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KY Local Tax
KY Local Jurisdiction Codes and descriptions may be established by organizations in KY required to withhold local Occupational Taxes. Once codes are established the appropriate code is selected in the employee master file under Local Tax.
Things you should know:
Code: Enter a Jurisdiction Code using accounts 1000 and higher.
Description: Enter a description for the Jurisdiction Code.
Rate (%): Enter the percentage to be withheld.
Min Wages: Enter the amount of minimum taxable wages, if applicable. Enter 0 if no
minimum.
Max Wages: Enter the amount of maximum taxable wages, if applicable. Enter 0 if no maximum.
Things you should know:
- Jurisdiction Codes must be 1000 or higher.
- In the employee file the rate will always show as zero. This is because a Jurisdiction may have different rates for different income levels. Based on the requirements of the jurisdiction, you may set up as many different rates, minimums and maximums as necessary under the same Jurisdiction code. The software will check the Local Tax (Jurisdiction) code in the employee file and calculate the appropriate rate based upon the information in the Setup file and the employee’s rate of pay.
- To set up additional rates, minimums and maximums under an existing Jurisdiction Code, click Edit, enter the existing code number. You will be prompted that the rate already exists and asked if you wish to add another rate. The same code should be used in the setup if wages are taxed by the one jurisdiction up to a certain amount and then by a second jurisdiction when wages exceed that amount. For example, wages 0-$15,000 are taxed by the county at .5%. Wages $15,000.01 to $75,000 are taxed by the city a .5%. Use the same code for both setups with the appropriate rates, minimums and maximums. If there are some employees who are only taxed by the first jurisdiction up to $15,000, a separate code needs to be set up with the maximum of $15,000. When the report is printed, you will need to export the report to Excel and copy and paste the employees from the new code set up to be under the same jurisdiction on the first code. Then have the subtotals recomputed for that jurisdiction.
- If you have employees who are required to pay a KY local tax after they have reached specified YTD salary such as $5,000, then set up 1 code with 2 rates. The first rate would be a 0% with a minimum of 0 and a maximum of $5000. Set up a second rate, entering the rate required for that jurisdiction with a minimum of $5,000 and a maximum of something, such as 999,999 if there is no maximum required.
- If these rates are set up during the calendar year a payroll adjustment would need to be created to subtract the Occupational Tax from the old local tax code and add the amount to the new KY Local Tax code. Up to 6 local tax codes may be entered in the Payroll Adjustment menu.
Code: Enter a Jurisdiction Code using accounts 1000 and higher.
Description: Enter a description for the Jurisdiction Code.
Rate (%): Enter the percentage to be withheld.
Min Wages: Enter the amount of minimum taxable wages, if applicable. Enter 0 if no
minimum.
Max Wages: Enter the amount of maximum taxable wages, if applicable. Enter 0 if no maximum.
