Local Tax Reporting

US Local Tax Reporting can sometimes be tricky with Clarity. You want or expect the information to appear on the W2’s in a VERY specific format and it’s not aligning the way you want it too. 

Q: How do I setup a Local taxation in the system?

Create a new payroll category of class “Tax”. Once the category is created you will have to assign it a number, name and abbreviation. These values will all pertain to how the category will appear within the payroll software.  

You then must set the Category Tax Level to “Local”, this will affect how the category reports to the tax forms and is very important. Set the state the locality falls into and then set the type to either “Percentage” 

Q: I have a Local Tax category, how do I make it appear on the W2’s?

First you must have a local tax category created, if you do not have the category already created look at the Q&A above.

Now, for the deductions of the local taxation appear on the W2’ forms you must go to the “Form Assignments” tab of the local tax payroll category and set the category to report to the “Local” box for “Generic Withholding”. This will let the system know that when you produce you W2’s that there is a generic tax withholding to assign.

Q: I want to change the way the category appears on the W2’s, how do I do that?

When you select to create the W2’ forms the system will bring you to a screen called “State & Local Tax Items”, as seen below.

You will see the Local tax that you created at the bottom of the screen.

To edit the local taxation you must select the local tax items and select “Edit” from the list. 

This will load the “Local Tax Item” Screen.  On here you can set the tax name and tax number.

If you want to change the tax name and the way it will appear on the W-2 change the taxation from the listed type to “Custom tax name”. This will enable all the fields so that you can manually type in the Tax name, W-2 Name and Tax-Type. The W-2 Name is limited to 6 characters.