1. The employee's income is not high enough to withhold state income tax or this employee claimed high number of exemptions
You can test it easily by increasing the payment.
2. On employee set up screen, the "State income tax" option is unchecked by mistake. You can edit employee tax option to solve this issue.
Issue #2: Wrong State Tax Calculation
1. If one employee claimed high number of exemptions, it will lower his state tax.
2. Such issue may be caused by pre-tax deduction. When you generate a paycheck, you can view the summary part. If the Taxable Income is lower than the Gross Income, that means you set up some deduction that is exempt from federal and state taxes.
Solution:You can review each dedution details. If the deduction is set up to be exempt from federal and state tax by mistake, please change the option. After you delete the wrong paycheck, you add new paycheck. You will see the correc federal and state tax amount.
ezPaycheck payroll software has been trusted by thousands of successful businesses for more than one decade. It helps you process payroll taxes, print paychecks and file tax forms easily and smoothly.
If you have not installed this software, you can download and try it free for 30 days with no obligation and no credit card needed. ezPaycheck is available for both Windows and Mac computers.