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US Federal Tax Calculation
US Federal Tax Calculation

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[{TableOfContents }]
[{TableOfContents }]
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This document describes the US Federal Tax Calculation using the Symmetry Tax Engine (STE) Software.
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!!!Federal Tax Calculation
!!General Set Up
__UDGNIS__\\This is the process to load all US Tax jurisdictions into [IDCO], [IDSP], [IDCN], [IDCI], [IDMN], [IDSD], [IDZR], and [IDTX]. \\ \\
__UPUTR__\\ This is the process to load all US Tax Rates and States Miscellaneous parameters.\\ After UPUTR is run, the applicable Tax Rates and Miscellaneous Parameters can be viewed by State in [IPUTR] and [IPUTP].\\ \\
__IPUTR__\\ US Tax Rates can be viewed by State and the Overridden Rates and Wage Base entered.\\ Some SUTA surcharge calculations for specific states can be suppressed by checking the 'Do not Calculate' toggle. \\ \\
__IPUTP__\\ The US Tax Miscellaneous parameters can be be viewed by the States that are applicable for [IPRLU]. \\ \\
__IDGV__\\ This form can optionally contain specific override rates and Wage Bases by Government Registration for each registration from the pay header's group. IDGV overridden amounts take precedence over the [IPUTR] overridden amounts.\\ \\
__IPPC__\\ Pay components must be set up with applicable [IPCU] PC Usages for US taxation.\\ \\
__IDTX__ Applicable Tax Jurisdictions that are paid by employees are entered here. On the [IPPH]/[IEPI], [IEAS], [IDLN], etc. forms that require a tax jurisdiction, the 'Tax Jurisdiction Editor Utility' dialog box can be used to enter the jurisdiction on [IDTX].\\ \\
__IPRLU/IPRLUS__\\ Each employee must be set up with the applicable tax methods. Miscellaneous Tax parameters must be set up by the states that need to be paid.\\ \\
__UPRLU__\\ This process audits the US Tax Filing Information and generates [IPRLU] Miscellaneous Tax Parameters information according to [IMCT] set up.\\ \\
__IPPH__\\
*The 'Pay Header' tab must define the default Work and Home jurisdictions.
*The 'Pay Lines' tab, 'Jurisdiction' field must define the Work Jurisdiction of this pay line.
* After the Trial Calc or [UPCALC], the 'Pay Amounts' tab contains all US Taxation amounts, in summary, that are used for the calculation of net pay.
*The 'Pay Jurisdiction' tab contains the default Work and Home jurisdictions.
*After Trial Calc or [UPCALC], the 'Pay Jurisdiction' tab contains all US Taxation amounts, by jurisdictions, in detail.\\ \\
!!Federal Tax Calculation
!!!General Set Up
;[UDGNIS]:This is the process to load all US Tax Jurisdictions into [IDCO], [IDSP], [IDCN], [IDCI], [IDMN], [IDSD], [IDZR], and [IDTX].
;[UPUTR]:This is the process to load all US Tax Rates and States Miscellaneous Parameters. After [UPUTR] is run, [IPUTR] and [IPUTP] screens can be used to view the applicable Tax Rates and Miscellaneous Parameters by state.
;[IPUTR]:US Tax Rates may be viewed by state and overridden Rates and Wage Base may be entered. Some SUTA surcharge calculation for some states may be suppressed by checking the ‘Do not Calculate’ toggle.
;[IPUTP]:US Tax Miscellaneous Parameters may be viewed by the states that are applicable for the [IPRLU] screen.
;[IDGV]:This screen may optionally contain specific override Rates and Wage Bases by Government Registration for each registration from the pay header’s group. [IDGV] overridden amounts take precedence over the [IPUTR] overridden amounts.
;[IPPC]:Pay components must be set up with applicable [IPCU] PC Usages for US taxation.
;[IDTX]:This screen is used to enter applicable Tax Jurisdictions that are paid by employees. On screens such as [IPPH]/[IEPI], [IEAS], [IDLN], etc. that require a Tax Jurisdiction, the ‘Tax Jurisdiction Editor Utility’ dialog box can be used to enter the jurisdiction on the [IDTX] screen.
;[IPRLU]/[IPRULS]:Each employee must be set up with the applicable tax methods. Miscellaneous Tax Parameters must be set up by the states that need to be paid.
;[UPRLU]:This process audits the US Tax Filing information and generates [IPRLU] Miscellaneous Tax Parameters information according to the [IMCT] set up.
;[IPPH]:
*The Pay Header tab must specify the default work and home jurisdictions.
*Within the Pay Lines tab, the Jurisdiction field must specify the work jurisdiction of this pay line.
*After a trial calc or having run [UPCALC], the Pay Amounts tab will contain, in summary, all the US Taxation amounts that are used for the calculation of net pay.
*The Pay Jurisdiction tab contains the default Work and Home jurisdictions.
*After a trial calc or having run [UPCALC],the Pay Jurisdiction tab will contain, in detail, all the US Taxation amounts by jurisdiction.
!!![IPUTP] – Federal Tax Parameters
When [UPUTR] is run, it loads in a list of the Federal tax parameters for the Symmetry Federal Tax calculation.\\ \\
On the [IPUTP] screen, the following Federal tax parameters are available to be used on the [IPRLU]/[IPRLUS] screen:
*401K_CATCHUP
*IRS_MAX_EXEMPTIONS
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!IPUTP - Federal Tax Parameters
When [UPUTR] is run, it loads in a list of federal tax parameters for Symmetry Federal Tax calculation.
\\ \\
On [IPUTP], the following Federal tax parameters are available to be used on the [IPRLU]/[IPRLUS] forms:
* IRS_MAX_EXEMPTIONS
* APPLY_BENEFIT_WAGE_LIMIT
%%information These parameters will not automatically be added to [IPRLU]/[IPRLUS] by [[UPRLU] process for all employees. For employees eligible for each parameter, those parameters must be manually added to the screens.%%\\
;401K_CATCHUP:
*Optional, character, 401K Limit Catch Up Option
*Indicates to Symmetry if the employee is enrolled in a 401k Catch Up plan
*The annual regular 401k contribution limit is defined by the IRS (e.g. $16,500). If an employee is enrolled in a 401k plan with annual contribution limit greater than this regular limit, this parameter will allow the 401k maximum contribution to exceed the IRS limit for Benefit Pre-tax calculation.
*Options:
**'DEFAULT'-Catch Up is not allowed
**'YES'-Catch Up is allowed
**'NO'-Catch Up is not allowed
*If 401K Catch Up option is applicable to all employees, ‘YES’ can be entered in the [IPUTP] default value, otherwise each employee can specify the value for this option on the [IPRLU]/[IPRLUS] screen.
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%%information These parameters will not automatically be added to [IPRLU]/[IPRLUS] by the [UPRLU] process for all employees. [IPRLU]/[IPRLUS] information is required to be manually added for employees who are eligible for each parameter.%%
;IRS_MAX_EXEMPTIONS:
*Optional, numeric, IRS maximum number of exemptions allowed
*Allows an employer to indicate on the employee’s [IPRLU]/[IPRLUS] screen, the maximum number of exemptions allowed for this employee as indicated by the IRS in a ‘lock-in-letter’
*[UPCALC] will cap the employee’s federal ‘# of exemptions’ with the value from the [IPRLU]/[IPRLUS] ‘IRS_MAX_EXEMPTIONS’ parameter
*Do not provide a default value for this parameter
*Any number provided will override the Federal Exemptions defined in the Federal Tax
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__IRS_MAX_EXEMPTIONS__
*IRS maximum number of exemptions allowed. Optional, numeric
*Allows an employer to define on the employee's [IPRLU]/[IPRLUS] form the maximum number of exemptions allowed for this employee as indicated by the IRS in a 'lock-in-letter'.
*[UPCALC] will cap the employee's 'Federal # of Exemptions' with the value from [IPRLU]/[IPRLUS] 'IRS_MAX_EXEMPTIONS' parameter.
*Any number provided will override the 'Federal # of Exemptions', including 0.
*Do not provide a default value
\\
__APPLY_BENEFIT_WAGE_LIMIT__
*Optional, alphanumeric
*Allows a user to specify if the Benefit Annual Wage Limit should be applied by the SymmetryTaxEngine when an employee’s wages reach the $250 000 limit. By applying the limit, when an employee reaches the limit (Regular and Supplemental wages combined), the employee’s 401k / 457 deductions become taxable. By not applying the annual limit, when an Employee reaches this annual wage the deductions are not taxable for Federal. This is typically used when an employee’s Supplemental wages should Not be considered in the annual wage equation.
!!!IPUTR – Federal Tax Rates
When UPUTR is run, it loads in a list of federal tax rates for Symmetry Federal Tax calculation.
*On the [IPUTR] screen, set the State field to 'Federal’ in order to view the federal tax rates.
*Each Tax Identifier may provide the default Tax Rates, Wage Base to be used for Federal Tax calculation
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!IPUTR - Federal Tax Rates
When [UPUTR] is run, it loads in a list of Federal Tax rates for the Symmetry Federal tax calculation.
%%warning __IMPORTANT__ : For the ER_FUTA Identifier, a user MUST enter their own government provided Employer FUTA rate on the ‘Override Tax Rate’ field. Symmetry requires this FUTA rate to be passed into the Symmetry tax engine, otherwise the ER FUTA will not be calculated%%
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*On [IPUTR], when the State is defined as 'Federal' the Federal Tax Rates can be viewed.
*Each Tax Identifier can provide the default Tax Rates and Wage Base to be used for Federal tax calculation.
!!!IPRLU – US Tax Filing Information
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%%warning __IMPORTANT:__ For the ER_FUTA identifier, users MUST enter their own Employer FUTA rate (provided by the government) on the 'Override Tax Rate' field. Symmetry requires this FUTA Rate to be passed into the Symmetry Tax Engine, otherwise ER FUTA will not be calculated.%%
Both the [IPRLU] and [IPRLUS] screens can be used to maintain US tax filing information for an employee.
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!IPRLU - US Tax Filing Information
Both [IPRLU] and [IPRLUS] can be used to maintain US Tax Filing Information for an employee.\\
__IPRLU__ contains all US Tax Filing Information for both Vertex and Symmetry Tax users. \\
__IPRLUS__ contains the US Tax Filing Information for Symmetry Tax users only:
;IPRLU:Contains all US tax filing information for both Vertex and Symmetry Tax users
;IPRLUS:Contains US tax filing information for Symmetry Tax users only
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*The [Federal|IPRLU#FederalTab], [State|IPRLU#StateTab] and [Local|IPRLU#LocalTab] tabs must define all tax methods and eligibility information. \\
*The Federal, State and local tabs must specify all the tax methods and eligible information.
*For Federal Tax calculation, the ‘# of Exemptions’ must be entered on the Federal tab, if the employee has an IRS letter to indicate the maximum number of exemptions they are allowed. The Misc. Identifier field is then set to ‘IRS_MAX_EXEMPTIONS’ on either the IPRLU Miscellaneous tab or the IPRLUS State tab. Any number provided will override the Federal Exemptions, including a value of 0.
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* For Federal Tax Calculation, the '# of Exemptions' must be entered on the [Federal|IPRLU#FederalTab] tab, if an employee has an IRS letter that indicates the maximum number of exemptions allowed. Then, on either the [Miscellaneous|IPRLU#MiscellaneousTab] tab or the [State|IPRLU#StateTab] tab, the IRS_MAX_EXEMPTIONS Misc. Identifier must be defined.
\\ \\
----
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!PC Usage - Federal Tax
!!!PC Usage – Federal Tax
On the IPPC screen, set up pay components for the following PC Usages used in federal tax calculation:
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On [IPPC], set up the pay components for these PC Usages for federal tax calculation:
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| |
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| |
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\\
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!PC Usage - Federal Insurance Contribution Act (FICA) Tax
Federal Insurance Contributions Act Tax (FICA) is imposed by the federal government on both employees and employers. The FICA tax is calculated using Pay Component Usages 6201 - 6261.
!!!PC Usage – Federal Insurance Contribution Act (FICA) Tax
Federal Insurance Contributions Act Tax (FICA) is imposed by the Federal government on both employees and employers. The FICA tax is calculated using Pay Component Usages 6201 – 6261.
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\\
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!PC Usage - Medicare Tax
Medicare Tax is an employer and employee paid tax. The Medicare tax is calculated using Pay Component Usages 6501 - 6552.
!!!PC Usage – Medicare Tax
Medicare Tax is an employer and employee paid tax. The Medicare tax is calculated using Pay Component Usages 6501 – 6552.
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\\
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!PC Usage - Federal Unemployment Tax Act (FUTA)
!!!PC Usage – Federal Unemployment Tax Act (FUTA)
Federal Unemployment Tax Act (FUTA) is an employer paid tax. The FUTA tax is calculated using Pay Component Usages 6401 – 6451.
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Federal Unemployment Tax Act (FUTA) is an employer paid tax. The FUTA tax is calculated using Pay Component Usages 6401 - 6451.
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#IPUTR
#*Enter the rate or wage base provided by the government on the Override fields
#*These overrides are applicable for the entire company for the federal calculations
#IPUTR
** enter the Rate or Wage Base provided by the Government on the Override fields
** these Overrides are applicable for the entire company for the Federal calculations
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#*If there is a specific rate provided by the government for a different Registration #, update the 'Reg Type' field on [IDGV]. This overrides the [IPUTR] Rate.
#*[UPCALC] retrieves [IDGV] by Government Registration from the employee's Pay Header group
\\ \\
** if there is a specific rate given by the government for different Registration #, then enter on IDGV by ‘Reg Type’, this overrides the IPUTR Rate
** UPCALC retrieves IDGV by Government Registration from Employee’s Pay Header Group
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If you do business in a State that has been given a FUTA Tax Credit reduction, the new FUTA tax rate for that specific State can be entered on [IDGV] for the State.
In [IDGV], add a new entry for the specific State, define the Registration Type as 'US SUI Regist 1', and define the Govt Rate Type as 'US FUTA Rate'. This State specific FUTA rate will be picked up by the UPCALC program when an employee is being paid in that State.
If you do business in a state that has been given a FUTA Tax Credit reduction, the new FUTA tax rate for that particular state may be entered in IDGV for the state. In IDGV add a new entry for the specific state, select Registration Type ‘US SUI Regist 1’, the Govt Rate Type should be ‘US FUTA Rate’. This state specific FUTA rate will be picked up by the UPCALC program when an employee is being paid in that state.
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!PC Usage - Railroad Taxation
Railroad taxation is calculated using Pay Component Usages 6301 - 6356.
\\ \\
!!!PC Usage – Railroad Taxation
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PC Usages 6301 – 6356
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!UPCALC Example - Federal Withholdings
!!!UPCALC Example - Federal Withholdings
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|IPRLU Federal Filing Status:|= Single
|Regular Earnings:|= 1923.08
|Supplemental Earnings:|= 100.00
\\ \\
\\
|IPRLU Federal Filing Status|Single
|Regular Earnings|1923.08
|Supplemental Earnings|100.00
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__Pre-Tax Benefits:__
|125 Plan| 145.89
|401K Plan| + 112.54
|403B Plan| + 20.84
|457 Plan| + 16.18
|Simple IRA Plan|+ 14.97
|__Total__|= 310.42
\\ \\
;Pre-Tax Benefits:
125 Plan + 401K Plan + 403B Plan + 457 Plan + Simple IRA Plan
145.89 + 112.54 + 20.84 + 16.18 + 14.97 = 310.42
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__Prorate Pre-Tax Benefits to Regular and Supplemental Earnings:__
|Reg Earn Pre-Tax Benefit|= 1923.08 / 2023.08 * 310.42|= 295.08
|Sup Earn Pre-Tax Benefit|= 100 / 2023.08 * 310.42|= 15.34
\\ \\
;Prorate Pre-Tax Benefits to Regular and Supplemental Earnings:
|Reg Earn Pre-Tax Benefit|1923.08 / 2023.08 * 310.42 = 295.08
|Sup Earn Pre-Tax Benefit|100 / 2023.08 * 310.42 = 15.34
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__FIT Withholding:__
|PC 8005 FIT Earn|= 1923.08 - 295.08|= 1628.00
|PC 8015 FSP Earn|= 100.00 - 15.34|= 84.66
| | |
|PC 6000 FIT Tax|= Based on PC 8005 $1628.00|= 237.77
|PC 6010 FSP Tax|= Based on PC 8015 $84.66 x 25%|= 21.17
\\ \\
----
;FIT Withholding:
|PC 8005 FIT Earn|1923.08 – 295.08 = 1628.00
|PC 8015 FSP Earn|100.00 – 15.34 = 84.66
\\
|PC 6000 FIT Tax|Based on PC 8005 $1628.00 = 237.77
|PC 6010 FSP Tax|Based on PC 8015 $84.66 x 25% = 21.17
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!FICA Wage < FIT Wage Example
!!!FICA Wage < FIT Wage Example
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\\ \\
When an Employee works for Regular Employment and Railroad Employment, FICA YTD and RRTA YTD are both used in the FICA calculation.
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Employee works for Regular Employment and Railroad Employment. FICA YTD and RRTA YTD are both used in FICA Calculation.
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\\
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|PC 8005 FIT Earn|= FIT_Wages - 125 - 401K|= 6676.24 - 200.33 - 239.57|= 6236.34
|PC 8039 FICA ER Earn|= FICA_Wages - 125|= 6596.13 - 200.33|= 6395.80
\\ \\
|PC 8005 FIT Earn |=FIT_Wages – 125 - 401K|= 6676.24 – 200.33 – 239.57|= 6236.34
|PC 8039 FICA ER Earn|=FICA_Wages – 125 |= 6596.13 – 200.33|= 6395.80
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__FICA ER - No Self Adjust Method__
|PC 7031 FICA ER|= FICA ER Earn x 0.062|= 6395.80 x 0.062|= 396.54
__1) FICA ER – No Self Adjust Method__
|PC 7031 FICA ER |= FICA ER Earn x 0.062|= 6395.80 x 0.062|= 396.54
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\\ \\
__FICA ER - Self Adjust Method__\\
This employee uses the 'Self-Adjust Method'. \\
This employee uses ‘Self-Adjust method’, please see next page.
\\ \\
__2) FICA ER – Self Adjust Method__
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|FICA_Wages.ytd|Usage 6261 Pre-FICA Employer Earnings|= 51057.92
\\ \\
If FICA Earnings (FICA_Wages.ctd) is different than FIT Earnings (FIT_Wages.ctd), then calculate the difference between the Wages for FICA and FIT (such as Usage 6261 - Usage 6051). This is called 'Additional FICA Wages'.
|CTD Usage 6261 Pre-FICA Employer Earnings:| |6596.13
|CTD Usage 6051 Pre FWT Earnings:| |- 6676.24
|CTD Addn FICA Wages:|6596.13 - 6676.24|= -80.11 (negative means FICA Earn < Pre-FWT Earn)
|FICA_Wages.ytd|Usage 6261 Pre-FICA Employer Earnings |= 51057.92
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|YTD Usage 6261 Pre-FICA Employer Earnings:| |51057.92
|YTD Usage 6051 Pre FWT Earnings:| |51747.29
|YTD Addn FICA Wages:|51057.92 - 51747.29|= -689.37 (negative means FICA Earn < Pre-FWT Earn)
If FICA Earnings (FICA_Wages.ctd) is different than FIT Earnings (FIT_Wages.ctd), then calculate the difference between the Wages for FICA and FIT (i.e. Usage 6261 – Usage 6051), called this Additional FICA Wages
|CTD Usage 6261 Pre-FICA Employer Earnings|6596.13
|CTD Usage 6051 Pre FWT Earnings|6676.24
|CTD Addn FICA Wages|6596.13 – 6676.24 = -80.11 (negative means FICA Earn < Pre-FWT Earn)
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|Addn FICA_Wages.ctd|= -80.11|FICA.ytdEE|= 3459.44 (dedn so far)|MEDI.ytd = 809.06 (dedn so far)
|Addn FICA_Wages.ytd|= -689.37|FICA.ytdER|= 3459.44 (dedn so far)|
|YTD Usage 6261 Pre-FICA Employer Earnings|51057.92
|YTD Usage 6051 Pre FWT Earnings|51747.29
|YTD Addn FICA Wages|51057.92 – 51747.29 = -689.37 (negative means FICA Earn < Pre-FWT Earn)
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|YTD 125 Total (from YTD):|= 1649.91 (prorate to YTD FIT / FSP Wages, such as 51747.29 and 5700)
|YTD 401K Total (from YTD):|= 2026.80 (prorate to YTD FIT / FSP Wages, such as 51747.29 and 5700)
|Addn FICA_Wages.ctd| = -80.11 FICA.ytdEE|= 3459.44 (dedn so far) MEDI.ytd = 809.06 (dedn so far)
|Addn FICA_Wages.ytd|= -689.37 FICA.ytdER|= 3459.44 (dedn so far)
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|FIT_ben_125.ctd:|= 200.83|FSP_ben_125.ctd:|= 0|
|FIT_ben_125.ytd:|= 1486.20|FSP_ben_125.ytd:|= 163.71|(1486.20 + 163.71 = 1649.91)
|FIT_ben_401K.ctd:|= 239.57|FSP_ben_401K.ctd:|= 0|
|FIT_ben_401K.ytd:|= 1825.70|FSP_ben_401K.ytd:|= 201.1|(1825.70 + 201.1 = 2026.80)
\\
__Calculate FICA Wages for the Year:__
|FIT_Wages.ctd|6676.24
|Addn FICA_Wages.ctd|+ (-80.11)
|FIT_Wages.ytd| + 51747.29
|Addn FICA_Wages.ytd| + (-689.37)
|__Total__|= 57654.05
\\
|YTD 125 Total (from YTD)|= 1649.91 (prorate to YTD FIT / FSP Wages, i.e. 51747.29 and 5700)|
|YTD 401K Total (from YTD)|= 2026.80 (prorate to YTD FIT / FSP Wages, i.e. 51747.29 and 5700)|
|FIT_ben_125.ctd|= 200.83 FSP_ben_125.ctd|= 0
|FIT_ben_125.ytd|= 1486.20 FSP_ben_125.ytd |= 163.71 (1486.20 + 163.71 = 1649.91)
|FIT_ben_401K.ctd|= 239.57 FSP_ben_401K.ctd|= 0
|FIT_ben_401K.ytd|= 1825.70 FSP_ben_401K.ytd|= 201.1 (1825.70 + 201.1 = 2026.80)
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|FSP_Wages.ctd|0
|FSP_Wages.ytd|+ 5700
|__Total__|= 5700
;Calculate FICA Wages for the Year:
|FIT_Wages.ctd |+ Addn FICA_Wages.ctd|+ FIT_Wages.ytd|+ Addn FICA_Wages.ytd|
|6676.24 |+ (-80.11)|+ 51747.29 |+ (-689.37)|= 57654.05
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|FSP_Wages.ctd |+ FSP_Wages.ytd|
|0 |+ 5700 | = 5700
\\
|FICA_Wages_Total|= 57654.05 + 5700|= 63354.05
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|FICA_Wages_Total|57654.05 + 5700|= 63354.05
\\
__Calculate 125 Exemption for the Year:__
|FIT_ben_125.ctd|200.83
|FSP_ben_125.ctd|+ 0
|FIT_ben_125.ytd|+1486.20
|FSP_ben_125.ytd|+163.71
|__FICA_125_Total__|=1850.74
;Calculate 125 Exemption for the Year:
|FICA_125_Total|= FIT_ben_125.ctd |+ FSP_ben_125.ctd|+ FIT_ben_125.ytd| + FSP_ben_125.ytd|
|FICA_125_Total|= 200.83 | + 0 |+ 1486.20 | + 163.71 |= 1850.74
;FICA ER Calculation:
|FICA Taxable Earnings|= FICA_Wages_Total – FICA_125_Total|
|FICA Taxable Earnings|= 63354.05 – 1850.74 | = 61503.31
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__FICA ER Calculation:__
|FICA_Wages_Total|63354.05
|FICA_125_Total|- 1850.74
|__FICA Taxable Earnings__|= 61503.31
|FICA ER Contribution|= FICA Taxable Earnings x FICA Rate|
|FICA ER Contribution|= 61503.31 x 0.062|= 3813.21
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|FICA ER YTD so far|= YTD PC 7031 FICA ER + PC 7033 RR Tier1 Soc ER|
|FICA ER YTD so far|= 1810.19 + 1649.25 | = 3459.44 (FICA.ytdER so far)
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|FICA Taxable Earnings|61503.31
|FICA Rate|x 0.062
|__FICA ER Contribution__|= 3813.21
\\
|FICA ER this pay|= FICA ER Contribution – FICA ER YTD so far|
|FICA ER this pay|= 3813.21 – 3459.44 |= 353.77 (RPREGC slight rounding 353.80)
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|YTD PC 7031 FICA ER|1810.19
|PC 7033 RR Tier1 Soc ER|1649.25
|__FICA ER YTD So Far__|= 3459.44 (FICA.ytdER so far)
;Medicare ER Calculation
|MEDI ER Contribution|= FICA Taxable Earnings x FICA Rate|
|MEDI ER Contribution|= 61503.31 x 0.0145 |= 891.80
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|FICA ER Contribution|3813.21
|FICA ER YTD So Far|- 3459.44
|__FICA ER This Pay__|= 353.77 (RPREGC slight rounding 353.80)
\\
__Medicare ER Calculation__
|FICA Taxable Earnings|61503.31
|FICA Rate|x 0.0145
|__MEDI ER Contribution__|= 891.80
|MEDI ER YTD so far|= YTD PC 7030 Medicare ER + PC 7034 RR Tier1 Med ER|
|MEDI ER YTD so far|= 423.35 + 385.71 | = 809.06 (MEDI.ytd so far)
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|MEDI ER this pay|= MEDI ER Contribution – MEDI ER YTD so far|
MEDI ER this pay|= 891.80 – 809.06 |= 82.74 (RPREGC slight rounding 82.75)
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|YTD PC 7030 Medicare ER|423.35
|PC 7034 RR Tier1 Med ER|+ 385.71
|__MEDI ER YTD So Far__|= 809.06 (MEDI.ytd So Far)
\\
|MEDI ER Contribution|891.80
|MEDI ER YTD So Far|- 809.06
|__MEDI ER This Pay__|= 82.74 (RPREGC Slight Rounding = 82.75)
\\ \\
----
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!Railroad - Tier1 Tax Example
!!!Railroad – Tier1 Tax Example
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\\ \\
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\\
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|PC 8005 FIT Earn|= FIT Wages - 125 - 401K|= 6153.82 - 194.22 - 225.31|= 5734.29
|PC 8201 RR Tier1 Soc ER Earn|= RRTA Wages - 125|= 6079.97 - 194.22|= 5885.75
\\
|PC 8005 FIT Earn|= FIT Wages – 125 - 401K|= 6153.82 –194.22 – 225.31|= 5734.29
|PC 8201 RR Tier1 Soc ER Earn|= RRTA Wages – 125|= 6079.97 –194.22|= 5885.75
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__RRTA - No Self Adjust Method__
__1)RRTA – No Self Adjust Method__
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\\ \\
For Railroad Taxation, if an employee has FICA contribution during the year, this means the employee works between the Railroad and Non-Railroad Assignments. In this case, please check if the 'RR Self-Adjust' method should be used for this employee or not.
*For Railroad Taxation, if an employee has FICA contribution during the year, this means the employee works between the Railroad and Non-Railroad Assignments. In this case, please check if the ‘RR Self-Adjust’ Method should be used for this Employee or not.
*The reason is, if ‘RR Self-Adjust’ method is defined on IPRLU, this method is applicable for both RR Tier1 and Tier2 calculation, but since Regular FICA does not have a Tier2 calculation, the ‘RR Self-Adjust’ method will automatically re-adjust all Earnings that include YTD FICA Earnings that are not subject to Tier2 calculation, this would cause the entire YTD Earnings to subject to Tier2 tax
*Since employee should only pay Tier2 tax for the Earnings that are earned for Railroad employment, if employee has FICA contribution, the user should verify if this employee should use the ‘Self-Adjust’ method to re-calculate all Tier2 tax or just to use ‘RR No Self-Adjust’ method.
*Next page example shows the ‘RR Self-Adjust method’ and should be used when Employee does not have FICA employment
__2) RRTA – Self Adjust Method__
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The reason is, if 'RR Self-Adjust' method is defined on [IPRLU], this method is applicable for both RR Tier1 and Tier2 calculations. However, since Regular FICA does not have a Tier2 calculation, the 'RR Self-Adjust' method will automatically re-adjust all earnings that include YTD FICA Earnings that are not subject to Tier2 calculation. This would cause the entire YTD Earnings to subject to Tier2 tax.
Since employees should only pay Tier2 tax for the earnings that are earned for Railroad employment, if employee has FICA contribution, it should be verified if this employee should use the 'Self-Adjust' method to re-calculate all Tier2 tax or just use 'RR No Self-Adjust' method.
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The next example shows the 'RR Self-Adjust' method and should be used when the employee does not have FICA employment. \\
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__RRTA - Self Adjust Method__
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If RRTA Earnings (RRTA_Wages.ctd) is different than FIT Earnings (FIT_Wages.ctd), then calculate the difference between the wages for RRTA and FIT (such as Usage 6306 - Usage 6051). This is called Additional RRTA Wages.
|CTD Usage 6306 Pre-Tier1 Soc ER Earn| |6079.97
|CTD Usage 6051 Pre FWT Earnings| |6153.82
|CTD Addn FICA Wages|6079.97 - 6153.82|= -73.85 (The negative sign means that RRTA Earn < Pre-FWT Earn)
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If RRTA Earnings (RRTA_Wages.ctd) is different than FIT Earnings (FIT_Wages.ctd), then calculate the difference between the Wages for RRTA and FIT (i.e. Usage 6306 – Usage 6051), called this Additional RRTA Wages
|CTD Usage 6306 Pre-Tier1 Soc ER Earn|6079.97|
|CTD Usage 6051 Pre FWT Earnings|6153.82|
|CTD Addn FICA Wages|6079.97 – 6153.82|= -73.85 (negative means RRTA Earn < Pre-FWT Earn)
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|YTD Usage 6306 Pre-Tier1 Soc ER Earn| |57654.05
|YTD Usage 6051 Pre FWT Earnings| |58423.53
|YTD Addn FICA Wages|57654.05 - 58423.53|= -769.48 (negative means RRTA Earn < Pre-FWT Earn)
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|YTD Usage 6306 Pre-Tier1 Soc ER Earn|57654.05|
|YTD Usage 6051 Pre FWT Earnings|58423.53|
|YTD Addn FICA Wages|57654.05 – 58423.53|-769.48 (negative means RRTA Earn < Pre-FWT Earn)
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|Addn RRTA_Wages.ctd|= -73.85 RRTA.ytd_Tier1_ER = 3813.24 (dedn so far)
|Addn RRTA_Wages.ytd|= -769.48
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|Addn RRTA_Wages.ctd|= -73.85|RRTA.ytd_Tier1_ER = 3813.24 (dedn so far)
|Addn RRTA_Wages.ytd|= -769.48|
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|YTD 125 Total (from YTD)|= 1850.24 (prorate to YTD FIT / FSP Wages, i.e. 58423.53 and 5700)
|YTD 401K Total (from YTD)|= 2266.37 (prorate to YTD FIT / FSP Wages, i.e. 58423.53 and 5700)
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|YTD 125 Total (from YTD)|= 1850.24 (prorate to YTD FIT / FSP Wages, i.e. 58423.53 and 5700)| |
|YTD 401K Total (from YTD)|= 2266.37 (prorate to YTD FIT / FSP Wages, i.e. 58423.53 and 5700)| |
|FIT_ben_125.ctd|= 194.22 FSP_ben_125.ctd|= 0|
|FIT_ben_125.ytd|= 1685.77 FSP_ben_125.ytd|= 164.47|(1685.77 + 164.47 = 1850.24)
|FIT_ben_401K.ctd|= 225.31 FSP_ben_401K.ctd|= 0|
|FIT_ben_401K.ytd|= 2064.91 FSP_ben_401K.ytd|= 204.46|(2064.91 + 204.46 = 2269.37)
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|FIT_ben_125.ctd|= 194.22|FSP_ben_125.ctd|= 0|
|FIT_ben_125.ytd|= 1685.77|FSP_ben_125.ytd|= 164.47| (1685.77 + 164.47 = 1850.24)
|FIT_ben_401K.ctd|= 225.31|FSP_ben_401K.ctd|= 0|
|FIT_ben_401K.ytd|= 2064.91|FSP_ben_401K.ytd|= 204.46| (2064.91 + 204.46 = 2269.37)
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;Calculate RRTA Wages for the Year:
|FIT_Wages.ctd | + Addn RRTA_Wages.ctd| + FIT_Wages.ytd |+ Addn RRTA_Wages.ytd|
|6153.82| + (-73.85) | + 58423.53| + (-769.48) |= 63734.02
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__Calculate RRTA Wages for the Year:__
|FIT_Wages.ctd|6153.82
|Addn RRTA_Wages.ctd|+ (-73.85)
|FIT_Wages.ytd|+ 58423.53
|Addn RRTA_Wages.ytd|+ (-769.48)
|__Total__|= 63734.02
|FSP_Wages.ctd |+ FSP_Wages.ytd|
|0 | + 5700 | = 5700
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|FSP_Wages.ctd|0
|FSP_Wages.ytd|+ 5700
|__Total__|= 5700
|RRTA_Wages_Total| = 63734.02 + 5700|= 69434.02
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|RRTA_Wages_Total =|63734.02 + 5700|= 69434.02
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;Calculate 125 Exemption for the Year:
|RRTA_125_Total|= FIT_ben_125.ctd|+ FSP_ben_125.ctd| + FIT_ben_125.ytd| + FSP_ben_125.ytd|
|RRTA_125_Total|= 194.22 |+ 0 | + 1685.77 |+ 164.47 | = 2044.46
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__Calculate 125 Exemption for the Year__
|FIT_ben_125.ctd|194.22
|FSP_ben_125.ctd|+ 0
|FIT_ben_125.ytd|+ 1685.77
|FSP_ben_125.ytd|+ 164.47
|__RRTA_125_Total__|= 2044.46
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;RRTA Tier1 ER Calculation:
|RRTA Taxable Earnings|= RRTA_Wages_Total – RRTA_125_Total|
|RRTA Taxable Earnings|= 69434.02 – 2044.46 | = 67389.56
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__RRTA Tier1 ER Calculation:__
|RRTA_Wages_Total|69434.02
|RRTA_125_Total|- 2044.46
|__RRTA Taxable Earnings__|=67389.56
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|RRTA Tier1 ER Contribution|= RRTA Taxable Earnings x RRTA Tier1 ER Rate|
|RRTA Tier1 ER Contribution|= 67389.56 x 0.062 | = 4178.15
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|RRTA Taxable Earnings|67389.56
|RRTA Tier1 ER Rate|x 0.062
|__RRTA Tier1 ER Contribution__|=4178.15
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|YTD PC 7031 FICA ER|2163.99
|PC 7033 RR Tier1 Soc ER|+ 1649.25
|__RRTA ER YTD so far__|= 3813.24 (RRTA.ytdER so far)
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|RRTA ER Contribution|4178.15
|RRTA ER YTD so far|- 3813.24
|__RRTA Tier1 ER this pay__|= 364.81
|RRTA ER YTD so far|= YTD PC 7031 FICA ER + PC 7033 RR Tier1 Soc ER|
|RRTA ER YTD so far|= 2163.99 + 1649.25|= 3813.24 (RRTA.ytdER so far)
|RRTA Tier1 ER this pay| = RRTA ER Contribution – RRTA ER YTD so far|
|RRTA Tier1 ER this pay| = 4178.15 – 3813.24 | = 364.81
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![Notes|Edit:Internal.PR_US_Federal_Tax_Calc.doc]
[{InsertPage page='Internal.PR_US_Federal_Tax_Calc.doc' default='Click to create a new notes page'}]
![Notes|Edit:Internal.US Federal Tax Calculation]
[{InsertPage page='Internal.US Federal Tax Calculation' default='Click to create a new notes page'}]
This page (revision-42) was last changed on 26-Nov-2021 10:22 by mmcfarlandTop