Hello @OCS
Square Payroll only supports businesses that are located in one tax jurisdiction for payroll purposes. Accordingly, although your employees can choose an address that is outside of your state jurisdiction, for tax purposes, our system will assume that the employee physically works in your business.
Based on this, income taxes are withheld for the state in which the employee “works”, unless a reciprocity agreement exists between the two states.
We don’t currently support the ability to withhold tax for multiple tax jurisdictions. Please review this situation with your tax professional to ensure meeting your withholding tax obligations as an employer.
You can read more about Payroll Reciprocal State Agreements in our Support Center.
Please let me know if you have any further questions. I’m happy to help.
