US FEDERAL TAX CALCULATION#
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 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.
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 information is required to be manually added for employees who are eligible for each parameter.
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
401K_CATCHUP
(Obsolete, removed from
IPUTP)
- 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 a user is enrolled in the 401k plan with an annual contribution limit greater than this regular limit, this parameter allows the 401k maximum contribution to exceed the IRS limit for Benefit Pre-tax calculation
- 'DEFAULT' and 'NO' Catch Ups are not allowed, 'YES'-Catch Up is allowed.
- If the 401K Catch Up option is applicable to all employees, 'YES' can be entered in IPUTP Default Value, otherwise each employee can specify the value for this option on IPRLU/IPRLUS.
IPUTR - Federal Tax Rates#
When
UPUTR is run, it loads in a list of Federal Tax rates for the Symmetry Federal tax calculation.
- 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.
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
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
- The Federal, State and Local tabs must define all tax methods and eligibility information.
For Federal Tax Calculation, the '# of Exemptions' must be entered on the Federal tab, if an employee has an IRS letter that indicates the maximum number of exemptions allowed. Then, on either the Miscellaneous tab or the State tab, the IRS_MAX_EXEMPTIONS Misc. Identifier must be defined.
Federal PC Usages#
PC Usage - Federal Tax#
On IPPC, set up the pay components for these PC Usages for federal tax calculation:
| Usage | Description |
|---|
| 6001 | FWT Deduction - Regular Tax |
| 6002 | FWT Deduction - Additional Tax |
| 6003 | FWT Deduction - Supplemental Tax |
| 6004 | FWT Earnings - Regular Tax |
| 6005 | FWT Earnings - Regular Tax |
| 6051 | Pre-FWT Earnings - Reg Tax Table Method (PPE) |
| 6052 | Pre-FWT Earnings - Reg Tax % Method (PPE) |
| 6053 | Pre-FWT 125 Exemption - Reg Tax (PPE) |
| 6054 | Pre-FWT 401K Exemption - Reg Tax (PPE) |
| 6055 | Pre-FWT Earnings - Supplemental Tax (PPE) |
| 6056 | Pre-FWT 125 Exemption - Supplemental Tax (PPE) |
| 6057 | Pre-FWT 401K Exemption - Supplemental Tax (PPE) |
| 6058 | Pre-FIT Hours - Total Hours worked (PPE) |
| 7901 to | Pre-FWT 125 Exemption - Reg Tax (PPE) |
| 7928 | Pre-FWT HSA Exemption -Suppl Tax (PPE) |
| 7801 to | Pre-Reg Custom Benefit 01 - Reg Tax (PPE) |
| 7830 | Pre-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.
| Usage | Description |
|---|
| 6201 | FICA Employee Deduction |
| 6202 | FICA Employee Earnings |
| 6210 | FICA Employer Contribution |
| 6211 | FICA Employer Earnings |
| 6251 | Pre-FICA Employee Earnings (PPE) |
| 6261 | Pre-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.
| Usage | Description |
|---|
| 6501 | Medicare Employee Deduction |
| 6502 | Medicare Employee Earnings |
| 6503 | Medicare Employer Contribution |
| 6504 | Medicare Employer Earnings |
| 6551 | Pre- Medicare Employee Earnings (PPE) |
| 6552 | Pre- 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.
| Usage | Description |
|---|
| 6401 | FUTA Employer Contribution |
| 6402 | FUTA Employer Earnings |
| 6451 | Pre-FUTA Employer Earnings (PPE) |
There are two ways of providing the FUTA tax rate:
- 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
- IDGV
- 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 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.
PC Usage - Railroad Taxation#
Railroad taxation is calculated using Pay Component Usages 6301 - 6356.
Federal Tax Calculation#
UPCALC Example - Federal Withholdings #
US Federal Tax Calculation_01.JPG
| IPRLU Federal Filing Status: | = Single |
| Regular Earnings: | = 1923.08 |
| Supplemental Earnings: | = 100.00 |
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 |
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
Employee works for Regular Employment and Railroad Employment. FICA YTD and RRTA YTD are both used in the 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 |
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 |
FICA ER - Self Adjust Method
This employee uses the '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 (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) |
| 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, 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) |
| 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 |
| FSP_Wages.ctd | 0 |
| FSP_Wages.ytd | + 5700 |
| Total | = 5700 |
| 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 |
FICA ER Calculation:
| FICA_Wages_Total | 63354.05 |
| FICA_125_Total | - 1850.74 |
| FICA Taxable Earnings | = 61503.31 |
| FICA Taxable Earnings | 61503.31 |
| FICA Rate | x 0.062 |
| FICA ER Contribution | = 3813.21 |
| 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) |
| 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 |
| 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) |
Railroad Tax Calculation#
Railroad - Tier1 Tax Example#
US Federal Tax Calculation_03.JPG
| 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 |
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 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.
The next example shows the 'RR Self-Adjust' method and should be used when the employee does not have FICA employment.
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 (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) |
| 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 | 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 | 0 |
| FSP_Wages.ytd | + 5700 |
| Total | = 5700 |
| RRTA_Wages_Total = | 63734.02 + 5700 | = 69434.02 |
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 |
RRTA Tier1 ER Calculation:
| RRTA_Wages_Total | 69434.02 |
| RRTA_125_Total | - 2044.46 |
| RRTA Taxable Earnings | =67389.56 |
| RRTA Taxable Earnings | 67389.56 |
| RRTA Tier1 ER Rate | x 0.062 |
| RRTA Tier1 ER Contribution | =4178.15 |
| 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) |
| RRTA ER Contribution | 4178.15 |
| RRTA ER YTD so far | - 3813.24 |
| RRTA Tier1 ER this pay | = 364.81 |
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