Override income tax withholding - accountants

This feature is for accountants only. If you're interested in this, we encourage you to have a discussion with your accountant and they can set this up. If you don't have your accountant 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. 

Employee’s taxes will default to be calculated based on their W-4 elections and the company’s pay schedule, per IRS regulations. However, accountants can now override an employee’s federal and state income tax while processing a regular payroll, an off-cycle payroll, or a bonus payroll. 

When to override withholdings
  • The company paid an employee outside of Gusto and the CPA needs to match the net/gross/tax amount they calculated.
  • CPA advises on using specific tax amounts.
  • An employee wants to have a set amount of income tax withheld per paycheck and not follow the regular calculations.
  • An employee doesn’t want to have income tax withheld on the payroll. 
Set up a one-time tax override

One-time overrides are recognized in Regular, Bonus, Off-cycle, and Transition payrolls.

  1. Sign in to your Partner dashboard.
  2. Select the desired company.
  3. Click the Payroll section and select Run payroll.
  4. Select the applicable pay period. 
  5. Click the three dots under the ‘Actions’ menu and select Override withholding.
    • For an off-cycle or bonus payroll, you’ll need to click +Enter payment then select the three dots under the ‘Actions’ menu.
  6. The first step is for federal income tax—select Apply one-time override to this payroll only.
  7. Choose whether you want to withhold a fixed dollar amount or a percentage of gross pay.
    • If you do not want to override the federal income tax withholding, select No override and click Continue to move to the state income tax step.
  8. Click Continue.
  9. The second step is for state income tax—select Apply one-time override to this payroll only.
  10. Choose whether you want to withhold a fixed dollar amount or a percentage of gross pay.
    • If you do not want to override the state income tax withholding, select No override and click Continue to move to the final confirmation step.
  11. Review the withholding override elections and make any necessary changes.
  12. Check the box confirming the override.
    • By checking this box, you understand that you're performing an override of the suggested tax calculation based on the information that was provided by this person on their W-4.
      • Important: This does not modify the employee’s W-4 but rather is overriding the elections on the W-4.
  13. Click Done.
  14. Finish processing payroll.

The employee will be notified of the adjusted taxes via email as well as a note on their paystub.

Set up a recurring tax override

Recurring overrides are recognized in Regular, Bonus, Off-cycle, and payrolls on AutoPilot.

  1. Sign in to your Partner dashboard.
  2. Select the desired company.
  3. Click the People section and select Team members.
  4. Select the employee’s name.
  5. Under the Job & Pay tab, navigate to the Federal and State tax sections.
  6. Click +Set up tax withholding overrides.
  7. Select when the override should end.
    • Never: Withholding override recurs indefinitely.
    • After a specific number of regular payrolls: Withholding override will stop after the selected amount of pay periods.
  8. Choose whether you want to withhold a fixed dollar amount or a percentage of gross pay.
  9. Check the box confirming the override.
    • By checking this box, you understand that you're performing an override of the suggested tax calculation based on the information that was provided by this person on their W-4. 
      • Important: This does not modify the employee’s W-4 but rather is overriding the elections on the W-4.
  10. Click Save. 
  11. Process the Regular payroll.

The employee will be notified of the adjusted taxes via email as well as a note on their paystub.