Taxation - US Federal
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US FEDERAL TAX CALCULATION#

Overview This document describes the US Federal Tax Calculation using the Symmetry Tax Engine (STE) Software.

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 may be viewed by states and the Overridden Rates and Wage Base entered.

Some SUTA surcharge calculations for specific states may be suppressed by checking the '€˜Do not Calculate'€™ toggle
IPUTP
The US Tax Miscellaneous parameters maybe be viewed by states that are applicable for IPRLU.
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
Applicable Tax Jurisdictions that are paid by employees may be entered here.

On the IPPH/IEPI, IEAS, IDLN, etc. screens 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 specify the default Work and Home jurisdictions.

The Pay Lines tab, Jurisdiction field must specify 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.

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 IPRLU/IPRLUS. These parameters will not automatically be added to IPRLU/IPRLUS by the UPRLU process for all employees. IPRLU/IPRLUS are required to be manually added for employees who are eligible for each parameter.

IRS_MAX_EXEMPTIONS

401K_CATCHUP (Obsolete, removed from IPUTP)

IPUTR -€“ Federal Tax Rates#

When UPUTR is run, it loads in a list of Federal Tax rates for the Symmetry Federal tax calculation. IMPORTANT: For the ER_FUTA identifier, a user MUST enter their own Employer FUTA rate which is 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.

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 US Tax Filing Information for Symmetry Tax users only

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 allowed for this employee, then enter on either the Miscellaneous tab or the State tab with the Misc. Identifier €˜IRS_MAX_EXEMPTIONS.€™

Federal PC Usages#

PC Usage -€“ Federal Tax#

On IPPC, set up pay components for these PC Usages for federal tax calculation

UsageDescription
6001FWT Deduction - Regular Tax
6002FWT Deduction - Additional Tax
6003FWT Deduction - Supplemental Tax
6004FWT Earnings - Regular Tax
6005FWT Earnings - Regular Tax
6051Pre-FWT Earnings - Reg Tax Table Method (PPE)
6052Pre-FWT Earnings - Reg Tax % Method (PPE)
6053Pre-FWT 125 Exemption - Reg Tax (PPE)
6054Pre-FWT 401K Exemption - Reg Tax (PPE)
6055Pre-FWT Earnings - Supplemental Tax (PPE)
6056Pre-FWT 125 Exemption - Supplemental Tax (PPE)
6057Pre-FWT 401K Exemption - Supplemental Tax (PPE)
6058Pre-FIT Hours - Total Hours worked (PPE)
7901 toPre-FWT 125 Exemption - Reg Tax (PPE)
7928Pre-FWT HSA Exemption -Suppl Tax (PPE)
7801 toPre-Reg Custom Benefit 01 - Reg Tax (PPE)
7830Pre-Sup Custom Benefit 10 - Suppl Tax (PPE)

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.

UsageDescription
6201FICA Employee Deduction
6202FICA Employee Earnings
6210FICA Employer Contribution
6211FICA Employer Earnings
6251Pre-FICA Employee Earnings (PPE)
6261Pre-FICA Employer Earnings (PPE)

PC Usage - Medicare Tax#

Medicare Tax is an employer and employee paid tax. The Medicare tax is calculated using Pay Component Usages 6501 - 6552.

UsageDescription
6501Medicare Employee Deduction
6502Medicare Employee Earnings
6503Medicare Employer Contribution
6504Medicare Employer Earnings
6551Pre- Medicare Employee Earnings (PPE)
6552Pre- Medicare Employer Earnings (PPE)

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.

UsageDescription
6401FUTA Employer Contribution
6402FUTA Employer Earnings
6451Pre-FUTA Employer Earnings (PPE)

There are two ways of providing the FUTA tax rate:

  1. 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
  2. IDGV
    • If there is a specific rate given by the government for a different Registration #, then enter by '€˜Reg Type' on IDGV€™, this overrides the IPUTR Rate
    • UPCALC retrieves IDGV by Government Registration from employee'€™s Pay Header group

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.

PC Usage -€“ Railroad Taxation#

PC Usages 6301 -€“ 6356

Federal Tax Calculation#

UPCALC Example - Federal Withholdings #

US Federal Tax Calculation_01.JPG(info) IPRLU Federal Filing Status = Single Regular Earnings: = 1923.08 Supplemental Earnings: = 100.00

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

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

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

FICA / MEDICARE#

FICA Wage < FIT Wage Example#

US Federal Tax Calculation_02.JPG(info)

Employee works for Regular Employment and Railroad Employment. FICA YTD and RRTA YTD are both used in FICA Calculation.

FIT_Wages Usage 6051 Pre FWT Earnings 6676.24 FICA_Wages Usage 6261 Pre-FICA Employer Earnings 6596.13

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

(1) FICA ER – No Self Adjust Method

PC 7031 FICA ER = FICA ER Earn x 0.062 = 6395.80 x 0.062 = 396.54 PC 7030 Medicare ER = Med ER Earn x 0.0145 = 6395.80 x 0.0145 = 92.74

This employee uses ‘Self-Adjust method’, please see next page.

FICA ER – Self Adjust Method#

FIT_Wages.ctd Usage 6051 Pre FWT Earnings = 6676.24 FIT_Wages.ytd Usage 6051 Pre FWT Earnings = 51747.29 FSP_Wages.ctd Usage 6055 Pre-FIT Suppl Earns = 0 FSP_Wages.ytd Usage 6055 Pre-FIT Suppl Earns = 5700 FICA_Wages.ctd Usage 6261 Pre-FICA Employer Earnings = 6596.13 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 (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)

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)

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 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)

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

FSP_Wages.ctd + FSP_Wages.ytd 0 + 5700 = 5700

FICA_Wages_Total = 57654.05 + 5700 = 63354.05

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

FICA ER Contribution = FICA Taxable Earnings x FICA Rate FICA ER Contribution = 61503.31 x 0.062 = 3813.21

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)

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)

Medicare ER Calculation

MEDI ER Contribution =: FICA Taxable Earnings x FICA Rate MEDI ER Contribution =: 61503.31 x 0.0145 = 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)

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)

Railroad Tax Calculation#

Railroad – Tier1 Tax Example#

US Federal Tax Calculation_03.JPG(info)

FIT_Wages Usage 6051 Pre FWT Earnings 6153.82 RRTA_Wages Usage 6306 Pre-RR Tier1 SOC ER Earnings 6079.97

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

(1) RRTA – No Self Adjust Method

PC 7033 RR Tier1 Soc ER = RR Tier1 Earn x 0.062 = 5885.75 x 0.062 = 364.92 PC 7034 RR Tier1 Med ER = RR Tier1 Earn x 0.0145 = 5885.75x 0.0145 = 85.34

- 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

FIT_Wages.ctd Usage 6051 Pre FWT Earnings = 6153.82 FIT_Wages.ytd Usage 6051 Pre FWT Earnings = 58423.53 FSP_Wages.ctd Usage 6055 Pre-FIT Suppl Earns = 0 FSP_Wages.ytd Usage 6055 Pre-FIT Suppl Earns = 5700 RRTA_Wages.ctd Usage 6306 Pre-Tier1 Soc ER Earn = 6079.97 RRTA_Wages.ytd Usage 6306 Pre-Tier1 Soc ER Earn = 57654.05

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)

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)

Addn RRTA_Wages.ctd = -73.85 RRTA.ytd_Tier1_ER = 3813.24 (dedn so far) Addn RRTA_Wages.ytd = -769.48

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)

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

FSP_Wages.ctd + FSP_Wages.ytd 0 + 5700 = 5700

RRTA_Wages_Total = 63734.02 + 5700 = 69434.02

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

RRTA Tier1 ER Calculation:

RRTA Taxable Earnings = RRTA_Wages_Total – RRTA_125_Total RRTA Taxable Earnings = 69434.02 – 2044.46 = 67389.56

RRTA Tier1 ER Contribution =: RRTA Taxable Earnings x RRTA Tier1 ER Rate RRTA Tier1 ER Contribution =: 67389.56 x 0.062 = 4178.15

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

Notes#

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