The Employee’s State Withholding Tax Calculatedis Significantly Higher/Lower in NetSuite Compared to a Third PartyPaycheck Calculator

If it is already verified that the paycheck calculator is setup with the correct information as what the employee record has in NetSuite and the state withholding tax is the only item with significant difference in calculated amounts, the key information that needs to be taken note of is the state and the filing status specified. 

 

In the 3rd party calculator, the state filing status may show Single or Married but in NetSuite, all possible state withholding filing statuses are available, including Married-Dual Income. For some states (ex. California - CA), Married-Dual Income falls under the same tax table with that of Single filing status and this would be the reason why in NetSuite, if employee is setup as Married-Dual Income, CA Withholding will be calculated higher (using same rates as that of Single filing status) compared to some paycheck calculator where Married filing status is setup. Below are the recommended ways to handle this confusion:



1. User to review their employees' correct filing status and check their state tax table for the rates that the filing status uses.
2. User to contact their state tax agencies if they would like to secure a copy of their state tax tables. 
3. If the user needs to double-check using another 3rd party paycheck calculator, user needs to ensure that they will setup the paycheck calculator with respect to what their state tax table provides. Say for the above example, if the employee in NetSuite is setup and should really have a Married-Dual Income CA Withholding filing status, the 3rd party calculator is to be setup with Single in CA filing status since this is the status on the same tax table as that of CA Married-Dual Income, this setup tallies the CA Withholding calculated in the said calculator with what the system is to calculate for the employee's paycheck. 



Disclaimer: To ensure compliance with requirements imposed by the tax agency, NetSuite informs you that any U.S. tax advice contained in this article, unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any matters addressed herein. 
These materials do not constitute tax, legal, or accounting advice and neither NetSuite, nor its agents, employees, or representatives are in the business of offering such advice. Please consult your tax, legal, and accounting advisors for tax, legal, or accounting advice.