Being tax exempt means that an employee or employer is not required by law to contribute to a specific tax. When you add a tax exemption in Gusto for an employee or employer, we won't debit for this tax or report it on your filings. We highly recommend that you consult with a CPA or other tax professional to confirm if you or your employee is tax exempt before making any changes to your Gusto account.
If your accountant is added in Gusto, we encourage you to have a discussion with them and they can set this up. If you don't have your accountant added in Gusto, we recommend you add them.
If you don't have an accountant, use our Partner Directory to find one that best suits your needs.
We highly recommend you consult with a CPA or other tax professional to confirm that your company is tax-exempt before setting this up in Gusto. If your accountant is added in Gusto, we encourage you to have a discussion with them so they can set this up. If you don't have your accountant added in Gusto, we recommend you add them.
If you don't have an accountant, use our Partner Directory to find one that best suits your needs.
Once this is set up, no wages will be reported for this tax and we won't file for this tax in payroll.
We highly recommend you consult with a CPA or other tax professional to confirm that your employee is tax-exempt before changing the tax status for your employee. If your accountant is added in Gusto, we encourage you to have a discussion with them and they can set this up. If you don't have your accountant added in Gusto, we recommend you add them. If you don't have an accountant, use our Partner Directory to find one that best suits your needs.
If you need to mark an employee as exempt from income taxes, have them complete a Form W-4 and indicate in their filing status they are "Exempt from withholding."
If you're an employee who needs to be exempt, reach out to your admin so they can complete this on your behalf.
Reach out to our team from the Help or Priority support section of your account if you need additional assistance setting up a specific exemption.
We won't withhold tax amounts for your employee in upcoming payrolls starting on the selected effective date.
Note: Exemptions may negate wages from being reported on applicable forms.
You can only remove tax exemptions if they're scheduled for the future, or if the employee hasn't been paid yet.
If you need to remove a tax exemption after an employee has been paid, please reach out to customer support from the Help or Priority support section of your Gusto account.
If you already ran payroll but forgot to set up a tax exemption, we can help you fix these past payrolls.
Our support team will use this information to correct the payrolls that didn't include that tax exemption.
Ministers may be given an official housing allowance that is excluded from taxable gross wages. Here's how to set up a housing allowance in Gusto:
Ministers may be exempt from certain taxes such as Social Security and Medicare. Please refer to the Topic 417 - Earnings for Clergy for more details on how to request these tax exemptions with the IRS.
Once you've confirmed that the minister is exempt from these taxes, set up the tax exemption in Gusto in the People section.
Gusto connects to Aplos Accounting and can automatically track your payroll and tax payments. We also support the W-2 requirements and unique church payroll needs for pastor housing allowances and tax exemptions.
Gusto is required to collect and remit sales tax on your Gusto product subscription in certain states—view the full list of required states and/or cities that Gusto is required to collect and remit sales tax in at the end of this dropdown.
Sales tax on services like Gusto’s varies by jurisdiction. If a jurisdiction considers any of our products as taxable, we’re required to collect and remit sales tax.
The company filing address stored in Gusto is used to determine the tax rate, and the tax charged will appear as a separate line item on your monthly invoice.
If you are a Gusto Partner, your clients may be charged sales tax on their Gusto subscription based on their filing address stored in Gusto.
Some, but not all charitable, religious, scientific, or educational organizations may be exempt from sales tax.
If you're a Gusto customer and would like to apply for sales tax exemption, please contact our Care team at (800) 936-0383.
Gusto partners with Avalara who will be validating tax exemption certifications on your behalf. Exemption validation typically takes 5-7 business days. If your application is approved before the end of the month, you will not be charged sales tax for the month, or months thereafter, so long as Gusto has valid proof of exemption as permitted by applicable law.
States
*In applicable jurisdictions only.