UPCALC - HOW TO COMBINE OR SEPARATE MULTIPLE EMPLOYMENTS FOR TAX CALCULATION #

Overview#

This section illustrates the option to handle multiple federal government registrations and multiple employments for legislative purpose. This is mostly for capping or restarting of annual wage base maximums, annual maximum deductions and limits.

Set Up#

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IMST – Site Preference – GOVT REGIST RULE#

On IMST Preferences tab, a site preference for ‘GOVT REGIST RULE’ may be added.

There is no page called 'GOVT REGIST RULE'. Would you like to create it?

Govt Regist Rules#

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Multiple Employments and Multiple Groups#

Each company must be registered with the federal government. The company may receive one or multiple Government Registration Numbers depending on the nature of their business.

An employee may work for one or multiple employments that must be reported under one or multiple Government Registration Numbers. The following situations may occur:

1. An employee may work for two or more different assignments (IEAS) that point to a different group (IDGR), the group may be reporting to a different Federal Registration Number
2. An employee may change employments with a new Hire Date, the new assignment may point to a different group (IDGR) that is reporting to a different Federal Registration Number

• When determining if the employee is reaching the annual maximum for government tax calculation (e.g. US FICA / Medicare maximums, Canada CPP / EI maximums), each company may apply different rules depending on their business scenarios.
• When retrieving the Period To Date (PTD), Month To Date (MTD), Quarter To Date (QTD) or Year To Date (YTD) amounts, it also has to be determined if there are pays in the same time frame across multiple employments or multiple groups.
• The processing for multiple employments and groups are performed within one entity. If the employee is changing entities, then the entity will start its own YTD / QTD / MTD / PTD accumulation.

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Employee Example#

An employee has two employments with the following Hire Dates and is being paid with different groups.

Employment (1) has been paid with one group

Hire Date: 15-Aug-2005

Group	Federal Number	Pay Component	Amount
Part-Time-Secretary	Fed#: 111122222	PC 1000 Gross	$3000

Employment (2) has been paid with three groups

Hire Date: 01-Jan-2009

Group	Federal Number	Pay Component	Amount
Part-Time-Teacher	Fed#: 111122222	PC 1000 Gross	$1000
Part-Time-Driver	Fed#: 999988888	PC 1000 Gross	$5555
Part-Time-Music	Fed#: 111122222	PC 1000 Gross	$4000

The employee will be paid under one of these employments via IPPH with each pay header pointing to one employment.

Below are results of the YTD values derived depending on the IMST ‘GOVT REGIST RULE’ setting.

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UPCALC - GOVT REGIST RULE = ‘01’ (Default Rule)#

IMST - GOVT REGIST RULE = 01

• Across Multi Group and Multi EEM
• By Federal Registration across multiple groups and employments
• This rule means regardless if the employee has worked for multiple groups or multiple employments, as long as the Group Federal Registration Numbers are the same on IDGV, the YTD amounts are combined.

For the example above:

• This rule deals with multiple employments
• It does not matter how many employments or how many groups the employee is being paid in, the IDGV Fed# is used to combine YTD values.

When paying for Employment (1)

Hire Date: 15-Aug-2005

Group	Federal Number	Pay Component	Amount
Part-Time-Secretary	IDGV Fed# = 111122222	PC 1000	Gross YTD amount = $3000 + $1000 + $4000 = $8000

When paying for Employment (2)

Hire Date: 01-Jan-2009

Group	Federal Number	Pay Component	Amount
Part-Time-Teacher	IDGV Fed# = 111122222	PC 1000	Gross YTD amount = $3000 + $1000 + $4000 = $8000.
Part-Time-Driver	IDGV Fed# = 999988888	PC 1000	Gross YTD amount = $5555
Part-Time-Music IDGV	Fed# = 111122222	PC 1000	Gross YTD amount = $3000 + $1000 + $4000 = $8000.

• In most situations, for taxation purposes, the Annual Maximum of a Wage Base and Annual Maximum Deduction should be applied to an employee under the same Federal Registration Number. This ensures that the employee will not be over deducted when the employee has worked for multiple employments or assignments that belong to multiple groups with the same Federal Registration Number.

Canada Taxation

For Canada taxation, the CPP/QPP and EI annual maximum deductions are respected which will help to avoid the employee being over-deducted and the company will not over pay their Employer portion of CPP/QPP, EI.

For Federal / Provincial / Quebec tax calculation, the employee’s YTD amounts are combined together such that the employee’s annual taxable income reflects the total income of the employee for the year for that Federal Registration number. This will avoid the employee’s tax being under deducted when the employee is filing their income tax return.

US Taxation

For US taxation, the FICA, MEDI, FUTA annual maximum wage base and deductions are respected, all other annual maximum amounts are respected.

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UPCALC - GOVT REGIST RULE = ‘02’#

IMST - GOVT REGIST RULE = 02

• Across Multi Group, each EEM
• By Federal Registration across multiple groups for one employment at a time.
• This rule means if the employee has worked for multiple groups within one employment, as long as the group Federal Registration Numbers are the same on IDGV, the YTD amounts are combined.
• If the employee has worked for a different employment, each employment will be evaluated on its own.

For the example above:

• This rule deals with one employment at a time
• Depending on the group’s IDGVFed#, the YTD values are combined for the same Fed#

When paying for Employment (1)

Hire Date: 15-Aug-2005

Group	Federal Number	Pay Component	Amount
Part-Time-Secretary	IDGV Fed# = 111122222	PC 1000 Gross YTD amount = $3000

When paying for Employment (2)

Hire Date: 01-Jan-2009

Group	Federal Number	Pay Component	Amount
Part-Time-Teacher	IDGV Fed# = 111122222	PC 1000	Gross YTD amount = $1000 + $4000 = $5000.
Part-Time-Driver	IDGV Fed# = 999988888	PC 1000	Gross YTD amount = $5555
Part-Time-Music	IDGV Fed# = 111122222	PC 1000	Gross YTD amount = $1000 + $4000 = $5000.

This is useful for when a new employment is treated as a company on its own and within each employment, the employee can work for different groups that can be reported by different registrations.

The following business scenario is an example of a company who does not need to combine employments for taxation purpose.

Example: A Service Bureau company may set up one Headquarter Entity on IDEN and use a group IDGR to identity many different Federal Registrations (EIN numbers). In this way, each group may actually represent one legal company registration with the government.

• An employee may work several months for a group at the beginning of a year (i.e. one company), then transfer to another group (i.e. another company). A new employment record is created for the second company with different Position/Job and Pay Scale etc. In this case, the legislative YTD maximums should be re-started when an employee is working for a new company.
• If the employee is terminated and rehired under the same employment (i.e. the employee may not be officially transferred), the YTD amounts will be accumulated or re-started according to the group Fed#.

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UPCALC - GOVT REGIST RULE = ‘03’#

IMST - GOVT REGIST RULE = 03

• Combine Group, each EEM
• Combine federal registration for multiple groups for one employment at a time.
• This is same as Rule 02 except the groups are combined under each employment.

For the example above:

• This rule deals with one employment at a time.
• Does not matter how many groups are being paid, all the group's YTD values are combined together.

When paying for Employment (1)

Hire Date: 15-Aug-2005

Group	Federal Number	Pay Component	Amount
Part-Time-Secretary	IDGV Fed# = 111122222	PC 1000	Gross YTD amount = $3000

When paying for Employment (2)

Hire Date: 01-Jan-2009

Group	Federal Number	Pay Component	Amount
Part-Time-Teacher	IDGV Fed# = 111122222	PC 1000	Gross YTD amount = $1000 + $5555 + $4000 = $10555.
Part-Time-Driver	IDGV Fed# = 999988888	PC 1000	Gross YTD amount = $1000 + $5555 + $4000 = $10555.
Part-Time-Music	IDGV Fed# = 111122222	PC 1000	Gross YTD amount = $1000 + $5555 + $4000 = $10555.

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UPCALC - GOVT REGIST RULE = ‘04’#

IMST - GOVT REGIST RULE = 04

• Combine all
• Always combine federal registration across multiple employments and groups

For the example above:

• This rule deals with multiple employments
• Does not matter how many employments or groups are being paid, the YTD values are combined together

When paying for Employment (1)

Hire Date: 15-Aug-2005

Group	Federal Number	Pay Component	Amount
Part-Time-Secretary	IDGV Fed# = 111122222	PC 1000	Gross YTD amount = $3000 + $1000 + $5555 + $4000 = $13555.

When paying for Employment (2) Hire Date: 01-Jan-2009

Group	Federal Number	Pay Component	Amount
Part-Time-Teacher	IDGV Fed# = 111122222	PC 1000	Gross YTD amount = $3000 + $1000 + $5555 + $4000 = $13555.
Part-Time-Driver	IDGV Fed# = 999988888	PC 1000	Gross YTD amount = $3000 + $1000 + $5555 + $4000 = $13555.
Part-Time-Music	IDGV Fed# = 111122222	PC 1000	Gross YTD amount = $3000 + $1000 + $5555 + $4000 = $13555.

This is when only reporting under one Federal Government Registrations for one entity.

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UPCALC – Additional Scenarios#

• If an employee belongs to one group (e.g. Part-Time Secretary with IDGV = 11112222) and this employee is terminated, then later on the employee is rehired in the same taxation year into the same group, the employee’s YTD should be accumulated for taxation purpose.
  • In this case, if the employee is rehired into the same employment, then Rule 01, 02, 03, 04 would accumulate the YTD.
  • In this case, if the employee is rehired under a new employment, then Rule 01, 04 would accumulate the YDT.

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When to Define a New Employment#

• At Site Level IMST, during installation time when defining rules for the Payroll system, how to start a new employment for employees should be defined.
• A new employment should be for a new Hire Date, then the employee will be set up for the assignments under this employment, each assignment will point to a group that reports to a Fed#.
• There must be an evaluation of how to report multiple groups by Fed# and how to report one or multiple employments.
• For most users, the default GOVT REGIST RULE 01 for taxation purpose should be used.
• For some common Payroll Masters, Service Bureau or Agencies, each entity on IDEN or each group on IDGR may represent a different company or a client of their own. Sometimes one employment of an employee may represent that this employee is working for a different company, therefore they must set up the IMST ‘GOVT REGIST RULE’ to handle the taxation according to their needs.
• The definition of a new employment, group, or entity is dependent upon the nature of the user's business.
• By default, UPCALC will accumulate and withhold according to the legislative requirement. If the client would like to switch the rule during one taxation year, the YTD amounts that have already been updated so far may not reflect the correct YTD amounts according to the rule. A manual YTD adjustment may need to be done.
  • However, in most cases, at the end of the year when the employee is filing their income tax return, the employee will be refunded with any excess contribution.
  • For the company portion contribution, the company may do manual YTD adjustment depending on if the company is over or under-contributed.

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Notes #

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