Tax Exempt and Status

Exempt
By checking any or all of the applicable boxes, an employee can be exempt from a particular tax or from all taxes. Situations which allow certain employees to be exempt from certain taxes are explained in the Employer’s Tax Guide Circular “E,” which can be obtained from the IRS at www.irs.gov. By checking all boxes, the employee becomes 100% exempt and therefore this feature can accommodate payments to sub-contractors. A 1099 form may be printed at the end of the year instead of a W-2.
CAUTION: Do not check an employee as exempt just because the employee’s annual income is low enough to where they pay no taxes. In such cases you should increase the exemptions up to “99” to have a zero withholding effect. The wages are still subject to taxes (not exempt) and are still reportable as W-2 income.

Residency
The residency status usually determines whether the employee is subject to certain state and/or local tax tables. Certain states have different tax rates for Residents and Non-residents. Other states use the same rates for both. The same is true for local taxes. By checking the applicable box here, the program will be able to look up the proper tax tables.

Confidential Pay rate
Check this box if you do not want hourly wages or salaries to appear on the Time Sheet. This is a good idea if you have an employee call in hours.

Tipped Employee
Check this box if the Employee is a Tipped Employee