How the STE handles nexus and reciprocity
Multi-state payroll is a collaborative effort between the Symmetry Tax Engine (STE) and the client-side application. In order to calculate correctly, both the STE and the client—that’s your application and your programmers—must provide information to the Symmetry Tax Engine. The following information walks you through what is required from resident and employee settings in order to successfully calculate withholding in either the resident or nonresident state or both.
First, it is necessary to set up the resident settings within the STE by asking these six questions:
Do reciprocity agreements exist with the nonresident states? STE Assigned
What is the nexus status with the resident state? Client Assigned
Does the state withhold on nonresidents working in the resident state? STE Assigned
Does the state withhold on residents working outside the resident state? STE Assigned
Does the state withhold on out of state wages if the nonresident state does not have a state tax? STE Assigned
What type of credit is given in the resident state for nonresident withholding? STE or Client Assigned
Next, the employee settings are created by answering these three questions:
What is the resident state? Client Assigned
Does the employee have a nonresident certificate on file? Client Assigned
The remaining parameters for state calculations come from the miscellaneous parameters (state or jurisdiction parameters). Client Assigned
With all of this information in place, the Symmetry Tax Engine multi-state algorithm runs, ultimately determining whether or not the employee should have withholding in the nonresident state and answering the question of whether or not the nonresident wages and benefits should be added to the resident state for the tax calculation.
Interested in learning more about multi-state payroll? Get in touch to see STE documentation for more information.
