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Siri H.

"Turn off" state tax for employer and employees (For NJ SDI)

SOLVED
Posted By

Hello all and happy new year!

We are a New Jersey employer that has decided to opt out of the state sponsored SDI (TDI) plan and go with a private insurer (due to the cost savings to our company as well as our employees), effective 1/1/2020. 

I'm looking for tips on the best way to handle this.  Obviously I'll be setting up a new Deduct and Fringe to handle the new payments made to the new Insurer (Guardian). 

But I am wondering how to best "turn off" the NJSDI and NJSDI_E taxes so that we don't continue to generate amounts to remit to the state.

>I hesitate to delete the taxes (especially given that updates happen annually). 

>I could access each employee and edit their records and replace the amounts with zero, probably...

Is there a recommended method for putting a state tax "on hold" so that it doesn't apply to your company?

Thanks in advance for the intel...

  • +1
    verified answer

    Hi Siri H,

    You can go into Setup, Taxes, Tax Groups and remove those taxes from the NJ tax group. This will retain all existing records in payroll and allow you to turn them back on at any time.

    Thanks!

  • +1
    verified answer

    There are a couple options.  

    1) You can remove the NJSDI AND NJSDI_E Tax rates from the tax group. This will prevent the taxes from calculating at all (no taxable, no subject to, no tax calcuated.

    2) You can change the setup of these taxes to use a 0 percent formula instead of the standard calculation method provided. However, when a tax update is installed, if there are a change to NJSDI taxes included in the update, it would most likely change the setup of the tax rate records to the default calculations provided with the software. The taxable and subject to these taxes would then still calculate but the tax amount would be zero.

    3) You can set the Employee tax records (in setup, Employee, Tax button) adjustment method for the NJSDI and NJSDI_E to No Tax. The taxable and subject to these taxes would then still calculate but the tax amount would be zero.

    4) You can set the Employee tax records (in Setup, Employee, Tax button) adjustment method for NJSDI and NJSDI_E to Exempt. The taxable and subject to these taxes would then not calculate, and no tax would calculate.

  • 0 in reply to Denise Paulus

    I guess that was more than "a couple" of options

  • 0 in reply to Jesse Gordon

    Hi Jesse, in moving further forward with this, I am seeing that it gets pretty complicated to have to set up a Deduction and a Fringe, as both should be automated with limits... Only the fringe can be automated... maybe this can be accomplished with formulas - - - but is there a reason why I couldn't just create a new set of Tax ID's with the different Liability Account?  And, could I even set them up under the NJ tax group so they continue to process automatically?  Fingers crossed, because that will make this so much easier...

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