check further and help resolve the issue.

 

Here's how to contact them:

 

  1. Login to your QuickBooks Online Payroll account.
  2. Click Help, then proceed to the Search tab.
  3. Utilize the search field or open an article and select Contact Us at the bottom of the Help panel.
  4. Choose the Ask about something else and enter your concern to Continue.
  5. Decide how you would like to talk with an expert: Chat with us or Have us call you.

 

You can find our support hours by checking out this article: Support Hours.

 

I'll also provide various payroll reports that you can generate, offering a detailed view of your employee's total wages, deductions, and tax information for a specific period. For the complete list and details on how to pull up these reports, kindly refer to this article: Run payroll reports.

 

Please leave us a response if you have other questions or concerns.

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