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Multi-State Payroll
There are a few things to consider for multi-state payrolls:
- the state where the employee is working
- the state where the employee resides
- the state where the business is located
State Unemployment Tax (SUTA): is generally paid to the state where the business is located. It doesn’t matter where the work is completed or where the employee resides. That is true for the five reciprocal states listed below, as well as many other states. But, there are exceptions to this rule (like Utah, for instance), so please check with us about specific states.
State Withholding: depends on where the employee resides as well as where he or she works.
Reciprocal States: Maryland, Pennsylvania, Virginia, West Virginia and Washington, DC
For employees who live and work in the five reciprocal states listed above, state taxes should be withheld for the state of residence.Otherwise, state taxes should be withheld for the state where the employee works.
Employees temporarily working out of state: The rule above applies if the work lasts more than two weeks. For work out of state lasting less than two weeks, there is no requirement to withhold for the new state.