Employee’s taxes will 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.
Important: A withholding override doesn't change the employee's W-4 elections. It only changes what's withheld from this paycheck. The employee is responsible for reconciling the actual tax amounts on their individual tax filing.
The ability to override income tax withholding is only available for accountants. If you're interested in this, work with your accountant to have them set it up. If you do not have your accountant in Gusto, you can add them, or use our Partner Directory to find one that best suits your needs.
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.
One-time overrides are recognized in regular, bonus, off-cycle, and transition payrolls.
Reminder: This feature is for accounting firms only.
Click Clients on the left-hand side.
Select the desired company.
Under the Payroll section, click Run payroll.
Select the applicable pay period and click Run payroll.
On the far-right, click the three dots under the "Actions" menu and select + Tax overrides.
For an off-cycle or bonus payroll, click the three dots under the "Actions" menu and select Override withholding.
The first part is for federal income tax—select how you'd like to override taxes:
A fixed dollar amount
A percentage of gross pay
Enter the amount or percentage you'd like to withhold.
If no override amount is applied, withholding amounts will be based on their W-4 information.
The second part is for state income tax—select how you'd like to override taxes:
A fixed dollar amount
A percentage of gross pay
Enter the amount or percentage you'd like to withhold.
If no override amount is applied, withholding amounts will be based on their W-4 information.
Check the disclaimer 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.
Click Save.
Finish processing payroll.
The employee will be notified of the adjusted taxes via email as well as a note on their paystub.
Recurring overrides are only available on regular payrolls.
Reminder: This feature is for accounting firms only.
Click Clients on the left-hand side.
Next to the desired company, click the green box with an arrow to go to the company's account.
Click the People section.
Select the employee’s name.
Toggle to the Taxes tab.
In either the Federal or State tax sections, click Edit next to "Withholding override".
Under Set up an override, select Apply to one or more regular payrolls. (Apply to this payroll only is only available while running payroll, and sets up a one-time override instead.)
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.
Select how you'd like to override taxes:
A fixed dollar amount
A percentage of gross pay
Enter the amount or percentage you'd like to withhold.
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.
Click Save.
Process the regular payroll.
The employee will be notified of the adjusted taxes via email as well as a note on their paystub.
Reminder: This feature is for accounting firms only.
To remove a recurring tax override:
Click Clients on the left-hand side.
Next to the company's name, click the green box with an arrow.
Go to People.
Select the employee’s name.
Click the Taxes tab.
In either the Federal or State tax sections, click Edit next to Withholding override.
Below the Save or Cancel buttons, click Remove tax withholding override.