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U.S. TAXATION
U.S. TAXATION

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[{TableOfContents }]
!!!U.S. TAXATION
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[Pay components|PAY COMPONENTS] used to store taxation and government calculation results are defined in the Pay Component ([IPPC]) form with the U.S. [pay component usages|PAY COMPONENT USAGES] from the Pay Component Usage ([IPCU]) form.
[UPCALC] uses an external file provided by Vertex® to calculate U.S. Taxation. This information is accessed through the HLServer.
Pay components used to store taxation and government calculation results are defined in the Pay Component ([IPPC]) form with the US PC usage from the Pay Component Usage ([IPCU]) form.
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[Pay elements|PAY ELEMENTS] defined in the ([IPPE]) form are used to define which [pay components|PAY COMPONENTS] are subject to each different tax.
Pay elements ([IPPE]) are used to define which pay components are subject to each different tax.
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Default tax calculation methods are found on the pay rule ([IPRLUS]) form for each employee.
Default tax calculation methods are found on the pay rule ([IPRLU]) form for each employee.
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!!U.S. Federal Tax Calculations
The [Symmetry] Tax Engine calculates the Federal tax regardless of the Work and Residence Jurisdiction codes that are passed to it. After the tax engine is called, [UPCALC] will retrieve the Federal tax results and store into the proper Federal tax [pay components|PAY COMPONENTS].
!!U.S. FEDERAL TAX CALCULATIONS
Vertex calculates the Federal tax regardless of the Work and Residence Jurisdiction codes that are passed to Vertex. After Vertex is called, UPCALC will retrieve the Federal tax results and store into the proper Federal tax pay components.
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!!U.S. State Tax Calculations
When calculating the State tax, the tax engine takes into consideration the Work and Residence Jurisdiction codes that are passed and the State Reciprocation. The Work Jurisdiction code of the employee is derived from their primary assignment record ([IEAS]) that is being paid in the time sheet on the [IPPH] form. The Residence Jurisdiction code is from the employee’s Personal ([IEPI]) record, where they live, that is effective for the time sheet. You can override both work and residence jurisdiction for each timeliest on the [IPPH] form.
!!U.S. STATE TAX CALCULATIONS
When calculating the State tax, Vertex takes into consideration the Work and Residence Jurisdiction codes that are passed and the State Reciprocation. The Work Jurisdiction code of the employee is derived from their primary assignment record ([IEAS]) that is being paid in the time sheet on the [IPPH] form. The Residence Jurisdiction code is from the employee’s Personal ([IEPI]) record, where they live, that is effective for the time sheet. You can override both work and residence jurisdiction for each timeliest on the [IPPH] form.
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When [UPCALC] calls the the tax engine module to calculate the State tax, there is a linkage area for State tax calculation that has 2 buffer areas, one for the Work State area and one for the Residence State area. The the tax engine|the tax engine module calculates the appropriate Work and/or Residence State tax and passes back the 2 buffer areas to [UPCALC]. [UPCALC] will then retrieve the State tax results and store into the proper Work State tax pay components and/or the Residence State tax pay components.
When [UPCALC] calls the Vertex module to calculate the State tax, there is a linkage area for State tax calculation that has 2 buffer areas, one for the Work State area and one for the Residence State area. The Vertex module calculates the appropriate Work and/or Residence State tax and passes back the 2 buffer areas to [UPCALC]. [UPCALC] will then retrieve the State tax results and store into the proper Work State tax pay components and/or the Residence State tax pay components.
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When using an Alternate State Tax Method for AZ the Filing Status and the number of Exemptions for both Federal and State must be the same. Although the Alternate State Methods are a percentage of Federal Tax – separate calculations for Federal and State taxation are calculated. This means that for State Tax the Federal amount is recalculated based on the State Filing Status and Exemptions and the Alternate percentage is then calculated.
When using an Alternate State Tax Method for AZ the Filing Status and the number of Exemptions for both Federal and State must be the same. Although the Alternate State Methods are a percentage of Federal Tax – Vertex performs separate calculations for Federal
and State taxation. This means that for State Tax the Federal amount is recalculated based on the State Filing Status and Exemptions and the Alternate percentage is then calculated.
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!!U.S. Local Tax Calculations
When calculating the Local County and City tax, the tax engine|the tax engine takes into consideration the Work and Residence Jurisdiction codes. The Work Jurisdiction code of the employee is from the employee’s primary assignment ([IEAS]) record that is being paid in the time sheet on the [IPPH] form. The Residence Jurisdiction code is from the employee’s Personal ([IEPI]) form, where they live, that is effective for the time sheet. You can override both work and residence jurisdiction for each timeliest on [IPPH] form.
!!U.S. LOCAL TAX CALCULATIONS
When calculating the Local County and City tax, Vertex takes into consideration the Work and Residence Jurisdiction codes. The Work Jurisdiction code of the employee is from the employee’s primary assignment ([IEAS]) record that is being paid in the time sheet on the [IPPH] form. The Residence Jurisdiction code is from the employee’s Personal ([IEPI]) form, where they live, that is effective for the time sheet. You can override both work and residence jurisdiction for each timeliest on [IPPH] form.
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When [UPCALC] calls the the tax engine|the tax engine module to calculate the Local tax, there is a linkage area for Local tax calculation that has 4 buffer areas - 1 for the Work County area, 1 for Work City area, 1 for Residence County area and 1 for the Residence City area. Then the the tax engine|the tax engine module calculates the appropriate Work and/or Residence County and City tax and passes back the 4 buffer areas to [UPCALC]. [UPCALC] will then retrieve the County and City tax results and store into the proper Work tax pay components and/or the Residence tax [pay components|PAY COMPONENTS].
When [UPCALC] calls the Vertex module to calculate the Local tax, there is a linkage area for Local tax calculation that has 4 buffer areas - 1 for the Work County area, 1 for Work City area, 1 for Residence County area and 1 for the Residence City area. Then the Vertex module calculates the appropriate Work and/or Residence County and City tax and passes back the 4 buffer areas to [UPCALC]. [UPCALC] will then retrieve the County and City tax results and store into the proper Work tax pay components and/or the Residence tax pay components.
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!!125 Plan Processing – Cash Option and Non-Cash Option
If an employee has an option of receiving cash in lieu of the 125 plan benefits, then the tax engine|the tax engine will take into consideration the 125 cash option in calculating SUI and SDI. You should set up a [pay component|PAY COMPONENTS] for cash option 125 plan and a pay component for non-cash option 125 plan. Then as the 125 plan contribution is calculated, store the 125 plan amount into the proper cash 125 plan pay component or non-cash 125 plan pay component depending on if the employee elects to receive cash 125 or not.
!!125 PLAN PROCESSING – CASH OPTION AND NON-CASH OPTION
If an employee has an option of receiving cash in lieu of the 125 plan benefits, then Vertex will take into consideration the 125 cash option in calculating SUI and SDI. You should set up a pay component for cash option 125 plan and a pay component for non-cash option 125 plan. Then as the 125 plan contribution is calculated, store the 125 plan amount into the proper cash 125 plan pay component or non-cash 125 plan pay component depending on if the employee elects to receive cash 125 or not.
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When [UPCALC] is run, as the 125 CASH OPT has a non-zero value, then the tax engine will take into consideration the 125 plan cash option when calculating the SUI and SDI.
When [UPCALC] is run, as the 125 CASH OPT has a non-zero value, then Vertex will take into consideration the 125 plan cash option when calculating the SUI and SDI.
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!!Vacation Pay Processing
!!VACATION PAY PROCESSING
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All taxable earnings at the federal, state and local levels will be adjusted according to the number of weeks, pro-ration factor before calling the tax engine|the tax engine. On return from the tax engine, all taxes calculated will be stored normally.
All taxable earnings at the federal, state and local levels will be adjusted according to the number of weeks, proration factor before calling Vertex. On return from Vertex, all taxes calculated will be stored normally.
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!!Multiple Tax Jurisdiction Processing
In Personality , each time sheet (pay header) contains the tax jurisdiction to be used for taxation purposes. Taxes are calculated according to the Pay Header's Work and Home Jurisdiction. One time sheet cannot be paid with multiple tax jurisdictions.
!!MULTIPLE TAX JURISDICTION PROCESSING
In [{$applicationname}] , each time sheet (pay header) contains the tax jurisdiction to be used for taxation purposes. Taxes are calculated according to the Pay Header's Work and Home Jurisdiction. One time sheet cannot be paid with multiple tax jurisdictions.
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!Set Up
;IPRLUS - Federal Tax Method
;:Federal Tax Method is from lexicon [X_UFED_TAX_METHOD], use one of the following values:
*10 - PTD Method
*11 - PTD Method +%
*12 - PTD Method + Amount
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;IPRLUS - State Tax Method
;:State Tax Method is from lexicon [X_UST_TAX_METHOD], use one of the following values:
*10 - PTD Method
*11 - PTD Method +%
*12 - PTD Method + Amount
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;IPRLUS - Local Tax Method
;:County and City Tax Method are from lexicon [X_ULOC_COUNTY_TAX_METHOD] and [X_ULOC_CITY_TAX_METHOD], use one of the following values:
*10 - PTD Method
*11 - PTD Method +%
*12 - PTD Method + Amount
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;PTD TAX METHOD PROCESSING
;:The 'Period To Date' method is to calculate taxes based on the entire Pay Period Amounts regardless of the number of time sheets the employee is being paid. If an employee is paid with one time sheet for 80 hours, the tax results should be the same as if the employee is paid 2 time sheets for 40 hours each, for the same tax jurisdiction.
;:The following steps are used for this method:
__Step (1) - retrieve taxable earnings, tax deductions for this pay period__:
*retrieve CTD values of all US PC Usages for this pay
*retrieve PTD values of all US PC Usages for this pay period excluding this pay
*retrieve YTD values of all US PC Usages for this year
;:At federal level. CTD/PTD/YTD values are retrieved for all tax jurisdictions.
;:At State level, PTD/YTD values are retrieved for the Pay Header's Work State and Home State.
;:At Local level, PTD/YTD values are retrieved for the Pay Header's Work Jurisdiction and Home Jurisdiction.
;:At federal level, if PTD method is used, the 125 plan and 401K amounts are passed as PTD amount, therefore FICA/MEDI/FUTA will automatically be calculated using the PTD method.
;:At State level, if PTD method is used, the 125 plan and 401K amounts are passed as PTD amount, therefore SUI/SDI will automatically be calculated using the PTD method.
;:At Local level, if PTD method is used, the 125 plan and 401K amounts are passed as PTD amount, therefore School district tax will automatically be calculated using the PTD method.
__Step (2) - accumulate all taxable earnings, tax deductions for this pay period__:
*add PTD values to CTD values, these become the new CTD values to call the tax engine
*subtract PTD values from YTD values, because PTD are included in CTD, no need to be included in YTD
__Step (3) - calculate taxes for the entire period__:
*call the tax engine to calculate tax amounts for the newly adjusted CTD amount for the entire period
*The tax engine returns all tax amounts for the entire period
__Step (4) - store taxes for current pay__ :
*from tax results, UPCALC subtracts the PTD amounts of the previous pays to obtain the current pay's tax amount
*store the difference between tax results and PTD amounts in current pay
\\
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;IPRLUS - EIC Tax Method
;:EIC Tax Method is from lexicon [X_UFED_EIC_METHOD], use one of the following values:
*11 - Single (EAS wage)
*12 - Married (EAS wage)
*13 - Married, No Spouse (EAS wage)
;:These EIC methods will pass the employee's prime assignment annual wage to the tax engine so it will calculate EIC base on prime assignment annual wage instead of deriving from the Current gross being passed.
\\
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;Cumulative Tax Calculation
;:The tax engine supports the cumulative tax calculation at Federal level. For State and Local level, the user should use 'PTD' method.
;:The tax engineCumulative Averaging method accumulates past + current gross and then averages it according to the number of periods so far in current year. If an employee has not been paid at beginning of year or the employee is not paid consecutively, the estimated annual income based on past income will be low. For new hired in middle of year, this method will not project the income accurately.
;:However, if the user prefers this Cumulative Averaging Method of annualizing income for Federal calculation, please use this method.
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![Notes|Edit:Internal.U.S.+TAXATION]
[{InsertPage page='Internal.U.S.+TAXATION' default='Click to create a new notes page'}]
This page (revision-16) was last changed on 26-Nov-2021 10:22 by kparrottTop