Other Taxes - Employee Taxes Tab

Access this tab using Maintain>Payroll>Other Taxes.

Use this tab to specify how the system should account for the employee withholding tax. Select the Withholding Tax's calculation basis, the General Ledger Liability Account, and the calculation type. The Employee Rate Table displays columns based on the Calculation Type selected. Enter exemptions/deductions, if applicable.

 

Calculation Basis: Select a calculation basis to determine the subject wages to be used for calculating the other tax.

• Taxable Earnings: Earnings, benefits, and deductions used in the employee's timesheet that are flagged as subject to other withholding tax.
• Federal Withholding: Earnings, benefits, and deductions used in the employee's timesheet that are flagged as subject to both federal and other withholding tax.
• State Withholding: Earnings, benefits, and deductions used in the employee's timesheet that are flagged as subject to both state and other withholding tax.

Liability Account: Enter the General Ledger Liability Account for withholding tax. The Liability Account must be an existing Active or Inactive General Ledger account that is not a subledger-type account.

Calculation Type: Select the calculation type and use the employee rate table to set up the tax calculation. The following describes each calculation type:

• Annual Base Tax - Taxes are calculated according to a fixed amount.
• Annual Tiered Tax - Tax rates change based on income levels, multiple lines are needed.
• Annual Tiered Tax with Cap Option - Tax rates change based on income levels, multiple lines are needed.
• Base Tax per Period with Minimum Wage Threshold - Taxes are calculated according to a fixed amount after a minimum wage amount is met for the pay period.
• Percent of Annual Wages with Cap Option - Taxes are calculated on a year-to-date or current pay period basis according to a flat percentage.
• Percent of Wages with Pay Cycle Cap Option - Taxes are calculated on a pay period basis according to a flat percentage.

Employee Rate Table: The amounts and percentages entered in this table are used in the calculation of the withholding tax. You must complete at least one line of this table if the Employee Applicable Taxes check box was selected on the Tax Code tab. The following describes the possible Calculation Type selection and what columns display in the Employee Rate Table:

When entering percentages, do not include a decimal point. For fractional percentages, enter the leading zeroes. For example, enter the following numbers to indicate the following percentages:

0005 = .5%

005, 05, or 5 = 5%

50 = 50%

The system calculates up to four places to the right of the decimal point.

• Annual Base Tax - Enter the annual amount in the Base Tax column, the system divides the amount by the number of annual pay periods (selected on the Maintain>Payroll>Processing Groups>Group tab>Pay Cycle) to determine the employee's tax for each pay period. Note that the Exemptions/Deductions table is not available.
• Annual Tiered Tax - Enter the Annual amount in the Base Tax column. To apply a maximum amount of earnings taxed, enter the amount in the Taxable Amount Under column. For a very large number, enter 999,999,999.99. If no maximum is needed, enter 0. If there is an Exclusion amount, the system reduces the annualized taxable wages by the exclusion amount. The system then applies the Percent rate to the resulting number, and adds the base tax to get the total annual tax amount. This amount is then divided by the employee's number of pay periods to get the tax withholding for a specific pay period. (The system first locates the line in the rate table that applies to the employee's annualized taxable wages (annualized gross taxable earnings less exemptions/deductions).)
• Annual Tiered Tax with Cap Option - Enter the Annual amount in the Base Tax column. To apply a maximum amount of earnings taxed, enter the amount in the Taxable Amount Under column. For a very large number, enter 999,999,999.99. If no maximum is needed, enter 0. If there is an Exclusion amount, the system reduces the annualized taxable wages by the exclusion amount. The system then applies the Percent rate to the resulting number, and adds the base tax to get the total annual tax amount. This amount is then divided by the employee's number of pay periods to get the tax withholding for a specific pay period. (The system first locates the line in the rate table that applies to the employee's annualized taxable wages (annualized gross taxable earnings less exemptions/deductions).) The CAP is applied if the YTD Tax Withheld is greater than the calculated Annualized Tax then subtracting the calculated Annualized Tax from the YTD Tax Withheld.
• Base Tax per Period with Minimum Wage Threshold - Enter the amount in the Base Tax column. Enter the Wage Threshold amount and select the Wage Threshold Period of Calendar Month or Calendar Year. The base tax is applied once per wage threshold period after the wage threshold is met or exceeded. Note that the Exemptions/Deductions table is not available.
• Percent of Annual Wages with Cap Option - Enter the Percent and select the Calculation Method of Year To Date or Current. To apply a maximum amount of earnings taxed, enter the amount in the Taxable Amount Under column. If there is no maximum amount of earnings taxed, the Taxable Amount Under may be left at 0 and no maximum will be applied, or you can enter a large number such as 999,999,999.99 to be applied as the maximum.
• Percent of Wages with Pay Cycle Cap Option - Enter the Percent and the Pay Cycle Cap amount for each of the Pay Cycles (Monthly, Semimonthly, Biweekly, Weekly). The system applies a flat percentage that is capped at a certain amount for each pay cycle.

Exemptions/Deductions Code, Description, Annual Amount: For each applicable exemption/deduction, enter a code, description, and the annual amount according to the taxing authority. This only applies to the Annual Tiered Tax with Cap Option and Percent of Annual Wages with Cap Option Calculation Types.