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    8 Replies Latest reply on Mar 12, 2009 11:40 AM by

    Payroll Question: Multi State

    optimustk Wayfarer

      We are a S Corporation, have an employee who is based in Illinois who travel on weekdays to Maryland to do consulting work.


      Employee Home State: Illinois


      Employee Work State: Maryland


      Company: Incorporated in State of Illinois.


      We kind of confused about doing payroll for this employee.


      I was told by my payroll company to do the following:


      1) Do payroll for this employee in State of Illinois.




      a) deduct Fed W/H


      b) deduct State W/H for State of Illinois,


      Pay no SUTA to State of Illinois.


      SUTA goes to State of Maryland.


      2) Do Unemployment and Workers Compensation for State of Maryland.


      A friend of mine who has been in this type of business for several years said that I should do the payroll for the employee in the State of Maryland not in State of Illinois.


      Which is the right way?


        • Re: Payroll Question: Multi State
          optimustk Wayfarer
          Update: When I ran the Payroll software, it calculate everything for State of Maryland. There is no deduction for State of Illinois.
          • Re: Payroll Question: Multi State
            Vince Adventurer

            Welcome to the Community *optimustk*! Great payroll question...I know there are several members that have this answer for you. Hopefully they'll have an answer for you soon. Good luck with your business


              • Re: Payroll Question: Multi State
                optimustk Wayfarer
                Thanks Vince. I have been testing my online payroll software, yes it does the right thing. But I want to make sure I really understand why it is doing differently than I thought or heard.
                  • Re: Payroll Question: Multi State
                    optimustk Wayfarer
                    I found some information about multi state payroll tax issues from "seminar conducted by the American Payroll Association".

                    Here is the URL:

                    I should trust my online payroll software for the time being until some one explain why?
                      • Re: Payroll Question: Multi State
                        dublincpa Scout

                        I work in a similar industry.

                        The unemployment part is right. However, if/when there is an unemployment claim, the EE will file through IL. The SUTA wages/taxes were paid to MD. It works out in the end, but it is almost always a hassle.

                        Since the corp doesn't seem to have nexus in MD, IL tax is withheld unless the ER wants to set up MD withholding as a courtesy. However, non resident wages should technically be reported for the EE in MD with no withholding. Even though the employer's presence is not enough to trigger nexus, the employee still has to file and pay as a nonresident in MD and tax a credit in Illinois.

                        Feel free to email me if you want to know how this is often handled.
                        1 of 1 people found this helpful
                          • Re: Payroll Question: Multi State
                            optimustk Wayfarer
                            dublincpa Thanks for your brief explanation. It is hard to find good folks like you in this tough economics situation where people call themself fortunate ( actually opportunist) because they can use this forum to get client and charge them unreasonable fee. Beware of people trying to get your contact number outside this forum. I strongly believe this forum has to be in general nature to educate others. Not be a tool to get clients.

                            I found that my friend was correct(???) when I checked with Bank Of America online payroll system help support. This is what I had to do for the payroll:

                            Deduct Income Tax for State of Maryland. i.e.: State Income Tax W/H goes to State of Maryland
                            *Employer pays: Unemployment(SUI), Workers Compensation goes to *State of Maryland.
                            **I was told State of Illinois does not collect state income tax on behalf of state of Maryland. You mentioned this point in your post. A state collecting tax on behalf of another state depends on their mutual agreement
                            **Nothing goes to State of Illinois. It is a great concern for my employee because their children goes or planning to go college in State of Illinois. I understand nexus is a issue here. Thanks for educating me<br <br <br
                    • Re: Payroll Question: Multi State
                      LUCKIEST Guide
                      Payroll Question, Welcome

                      WHO ARE YOU?? Everybody in business should have an Accountant.

                      Talk to your Accountant.

                      Without your first name, I would not answer your Payroll Question
                      • Re: Payroll Question: Multi State

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