1099 State Tax Setup

In order for a tax state to record correctly for an employee on their 1099, so that we can file for them with individual states, they need to have the correct worked state recorded with their pay.  For this to happen correctly, they must have a cost center that can be assigned, stating which state they are working in. 

First, you will need to create a new cost center level to gather this information.

Go to Global Setup > Company Setup, and then to the Company Config tab.  In the cost center trees section, select a field not already in use, and name it Work Location, and then save.  ***NOTE: if they already have a separate cost center depicting where they work, with addresses included, you can use that cost center.  There is no need to create a new one.

Once you have your work location added, click the Settings button to the right to turn on specific settings for this cost center.

In the settings screen, change the Priority and Default Priority to 1-Highest Priority.  You can also set the Geo-Fencing to the highest priority, unless other addresses on a different cost center are being used to determine the geo-fencing.

Update the System Display Settings to Lookup with Type In to allow the drop down option when selecting this cost center.

Finally, at the bottom, select the address box next to the level you are going to set the address.

Save your new settings.

Click Edit Tree from the top of the Settings screen to add your cost centers.

Change the name of the cost center on the main level.

Then click Add New (Child:1) to add in your new cost centers. 

When adding the cost centers, be sure to go to the Address section, and enter the correct address in that state.  This will be the address that drives the wages to be put in a certain state on the 1099.

If employees are working from home, you can also add a cost center called “Works From Home”, and mark the Use Employee Home Address as Work Address for Taxes box.  This will then tell the system to look to that person’s personal address in the system to determine the state they are working in.

Once the name and address of the cost center are added, make sure to Save.

You now want to make sure this is a required field for employees, so it doesn’t get left off when adding new employees.

Go to Global Setup > Company Setup, and then the Global Policies tab.  In the Account Policies section, find the Required Cost Centers, and make sure your work location is marked.

Make sure to save when you are done.

While in Global Setup > Company Setup, you will also need to go to the Payroll tab.  In the Distribute section, make sure your new cost center is set to Distribute (Last Level).  This will make sure that if clients assign multiple work locations on a timesheet, they will come into payroll.  ***NOTE: if a client needs this access also enabled, there are additional steps needed to add it onto the timesheet, and also to allow employees to punch to those, if needed.

These are now ready to be assigned to employees.  It is essential that these get assigned to employees BEFORE any pay statements are added.  If this is added after the fact, it will not update any existing pay statements.  The pay statement would need to be deleted, and re-added, in order for it to pick up the new cost center.