US TAXATION PROCESSING - IPRLU TAX METHODS#
Overview#
1 OVERVIEW 4 2 GOVERNMENT WEB SITES 5 Website – IRS and Railroad Retirement Board 5 3 SET UP 6 IPCU – Railroad Tax Pay Component Usages 6 IPPC – Railroad Tax Pay Components 7 RPPC – Railroad Tax Pay Components Example 8 IPPE – Deduction Element – Add Railroad Deduction PCs 9 IDGV – Define Government Registrations – US Fed Regist # 10 IDGR – Define Groups for Railroad Employment 10 IDGV – Define Government Registrations – US RR Regist # 11 IDGV – Define Government Registrations for Railroad Overrides 12 IDPS – Define Positions for Railroad 14 IEAS – Maintain Assignments for Railroad Employees 15 IPRLU – US Tax Filing Information 16 IPPGU – US Pay Categories 19 IPPR – Payroll Information 20 4 RAILROAD TAX CALCULATION 21 IPPH – Pay Header of Railroad Employees 21 UPCALC – Railroad Taxation 22 RPREGC – Pay Register Example of Railroad Tax 23 5 EMPLOYEE TRANSFER – RAILROAD EMPLOYMENT 24 IEAS – Transfer with an Effective Date Change 24 IEAS – Transfer with additional Assignments 26 IEEI – Transfer with different Employments 28 6 RPYEU – YEAR END REPORTING RAILROAD EMPLOYEES 31 IDFDV – Box 14 Railroad Tax Set Up 31 RPYEU – Example of a Regular and Railroad Employee 32 RPW2 – Example of a Regular and Railroad Employee 33Overview#
IntentFor US Railroad Employers, this is to perform the Railroad tax calculation in the Pay Cycle UPCALC process. Employees can transfer to and from Railroad and Regular Employment. The system will take into consideration the contributions of Railroad tax contributions and the Social Security Administration tax contributions.
Audience
All users who are responsible to do Payroll Tax Calculation in the Pay cycle process.
Prerequisites
Users must have a thorough understanding of the Payroll Pay cycle processing and the functions in the menu ‘Produce US Legislative reports’.
Government Web Sites#
Website – IRS and Railroad Retirement Board
http://www.irs.gov/businesses/article/0,,id=203118,00.html http://www.rrb.gov/ http://www.rrb.gov/AandT/pl/pl1103.asp
Set Up#
IPRLU – Railroad Tax Method
- It is recommended to use ‘No Self Adjust’ Method for Railroad Tax Calculation.
- Reason is: an employee can Transfer To / From Railroad and Non-Railroad Employment, when calculating Railroad Tier2 Tax for these employees, since FICA calculation does not have Tier2 calculation, the Railroad Tier2 ‘Self-Adjust’ method will adjust the Tier2 tax with all Earnings including the earnings for non-Railroad earnings.
IPCU – Railroad Tax Pay Component Usages
- on IPCU screen, the following PC Usages are supplied for Railroad Tax calculation:
Railroad TIER1 Social Security Contribution 6301 - RR Tier1 Social Security EE Deduction 6302 - RR Tier1 Social Security EE Earnings 6303 - RR Tier1 Social Security ER Contribution 6304 - RR Tier1 Social Security ER Earnings 6305 - Pre-RR Tier1 Social Security EE Earnings (PPE) 6306 - Pre-RR Tier1 Social Security ER Earnings (PPE)
Railroad TIER1 Medicare Contribution 6311 - RR Tier1 Medicare EE Deduction 6312 - RR Tier1 Medicare EE Earnings 6313 - RR Tier1 Medicare ER Contribution 6314 - RR Tier1 Medicare ER Earnings 6315 - Pre-RR Tier1 Medicare EE Earnings (PPE) 6316 - Pre-RR Tier1 Medicare ER Earnings (PPE)
Railroad TIER2 Contribution 6321 - RR Tier2 EE Deduction 6322 - RR Tier2 EE Earnings 6323 - RR Tier2 ER Contribution 6324 - RR Tier2 ER Earnings 6325 - Pre-RR Tier2 EE Earnings (PPE) 6326 - Pre-RR Tier2 ER Earnings (PPE)
Railroad Unemployment Insurance Act (RUIA) 6331 - RR RUIA EE Deduction 6332 - RR RUIA EE Earnings 6333 - RR RUIA ER Contribution 6334 - RR RUIA ER Earnings 6335 - Pre-RR RUIA EE Earnings (PPE) 6336 - Pre-RR RUIA ER Earnings (PPE)
http://www.irs.gov/businesses/article/0,,id=203118,00.html#4 Railroad Unemployment Repayment Tax - This tax was terminated effective with respect to payments made on or after July 1, 1993.
- the following PC Usages are not used for Symmetry and therefore will not be calculated - IPRLU ‘Railroad Suppl Method’ and ‘RURT Method’ are not needed Railroad Unemployment Repayment (RURT) 6341 - RR RURT EE Deduction 6342 - RR RURT EE Earnings 6343 - RR RURT ER Contribution 6344 - RR RURT ER Earnings 6345 - Pre-RR RURT EE Earnings (PPE) 6346 - Pre-RR RURT ER Earnings (PPE)
Railroad Supplemental Annuity 6351 - RR SUPPL EE Deduction 6352 - RR SUPPL EE Earnings 6353 - RR SUPPL ER Contribution 6354 - RR SUPPL ER Earnings 6355 - Pre-RR SUPPL EE Earnings (PPE) 6356 - Pre-RR SUPPL ER Earnings (PPE)
IPPC – Railroad Tax Pay Components
- on IPPC screen, user must set up Pay Components for Railroad Tax with all the above PC Usages if applicable:
For PC Usages with Pre- Earnings, the Assoc Element must be set up with the Eligible Taxable Earnings: Please refer to PR_US_pc_usages.doc for the complete list of US PC usages.
RPPC – Railroad Tax Pay Components Example
The following report excerpt is an example to show the Pay Components of all the Railroad PC Usages. Note that the Associated PC is not being used.
IPPE – Deduction Element – Add Railroad Deduction PCs
- user must add all the Railroad Tax Deduction pay components to the Deduction Element in order for UPCALC to deduct the Railroad tax from employee’s gross pay
- IPCU screen PC Usage 2 Total Deductions (PPE) must already define a Pay Component from IPPC that specify the Deduction Element
- Using IPPC PC Usage 2 Assoc Element, the user must go into IPPE screen and add the list of Railroad Deduction pay components to be deducted from employee’s gross pay
IDGV – Define Government Registrations – US Fed Regist #
- on IDGV screen for each Entity, user must define the Fed Regist Set and Fed Regist Type with the Fed Regist # prior to set up the IDGR screen to define groups for Railroad Employment.
IDGR – Define Groups for Railroad Employment
- At the Group level, user must define the Groups for Railroad Employment with W2 Employment Type of ‘Railroad’ on the Registration Tab along with the appropriate IDGV Government Registrations
IDGV – Define Government Registrations – US RR Regist #
- if user needs to define Railroad Registration # or to specify the overridden Railroad Maximums or Experience rate, the user must set up IDGV screen with Registration Type ‘US RR Regist 1’ up to ‘US RR Regist 9’.
- the last digit of the ‘US RR Regist n’ is the same digit as the IDGR Fed Regist Type ‘US Fed Regist n’
e.g. if IDGR specifies ‘US Fed Regist 2’, then IDGV should define ‘US RR Regist 2’ with the same Registration Set to be used for this group.
The Registration Type is from Lexicon X_GOVT_REGIST_TYPE.
X_GOVT_REGIST_TYPE lexicon values for Railroad Registration are:
0291 – US RR Regist 1 0292 – US RR Regist 2 0293 – US RR Regist 3 0294 – US RR Regist 4 0295 – US RR Regist 5 0296 – US RR Regist 6 0297 – US RR Regist 7 0298 – US RR Regist 8 0299 – US RR Regist 9
IDGV – Define Government Registrations for Railroad Overrides
- After the ‘US RR Regist n’ is entered on IDGV, user can enter the ‘Govt Rate Type’ to specify any overridden values for the Railroad tax calculation.
For Example:
RUIA Employer Portion is 2.15% (Experience Rate) or 12% up to Wage Base $1280 per month. The default rate of 12% will be used by UPCALC all the time as the default Tax rate.
If the user is using the 2.15% Experience Rate, the user must set up the Experience Rate of 2.15% on IDGV screen to override the Default rate. Please enter the percent 2.15% as a rate of 0.0215.
The Govt Rate Type is from Lexicon X_GOVT_RATE_TYPE.
X_GOVT_RATE_TYPE lexicon values for Railroad Tax calculation are:
022011 – US RR Tier1 Soc Max Base Amt 022012 – US RR Tier1 Soc Max Dedn 022013 – US RR Tier1 Soc Rate
022021 – US RR Tier1 Med Max Base Amt 022022 – US RR Tier1 Med Max Dedn 022023 – US RR Tier1 Med Rate
022031 – US RR Tier2 EE Max Base Amt 022032 – US RR Tier2 EE Max Dedn 022033 – US RR Tier2 EE Rate
022036 – US RR Tier2 ER Max Base Amt 022037 – US RR Tier2 ER Max Dedn 022038 – US RR Tier2 ER Rate
022041 – US RR RUIA Max Base Amt 022042 – US RR RUIA Max Dedn 022043 – US RR RUIA Rate
022051 – US RR RURT Max Base Amt 022052 – US RR RURT Max Dedn 022053 – US RR RURT Rate
022061 – US RR SUPPL Max Base Amt 022062 – US RR SUPPL Max Dedn 022063 – US RR SUPPL Rate
IDPS – Define Positions for Railroad
- after IDGR groups are defined for Railroad Employment, user can define Jobs and/or Positions that use these Groups of Railroad Employment.
- these Positions/Jobs will then be used to set up employees Assignments.
IEAS – Maintain Assignments for Railroad Employees
- When setting up the employee’s Assignment, user can select the Railroad Positions.
- after the Position is entered, the Group is retrieved according to the Position
- when the employee is paid by this Assignment, the Group of this Assignment will be used for the Pay Header and therefore the Railroad tax will be calculated according to the W2 Employment Type of the Group.
IPRLU – US Tax Filing Information
User must set up the Railroad tax methods for each Railroad employee on IPRLU screen.
- the Railroad Taxation Area must be set up for Railroad Employees only
- the FICA Method and Medicare Method are used when the employee is paid by Groups that are not Railroad Employment.
- for Railroad Employees, the user should set up both the FICA/Medicare Method and the Railroad Tax section so that when employee is transferred to and from Railroad and Regular Employment, the corresponding tax will be calculated
- once after the user defines all Groups for the Railroad employment and finishes the set up on IEAS for the employees to be paid with the Railroad Employment Groups, the user can run a fix up script to populate the IPRLU Railroad tax method to the default method of ‘Self Adjust’, the script is called fix_IPRLU_Railroad_default.sql
- note: fix_IPRLU_Railroad_default.sql only populates the Railroad tax methods, user must first create the IPRLU record
The following is a list of the Database columns used for Railroad Tax calculation:
P2K_PR_US_PAY_RULES (ppru)
o URR_TIER1_SOC_METHOD - Railroad Tier 1 Social Security Tax Method - VARCHAR2(2), lookup lexicon X_URR_TIER1_SOC_METHOD
o URR_TIER1_MED_METHOD - Railroad Tier 1 Medicare Tax Method - VARCHAR2(2), lookup lexicon X_URR_TIER1_MED_METHOD
o URR_TIER2_RET_METHOD - Railroad Tier 2 Retirement Tax Method - VARCHAR2(2), lookup lexicon X_URR_TIER2_RET_METHOD
o URR_RUIA_METHOD - Railroad Unemployment Insurance Act (RUIA) Tax Method - VARCHAR2(2), lookup lexicon X_URR_RUIA_METHOD
o URR_RURT_METHOD - Railroad Unemployment Insurance Repayment (RURT) Tax Method - VARCHAR2(2), lookup lexicon X_URR_RURT_METHOD
o URR_SUPPL_METHOD - Railroad Supplemental Annuity Tax Method - VARCHAR2(2), lookup lexicon X_URR_SUPPL_METHOD
P2K_PR_US_PAY_CATEGORIES (pctu) - same as P2K_PR_US_PAY_RULES (ppru)
The following is a list of Railroad Tax Method lexicons:
X_URR_TIER1_SOC_METHOD VARCHAR2(2) 01 – RR SOC Self Adjust 02 – RR SOC No Self Adjust 03 – RR SOC Self Adjust at Max 99 – Do Not Calculate
X_URR_TIER1_MED_METHOD VARCHAR2(2) 01 – RR Med Self Adjust 02 – RR Med No Self Adjust 03 – RR Med Self Adjust at Max 99 – Do Not Calculate
X_URR_TIER2_RET_METHOD VARCHAR2(2) 01 – RR Tier2 Self Adjust 02 – RR Tier2 No Self Adjust 03 – RR Tier2 Self Adjust at Max 99 – Do Not Calculate
X_URR_RUIA_METHOD VARCHAR2(2) 01 – RR RUIA Self Adjust 02 – RR RUIA No Self Adjust 03 – RR RUIA Self Adjust at Max 99 – Do Not Calculate
X_URR_RURT_METHOD VARCHAR2(2) 01 – RR RURT Self Adjust 02 – RR RURT No Self Adjust 03 – RR RURT Self Adjust at Max 99 – Do Not Calculate
X_URR_SUPPL_METHOD VARCHAR2(2) 01 – RR SUPL Self Adjust 02 – RR SUPL No Self Adjust 03 – RR SUPL Self Adjust at Max 99 – Do Not Calculate
IPPGU – US Pay Categories
The user may override the Railroad tax methods by Pay Categories on IPPGU screen.
IPPR – Payroll Information
Because the Railroad Unemployment Insurance (RUIA) is calculated at a Rate up to a Monthly Maximum Earnings, the user must turn ON the MTD Toggle on IPPR screen in order to maintain the MTD values.
Railroad Tax Calculation#
IPPH – Pay Header of Railroad Employees
When an employee is paid with the IEAS Assignment for the Group that points to the Railroad W2 Employment Type, this employee’s Pay Header is subject to Railroad Tax calculation.
- the Pay Header’s Group determines if this pay should calculate the Railroad Tax
- the IPRLU screen defines each Railroad Tax method that is eligible for this employee
- UPCALC retrieves all Taxable Earnings according to IPCU Railroad PC Usages and pass to Vertex to calculate Railroad taxation
UPCALC – Railroad Taxation
- the Railroad Tax Annual maximums and Rates are supplied by Vertex
- there are different Annual Maximum Earnings and Rates for different Railroad tax calculation
- the following is an example of Rates and Maximums for 2008
Tier1 OASDI Employee Portion is 6.2% up to SSA Wage Base $102,900 Tier1 OASDI Employer Portion is 6.2% up to SSA Wage Base $102,900 Tier1 Medicare Employee Portion is 1.45% with no Wage Base limit Tier1 Medicare Employer Portion is 1.45% with no Wage Base limit Tier2 Employee Portion is 3.9% up to SSA Wage Base $75,900 Tier2 Employer Portion is 12.1% up to SSA Wage Base $75,900 RUIA Employer Portion is 2.15% (Experience Rate) or 12% up to Wage Base $1280 per month
- when an employee is paid throughout the year of 2008, the employee will first reach the Tier2 maximum earnings $75,900 and thus Tier2 contribution will stop, then the employee will reach the OASDI maximum of $102,900 while the Medicare portion will continue with no Base limit
- the Railroad Unemployment Insurance (RUIA) has a Monthly Maximum Wage Base of $1280 per month, thus the MTD Earnings and contributions are passed to Vertex to determine if the RUIA Maximums are reached for each month
RPREGC – Pay Register Example of Railroad Tax
Period: 200802 PC 6033 RR Tier1 Soc EE: 535.61 x 6.2% = 33.21 PC 6034 RR Tier1 Med EE 535.61 x 1.45% = 7.77 PC 6035 RR Tier2 EE 535.61 x 3.9% = 20.89 PC 7035 RR Tier2 ER 535.61 x 12.1% = 64.81 PC 7036 RR RUIA ER 535.61 x 2.15% = 11.52 (Experience Rate 2.15% instead of default 12%)
Employee Transfer – Railroad Employment#
IEAS – Transfer with an Effective Date Change
- an employee can transfer to and from Railroad Employment by just changing the IEAS Assignment Position with an effective date change
- when the Pay Headers are generated from this Assignment, the effective Assignment Group will be used and therefore the Railroad tax will be calculated accordingly
- when calculating the Railroad Tier1 Social Security / Medicare portion and the Regular FICA/MEDI for the different Assignments, the YTD amounts of these contributions are taken into consideration so that the employee will not contribute over the Annual maximums
IEAS – Transfer with additional Assignments
- an employee may be assigned with an additional Assignment to perform Regular or Railroad type of work throughout the year
- when the employee is paid with either Assignment, the Pay Header’s group determines if the Railroad tax should be calculated
- when calculating the Railroad Tier1 Social Security / Medicare portion and the Regular FICA/MEDI for the different Assignments, the YTD amounts of these contributions are taken into consideration so that the employee will not contribute over the Annual maximums
IEEI – Transfer with different Employments
An employee can be terminated and re-hired in a different Employments.
For Employment with Hire Date of ’01-Sep-2000’, the IEAS Assignments are defined for this Employment.
When Pay Headers are entered for this Assignment, the Assignment Group is used to determine if the Railroad Tax should be calculated.
- when the employee is paid with either Employments, the Pay Header’s group determines if the Railroad tax should be calculated
- when calculating the Railroad Tier1 Social Security / Medicare portion and the Regular FICA/MEDI for the different Assignments, the YTD amounts of these contributions are taken into consideration so that the employee will not contribute over the Annual maximums
For Employment with Hire Date of ’01-Jan-2002’, the IEAS Assignments are defined for this Employment.
When Pay Headers are entered for this Assignment, the Assignment Group is used to determine if the Railroad Tax should be calculated.
- when the employee is paid with either Employments, the Pay Header’s group determines if the Railroad tax should be calculated
- when calculating the Railroad Tier1 Social Security / Medicare portion and the Regular FICA/MEDI for the different Assignments, the YTD amounts of these contributions are taken into consideration so that the employee will not contribute over the Annual maximums
RPYEU – Year End Reporting Railroad Employees#
IDFDV – Box 14 Railroad Tax Set Up
From W2 Form Instructions:
- Box 14 is used to report RRTA (Railroad Retirement Tax Act) Tier1 and Tier2 employee taxes
- when reporting the Railroad Employees information, Box 3, 4, 5, 6, 7 Social Security Information should be zero
- when an employee has contributions to both the Railroad and Regular Employments, then Box 3, 4, 5, 6, 7 Social Security Information should be reported, this is the case when employee is transferred to and from Railroad and Regular Employments
User must set up IDFDV Identifiers W2-OTHER-01 to W2-OTHER-nn Box 14 Information for Railroad TIER1 and TIER2 taxes as follows:
From EFW2 File Instructions:
- different Code RE Employer Record must be generated by the W2 Employment Type
- Railroad Employees who have been paid by this Code RE Federal Registration# and W2 Employment Type must be grouped and reported under this RE record
- Social Security and Medicare information should be zero filled for these employees
- Box 14 information are not reported on EFW2 File
RPYEU – Example of a Regular and Railroad Employee
- Employee 507 has been paid for both Regular and Railroad Employment during the year.
- When RPYEU is run, IPVT Group Code is used to retrieve the W2 Employment Type to be reported
- Employee 507 will be reported under Regular Employment and Railroad Employment.
- when reporting the Regular Employment, the Box 3, 4, 5, 6 Social Security Information will be retrieved from IPVT of the Regular Employment Group which had calculated the Social Security taxes throughout the year
- Box 14 Railroad taxes will not be reported because the Regular Employment Group will not calculate Railroad taxes
- when reporting the Railroad Employment, the Box 3, 4, 5, 6 Social Security Information will not be retrieved from IPVT of the Railroad Employment Group because the Social Security taxes have not been calculated throughout the year
- Box 14 Railroad taxes will be reported because the Railroad Employment Group has been calculated the Railroad taxes
- note that Box 7 SOC SEC TIPS are calculated and set up by users, this report is an example only, user should not calculate this for Railroad employees
RPW2 – Example of a Regular and Railroad Employee
Employee 507 will receive 2 W2 forms. For Regular Employment: Box 3, 4, 5, 6 Social Security Information will be printed Box 14 Railroad information will not be printed
For Railroad Employment: Box 3, 4, 5, 6 Social Security Information will not be printed Box 14 Railroad information will be printed
Notes #
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