Setting Up Payroll Tax Tables

This chapter provides an overview of payroll tax tables and discusses how to:

• (USA) View federal and state tax tables.

• (USA) View local tax tables.

• (USA) Manage tax reciprocity.

• (USA) Update the Taxable Gross Definition table.

• (USA) View state marital status codes.

• (CAN) View Canadian tax tables.

• (CAN) Set up wage loss plans.

• (CAN) Define Canadian WCB assessment reporting.

• (USF) Set up state and locality tax routing.

• (E&G) Establish 1042 processing for non-resident aliens.

• (USA) Establish UI report codes.

• (USA) Establish standard occupational classifications for Alaska.

• (USA) Specify voluntary disability insurance plan location and contact information.

• (USA) Specify parameters for quarterly tax reporting.

• Set up tax types for PeopleSoft Enterprise Payables integration.

Note. You must also set up tax locations and company tax tables, which is documented in the PeopleSoft Enterprise HRMS Application Fundamentals PeopleBook.

See Also

Setting Up Company Tax Tables for North America

(CAN) Canadian Tax Method Calculations

(USA) U.S. Tax Methods and Calculations

Understanding Payroll Tax Tables

This section discusses how to:

• Find instructions on year-end processing.

• Work with payroll tax tables.

• (USA) Work with U.S. Tax tables.

• (CAN) Work with Canadian Tax tables.

Finding Instructions on Year-End Processing

Since year-end processing information changes regularly, PeopleSoft posts the most up-to-date instructions in the current year-end tax update documentation, posted on My Oracle Support.

See Accessing Year-End Processing Instructions.

Working with Payroll Tax Tables

The PeopleSoft Enterprise Payroll for North America tax tables store tax information that the system requires to calculate and report taxes. PeopleSoft provides and maintains most of the payroll tax tables.

Payroll for North America delivers tax data for all federal and state or provincial taxing entities and almost all localities. Should you need a locality that PeopleSoft does not yet support, you can add and maintain entries using the tax pages. If you need to make a change or addition to the standard tax information delivered with the system, you are responsible for maintaining the change until it is incorporated into PeopleSoft-maintained tax tables. After you notify us of the missing locality, PeopleSoft will add it to our standard system and maintain it for you in subsequent versions.

You are responsible for completing the tax tables that contain data specific to your company.

Note. The pages for Federal/State Tax, Taxable Gross Definition, and Canadian Tax tables reference more than one table.

(USA) Working with U.S. Tax Tables

Some U.S. tax tables are maintained by PeopleSoft, others are maintained by the employers.

PeopleSoft-Maintained Tables

These are the PeopleSoft-maintained tables for U.S. employers:

• Federal/State Tax and Local Tax tables, which contain rates and other constants used in the calculation of most forms of taxes for U.S. federal, state, and local taxing entities.

• State and Local Tax Reciprocity tables, which define reciprocal taxing rules between states and localities, and other rules for determining tax liabilities for multiple jurisdictions.

• Taxable Gross Definition table, which identifies differences between states or localities and the federal government in the definition of taxable wages.

  PeopleSoft delivers sample taxable gross component IDs for Group Term Life (GTL), Section 125 (125), domestic partner benefits (DPB), Health Savings Accounts (HSA), and Health Savings Account employer contributions (HSR).

• SWT Marital Status table, which defines the valid tax marital status codes for each state.

Employer-Maintained Tables

U.S. employers must set up and maintain the following tables:

• Tax Location table, which contains the work locations for which you process payroll and taxes.

• Company State Tax and Company Local Tax tables, which store tax identification numbers, unemployment and disability experience rates, and general ledger codes for the states and localities for which your company collects and pays taxes.

• Tax Reporting Parameters table, which controls the execution of many of your quarterly and annual tax reports and specifies data needed for magnetic media filing.

See Also

Setting Up Company Tax Tables for North America

(CAN) Working with Canadian Tax Tables

Some Canadian tax tables are maintained by PeopleSoft, others are maintained by the employers.

PeopleSoft-Maintained Tables

Canadian Tax tables, which contain rates and other constants used in the calculation of all forms of federal, provincial, and Quebec taxes.

Employer-Maintained Tables

Canadian employers must define and maintain the following tables:

• The Canadian Wage Loss Plan table, which identifies your organization's valid wage loss replacement plans and general ledger account numbers.

• The Canadian Company Tax table, which defines the Prescribed Interest rate, Provincial Premium Tax rate, and Health Insurance rate override.

• Canadian Tax Reporting Parameters table, which controls the execution of many quarterly and annual tax reports and specifies data needed for magnetic media filing.

See Also

Setting Up Company Tax Tables for North America

(USA) Viewing Federal and State Tax Tables

To view federal and state tax tables, use the Federal/State Tax Table component (STATE_TAX_TABLE).

This section provides overviews of federal and state tax tables and of the Pennsylvania Local Services Tax (LST) and discuss how to:

• View standard deductions, allowance amounts, and supplemental taxes.

• View special tax amounts.

• View wage bracket rate information.

• View additional rate information.

Understanding Federal and State Tax Tables

Use the Federal/State Tax Table pages to view the tax data PeopleSoft Payroll for North America uses to calculate U.S. federal, state, and certain local taxes. These pages supply the following information:

• Identify the general type of withholding tax calculation employed by each jurisdiction and provide all the constants needed by the calculation routines for income tax withholding and unemployment and disability taxes.

• Contain the wage bracket tax rate data used by the taxing authorities for implementing graduated taxes.

Special State Codes for Localities Using Graduated Tax Tables

In addition to the rules for state withholding, the rates for calculating federal withholding, FICA, and federal unemployment are defined on this table, primarily because the method of calculation is similar. Localities that use graduated tax tables are also included. These entries are identified by special state codes such as Z1 and Z2. Here are some of these special codes:

Understanding the Pennsylvania Local Services Tax

On the Federal/State Tax Table - Additional Rates page, the Tax Class LS Tax represents the Local Services Tax (LST) for Pennsylvania employees. The total LST paid by any individual in a calendar year is limited to 52 USD, regardless of the number of political subdivisions in which the individual works during the year.

LST Localities

The LST can be imposed by both municipalities and school districts. Certain LST processing requirements relate to the combined LST rate for municipalities and school districts. Therefore, you must implement the LST using Local Tax Table entries that represent combined LST tax rates. These entries have the letter "C" in position 8 of the Locality Code.

For example, the locality code O430212C for Farrel City is used to process the LST at the combined tax rate of the Farrel City municipality and the Farrel City School District.

Lump Sum and Prorated LST Deductions

When the LST is levied at a combined rate of 10 USD or less annually, it is deducted as a lump sum from the employee's first paycheck of the year in the taxing jurisdiction.

If the LST is levied at a combined rate exceeding 10 USD annually, the tax is divided equally across the number of pay periods in the employee's pay frequency. When calculating prorated pay period deductions, employers are required to round down to the nearest cent. For example, a 52 USD annual combined tax rate is deducted at 1 USD per week from employees paid weekly, or at 4.33 USD per month from employees paid monthly.

Maximum Annual Deduction

If an employee pays LST of less than 52 USD to the first municipality where the employee works during a calendar year and transfers to one or more municipalities that impose the LST, the additional tax is withheld as long as the combined LST deductions are equal to or less than 52 USD. If the combined LST deductions exceed 52 USD, only the difference between 52 USD and the total of any previous LST is withheld from the employee.

For example, an employee who is paid weekly works in locality A, which imposes a 10 USD combined LST. At this rate, the entire LST is deducted in the employee's first paycheck. The next week, the employee works in locality B, which imposes a 52 USD combined LST. Locality B is entitled to a maximum of only 42 USD because the employee has already paid 10 USD of the 52 USD annual maximum tax.

The system deducts 1 USD per week from the employee's weekly paycheck (because locality B's entire 52 USD rate is prorated across 52 pay periods in the year) until 42 USD has been collected for locality B. At this point, the employee has reached the 52 USD annual maximum, and no further deductions are taken in locality B or in any other locality where the employee subsequently works in the same year.

The state-level Pennsylvania LST Memo tax record keeps track of how much Pennsylvania LST an employee has paid for the year. During the LST calculation, the system checks this state memo tax balance before computing the LST.

When you hire an employee whose LST for the current tax year has been fully or partially withheld by another employer, you can load the amount already withheld into the employee's state tax memo balance to prevent the system from exceeding the annual maximum for that employee. Alternatively, you can leave it to the employee to file for a refund of overpaid LS tax at year end.

See (USA) Reviewing and Adjusting U.S. Tax Balances.

Rules For Employees Working in Multiple Jurisdictions

Employees are not subject to LST at more than one place of employment during a payroll period. Pennsylvania indicates that the "priority of claim" to collect the LST is as follows:

1. Where the employee "maintains his or her principal office or is principally employed."

2. Where the employee "resides and works."

3. Where the employee is employed that is "nearest in miles" to the employee's home.

Because the system is not able to determine which jurisdiction has the highest priority when an employee has active LST deductions set up for multiple jurisdictions, it is your responsibility to determine which LST jurisdiction has priority and to structure the employee's Local Tax Data so that the employee has only one active LST deduction set up for the correct jurisdiction.

If you fail to do this, and an employee has active LST deductions set up for multiple jurisdictions, the system deducts the tax for the first jurisdiction encountered in the processing sequence. For multiple job employees with multiple active LST deduction setups, the tax is deducted for whichever job is the first one calculated in the primary pay group.

Important! Although the system takes the LST deduction for only one jurisdiction per pay period, it is your responsibility to structure the employee's Local Tax Data to ensure that the deduction is taken for the correct jurisdiction.

If you need to set up Local Tax Data records for multiple LS Tax jurisdictions for an employee in order to clear Payroll Error 92 ("Local Tax Not Found: The local tax record for the locality cannot be found for this employee."), then you can limit the employee to one active LST by setting all but one of the employee's Local Tax Data records for LST to the Special Tax Status of "Do Not Maintain Taxable Gross and Do Not Withhold Tax".

Low Income Exemption

A jurisdiction that levies the LST at a combined rate greater than 10 USD is required to exempt from the tax employees whose total income within the jurisdiction is less than 12,000 USD for the calendar year.

To receive an up front exemption from LST deductions, an employee must provide the employer with a completed Local Services Tax Exemption Certificate. To record the employee's exemption from the tax, enter 999 as the number of Local Withholding Allowances in the employee's Local Tax Data page for the locality imposing the LST.

Entering 999 as the number of Local Withholding Allowances suspends deduction of the LST from the employee's paychecks. If the employee's YTD taxable gross for the locality reaches or exceeds 12,000 USD, then regular paycheck deductions of the tax will begin, and a catch-up lump sum tax deduction will be taken equal to the amount of tax that was not previously withheld from the employee as a result of the employee's exempt status.

Important! Once you set up an employee as exempt from a jurisdiction's LST for a particular calendar year, do not change that exempt status for the remainder of that calendar year. If an employee's exempt status is changed mid-year, the system will not take the catch-up lump sum tax deduction from the employee.

Pages Used to View Federal and State Tax Tables

Viewing Standard Deductions, Allowance Amounts, and Supplemental Taxes

Access the Federal/State Taxes - Tax Table - General page (Set Up HRMS, Product Related, Payroll for North America, Federal/State Taxes, Tax Table, General).

Note. You shouldn't need to modify this table, but if you must, you can make changes if you have the appropriate security authorization. This applies to all pages in this component.

Supplemental Method

Details of the values available for selection in this group box and examples of calculations are provided in this PeopleBook.

See Supplemental Tax Calculations.

Viewing Special Tax Amounts

Access the Special Tax Amts page (Set Up HRMS, Product Related, Payroll for North America, Federal/State Taxes, Tax Table, Special Tax Amounts).

Special Tax Amount	This field is used to store parameters or values used in withholding tax calculations for the selected state or federal jurisdiction.
Special Tax Amount 5	When the selected state is Federal ($U), the amount displayed is the amount that the system adds to the annualized wages of the nonresident alien (NRA) solely for purposes of NRA tax withholding calculation. This amount does not add to the employee's federal taxable gross balance.
State Statutory Minimum Hourly	The system uses this field to calculate tip credit to pay overtime for tipped employees. The minimum hourly rate required by that state appears here.
Report Neg Wages	Options are include or separate.
State Tips W/H Threshold	This field appears if the value in the State field is $U. This field is used in conjunction with state regulations for delaying the withholding of taxes on tips until the employee reports monthly tips in the amount equal to the threshold amount. This field displays the monthly threshold amount from the federal regulations and as of now all states use that threshold amount. For states that allow you to delay withholding on tips, you can specify by Pay Group whether you delay withholding on tips.
Tax Reporting	Options include Annual, Monthly, or Quarterly.
Delay Withholding for Tips	On this page, this check box refers to state income tax. For each state, PeopleSoft selects or deselects this check box, depending on whether the state allows employers to delay withholding on tip income until the monthly threshold amount is reached. For states that allow you to delay withholding on tips, you can specify by Pay Group whether you'll delay withholding on tips.
Employee Detail Required	This field is informational only and indicates whether a state requires the quarterly reporting of individual employee wage data. All states currently require such reporting.
Use Common PayMaster for SUI	This check box is selected if the state recognizes common paymaster status between companies for purposes of state unemployment insurance taxes.

Viewing Wage Bracket Rate Information

Access the Federal/State Tax Table - Rates page (Set Up HRMS, Product Related, Payroll for North America, Federal/State Taxes, Tax Table, Rates).

Tax Status	The appropriate Federal/State tax status (Married, Single, and so on).
Low Gross	The minimum taxable gross for the bracket.
Low Tax	The tax to be withheld on the corresponding minimum gross.
Tax Rate	The rate to be applied until the next bracket is reached.
Credit Amount	Not currently used by PeopleSoft Payroll for North America.

Viewing Additional Rate Information

Access the Federal/State Tax Table - Additional Rates page (Set Up HRMS, Product Related, Payroll for North America, Federal/State Taxes, Tax Table, Additional Rates).

Tax Class	Tax classes identify different taxes that share certain characteristics. Local Services Tax represents Local Services Tax (LST) for Pennsylvania employees. See Understanding the Pennsylvania Local Services Tax. See Understanding Federal and State Tax Tables.
Calculation Type	Options are % Tax Grs, %ER Wage, and N/A.
Tax Base	Options are Disability, Unemployment, and Withholding.
Tax Rate	The tax rate for employer unemployment or disability contributions is blank on this page. The rate used during payroll calculations comes from the Company State Tax table.
Maximum Gross	If a tax applies only to a portion of an employee's annual wages up to a specified limit, such as employer unemployment taxes, that limit amount appears in this field. An entry of all 9s, as with Medicare taxes, indicates a tax without limit.
Maximum Tax	If there is an annual limit on a particular type of tax, such as Pennsylvania's Local Services Tax, enter that limit amount here.
Taxability	Select Employee Tax Only, Employer Tax Only, Empl and Emplr Tax, or Memo Tax Only to indicate whether a tax is paid by the employee, paid by the employer, or paid in equal matching amounts by both.
Period Maximum	If selected, this option indicates that the tax is calculated for a period other than annual. Two examples of this are SDI in New York and Hawaii, both of which have weekly maximums.
Self Adjust (self-adjusting)	This check box is for information only and does not affect processing.
Delay W/H for Tips (delay withholding for tips)	On this page, this check box is selected or deselected for each additional tax the state may impose. For each state, PeopleSoft selects or deselects this check box, depending on whether the state allows employers to delay withholding on tip income until the monthly threshold amount is reached. For states that allow you to delay withholding on tips, you can specify by Pay Group whether you'll delay withholding on tips.

Voluntary Disability Plans

Of the states that provide disability insurance plans (currently California, Hawaii, New Jersey, New York, Rhode Island, plus Puerto Rico), all but Rhode Island allow employers to provide voluntary disability plans in place of the state plan. PeopleSoft maintains the Tax Class rows on the Federal/State Tax Table - Additional Rates page for the Employer and Employee paid tax for voluntary disability plans for each of these states.

Note. If you implement a voluntary disability plan for California, Hawaii, New Jersey, New York, or Puerto Rico, you must set up the appropriate tax rates on the Company State Tax table and the VDI/FLI Administrator table.

State Unemployment Insurance (SUI) Tax

You must make sure that the unemployment insurance taxable gross and tax balances transferred during the conversion process are consistent with the unemployment tax rates that have been entered for each quarter on the Company State Tax Table page.

Warning! If these amounts are not consistent and in balance, the system will either charge or refund additional unemployment tax amounts to account for the difference in the quarterly unemployment insurance tax balances.

See Also

Specifying States Where You Collect or Pay Taxes

(USA) Viewing Local Tax Tables

To update local tax information, use the local Tax Table component (LOCAL_TAX_TABLE).

This section provides an overview of locality codes and discusses how to:

• View local tax jurisdiction information associated with a locality code.

• View the method used to calculate local withholding rates.

• Enter a locality's tax reporting requirements.

Understanding Locality Codes

The local Tax Table component (LOCAL_TAX_TABLE) displays information used when the system calculates local withholding tax. In this table, each locality is assigned a code of up to ten characters. Typically this is how these codes are assigned:

• For Pennsylvania municipalities and school districts: an eight or nine character code based on codes assigned in the official Pennsylvania local tax register.

• For municipalities in states other than Pennsylvania: a five-character Federal Information Processing Standards (FIPS) code.

• For counties: a three-digit county number.

• For Ohio school districts: a four-digit district number.

Pennsylvania Localities

The State of Pennsylvania provides a registry of tax rates for all cities, counties, political subdivisions, school districts, and so on located in Pennsylvania. For each municipality and overlying school district, the registry lists effective tax rates for both Earned Income Tax (EIT) and local services tax (LST) for residents and, where applicable, non-residents.

The following is the definition of the eight or nine character Pennsylvania code:

• The letter in the first position refers to the type of tax:

  • I - income tax.

  • O - local services tax.

• The next six digits are the numerical code assigned to the municipality by the state of Pennsylvania.

• The alphabetic code in the eighth position signifies the tax rate:

  • C - combined municipality and school district tax rate.

  • M - municipality tax rate.

  • S - school district tax rate.

• A numerical digit in the last position indicates that the municipality overlaps with all or portions of multiple school districts.

  Refer to the School District Code field on the Local Tax Table 1 page to determine which locality code applies to which school district, and then choose the appropriate entry for the employee's location.

For each municipality and overlying school district, PeopleSoft delivers the following locality types:

Note. The LST can be imposed by both municipalities and school districts. However, certain LST processing requirements relate to the combined LST rate for municipalities and school districts. Therefore, you must implement the LST using Local Tax Table entries that represent combined LST tax rates. These entries have the letter "C" in position 8 of the Locality Code.

Maintaining Tax Localities

For each locality that PeopleSoft supports, we maintain the entries for that locality in the following tables:

• Local Tax Table.

• Local Tax Reciprocity table (if applicable).

• Taxable Gross Definition table (if applicable).

Pages Used to View Local Tax Information

Viewing Local Tax Jurisdiction Information Associated with a Locality Code

Access the Local Tax Table 1 page (Set Up HRMS, Product Related, Payroll for North America, Local Taxes, Tax Table).

Maintenance Responsibility	All entries that we supply are marked as the maintenance responsibility of PeopleSoft. However, if you add a locality to this table, the system marks it as your maintenance responsibility.
Local Jurisdiction	Reserved for future use.
Partial District Indicator (PA Only)	This check box is selected to indicate a Pennsylvania municipality that is co-terminus with multiple school districts, meaning the boundary of the municipality overlaps the boundaries of multiple school districts. For example, in Westmoreland County, the City of Greensburg is co-terminus with both the Greensburg Salem School District and the Hempfield Area School District. Be sure to use the Local Tax Table entry that represents the correct municipality/school district combination.
Locality Name	The municipality name from the register (except for school district entries, which are school district name). Combined jurisdictions have the appendage M+SD.
Other Locality Name	For Pennsylvania localities, combined entries display the school district name.
School District Code (PA Only)	For Pennsylvanian localities, the appropriate school district code appears here.

See Also

Understanding Locality Codes

Viewing the Method to Calculate Local Withholding Taxes

Access the Local Tax Table 2 page (Set Up HRMS, Product Related, Payroll for North America, Local Taxes, Tax Table).

Local Tax Calculation Type	Indicates the calculation method used to determine the amount of local income tax withheld.
Withhold On Work Locality Only	When this check box is selected for a locality, only wages earned in that locality are considered taxable for residents of the locality. No resident tax is withheld from wages paid for work performed outside of the locality.
Graduated Tax Table Code	This option takes effect if the locality requires that tax tables be referenced during calculation, as do New York City, Yonkers, and Maryland counties. In this case, the graduated tax table code entered here links the record to the appropriate entry in the PeopleSoft Federal/State Tax table where the graduated tax rates are stored.

Tax Rate

Entering a Locality's Tax Reporting Requirements

Access the Local Tax Table 3 page (Set Up HRMS, Product Related, Payroll for North America, Local Taxes, Tax Table).

Tax Reporting	Displays the interval required by the locality for tax reporting, Monthly, Quarterly, or Annual.
W2 Electronic Reporting Name	Displays the locality name that TAX960LC uses on electronic reports for the CLMBS reporting agency. This field is visible only when the value in the W2 Reporting Agency field is CLMBS. See Year End Processing: U.S., Puerto Rico, and the U.S. Territories Guide

Important! If you add a locality, you are responsible for maintaining the entries on these tables for the new locality until PeopleSoft incorporates it into a tax update. Contact your Global Support Center if you discover any localities not listed or any errors so we can include the addition or correction in the next PeopleSoft Payroll Tax Update.

See Also

Accessing Year-End Processing Instructions

(USA) Managing Tax Reciprocity

To manage tax reciprocity, use the State Tax Reciprocity Table component (STATE_TX_RECIP_TBL), local Tax Reciprocity Table component (LOCL_TAX_RECIP_TBL), and the Work Locality Reciprocity component (LCLTX_WK_RECIP_TBL).

This section discusses how to:

• View state tax withholding reciprocity rules.

• View local tax reciprocity rules.

• View reciprocal agreements between work localities.

Pages Used to Manage State Tax Reciprocity

Viewing State Tax Withholding Reciprocity Rules

Access the State Tax Reciprocity Table page (Set Up HRMS, Product Related, Payroll for North America, Federal/State Taxes, State Tax Reciprocity Table).

Note. The State Tax Reciprocity Table page is used to set up any and all withholding tax relationships between an employee's residence state and employment state, to cover any situation where an employees lives in one state and works in another state. Although some of the table entries reflect formal reciprocal agreements between states, the majority of the table entries do not.

Note. If you're a multi-state employer, review the rules in this table, particularly if you can be considered a non-resident employer for certain employees. For example, Alabama requires that resident employers withhold Alabama tax on wages earned both inside and outside the state by Alabama residents. Non-resident employers must withhold on only those wages earned in Alabama, regardless of where the employee resides. The entries in the State Tax Reciprocity table—as delivered by PeopleSoft—assume that you are a resident employer in each state.

Viewing Local Tax Reciprocity Rules

Access the Local Tax Reciprocity Table page (Set Up HRMS, Product Related, Payroll for North America, Tax Table Reports, State Reciprocity Rules).

When the residence locality differs from the employment locality, the system calculates both taxes and applies the reciprocity rule from this table to produce the correct net withholding for the employee in each locality.

Viewing Reciprocal Agreements Between Work Localities

Access the Work Locality Reciprocity page (Set Up HRMS, Product Related, Payroll for North America, Local Taxes, Work Locality Reciprocity).

Other Jurisdiction

Local Work Tax Reciprocity Information

Reciprocity Rule

See Also

Maintaining Payroll Data

(USA) Updating the Taxable Gross Definition Table

To update the Taxable Gross Definition Table, use the Taxable Gross Definition Table component (TAXGR_DEFIN_TBL).

This section provides an overview of the Taxable Gross Definition table and discusses how to set up a taxable gross definition.

Understanding the Taxable Gross Definition Table

Taxing jurisdictions may have different rules as to whether a given type of earnings or deduction should be taxed, and whether or not the tax should be withheld at the time of payment. The Taxable Gross Definition table defines the taxability for specific earnings or deduction types that must be treated differently at the state or local level than at the federal tax level. It also enables you to specify whether the state and local income tax withholding follows the same rules as federal withholding.

This section discusses:

• Taxability.

• Withholding.

• Delivered entries on the Taxable Gross Definition table.

• Example of setting up an earning with state tax withholding but without federal tax withholding.

• Reference table of taxability and withholding setup.

Taxability

PeopleSoft Payroll for North America tracks these differences in taxability by documenting where the taxable wage definition of a particular jurisdiction differs from a standard definition for the following basic payroll tax types:

• Withholding

• Unemployment

• Disability

For each of these tax types, certain earnings and deductions are taxable at the state or local level, while others are not. What is taxable differs for each tax, so we have a separate standard definition for each type. Because most states and localities follow federal guidelines for taxing earnings, we use Federal income tax withholding, Federal unemployment, and FICA as the standard taxes from which to develop these rules.

The system automatically maintains federal taxable grosses, FWT, FICA, and FUT, based on entries in the Earnings table and Deduction table:

Normally, the system calculates state and local taxes using the following taxable grosses:

PeopleSoft uses the FUT gross as the starting point for SDI because most states do not publish any separate definition of subject wages for SDI. Instead, states treat the definition of wages for SDI purposes as the same as the definition of wages for SUI purposes. Since SUI wages are based on FUT wages, and SDI subject wages are the same as SUI wages, FUT is the starting point for determining both SUI and SDI wages.

You can override or establish exceptions to the federal definitions of taxable gross for the following taxable grosses:

• State withholding

• State unemployment

• State disability

• Local withholding

When a state or locality declares that taxability of a certain earnings or deduction is different from one of these federal standards, a rule must be placed in the Taxable Gross Definition table indicating the deviation. The system uses the rules stored in the Taxable Gross Definition table to adjust the taxable gross for the states and localities that deviate from the federal norm.

For each of these taxable gross definitions, identify a Taxable Gross Component ID and assign it to the various states or localities affected.

Withholding

When you set up earnings and taxable benefits that are federally taxable, you specify whether or not that amount should also be subject to federal income tax withholding using:

• The Subject to FWT field on the Earnings Table - Taxes page.

• The Withhold FWT field on the Deduction Table – Tax Effect page.

Use the Withholding Follows Fed Rules (withholding follows federal rules) field on the Taxable Gross Definition Tbl page (TAXGR_DEFIN_TBL) to specify whether the state and local income tax withholding follows the same rules as federal withholding.

Note. You must create a Taxable Gross Definition table entry when you want to stop state or local income tax withholding on a particular earnings or taxable benefit. This is true regardless of whether or not the state or locality follows the federal rule for including the amount in taxable income, and regardless of whether or not you have selected to withhold federal income tax on the earnings or taxable benefit.

Delivered Entries on the Taxable Gross Definition Table

PeopleSoft delivers sample entries on the Taxable Gross Definition table for 401(k), Section 125, TIP, domestic partner benefits (DPB), group-term life (GTL), Health Savings Account (HSA), and Health Savings Account employer contribution (HSR) taxable gross definitions. These sample entries are intended as examples and are delivered with the Plan Type element blank and the Deduction Code set to $DFLT. You must review these entries and update them with the specific values for your implementation. You maintain any taxable gross definitions that you add.

For Section 125 cafeteria plans, the taxable gross definitions are for employee deductions only. You may have to set up your own entries to process specific parts of your plan. In some states, the taxability of deductions depends on whether the employee has the option of receiving cash.

Review the definitions in this table carefully with regard to your particular 125 plans.

How Taxable Gross Definitions Affect Earnings and Deductions

The standard definition of taxability of an earnings or deduction type is determined by entries on the Earnings and Deduction tables. When establishing an entry on these tables, you specify if the earning or deduction is to be taxed for FWT, FUT, and FICA. Any earnings and deductions you marked as taxable are totaled during payroll processing to determine an employee's taxable gross for each of the standard tax types. For earnings or deduction types that increase or decrease the state or local taxable grosses compared to the federal taxable gross, enter a taxable gross component ID that identifies which rules on the Taxable Gross Definition table to use.

For example, Pennsylvania considers employee before-tax 401(k) contributions taxable for state withholding, whereas they are not taxed at the federal level. Therefore, you must have a Taxable Gross Definition for 401(k) deductions that indicate to the payroll calculation programs that when taxable gross for withholding is determined, 401(k) deductions should be included as earnings for Pennsylvania (but not for federal) withholding purposes.

Example of Setting Up an Earning with State Tax Withholding but Without Federal Tax Withholding

Take a hypothetical example of moving expenses in the state of Pennsylvania. This example assumes the following:

• Certain types of moving expense reimbursement payments that you make to Pennsylvania employees are includable in taxable gross at both the federal and state level.

• Federal regulations do not require that federal income tax be withheld from these moving expense reimbursement payments.

• Pennsylvania regulations do require that Pennsylvania income tax be withheld from these amounts at the time of payment.

In this case, state withholding does not follow the federal rules.

The following table illustrates these assumptions:

To define the moving expense earnings with the proper tax and withholding effects:

1. Define a Taxable Gross Component ID (here named MOV) to identify these moving expense reimbursement payments that require different tax treatments at the federal and state levels.

   This table shows the relevant page elements and values on the Taxable Gross Definition Table page:

   Page Element	Value	Explanation
   Taxable Gross	Withholding
   Base Gross	FWT
   Taxable Gross Component ID	MOV
   Withholding Follows Fed Rules	deselect the check box.	You do not want state tax withholding to follow the selection you will make for the Subject to FWT check box on the Earnings Table - Taxes page for these moving expense reimbursement amounts. You do not want federal income tax withheld on this earnings type, but you do want Pennsylvania income tax withheld.
   Tax Gross Effect	No Effect	The earnings type is to be included in both the federal and Pennsylvania taxable grosses.

2. Enter the Taxable Gross Component ID when you set up the earnings on the Earnings Table - Taxes page.

   This table shows the relevant page elements and values for setting up this moving expense reimbursement earning on the Earnings Table - Taxes page:

   Page Element	Value	Explanation
   Earnings Type	MOV
   Earnings Description	Mov Exp Reimb – No Fed W/H	Moving expense reimbursement without federal withholding
   Tax Method	Annualized
   Subject to FWT	Selected
   Taxable Gross Component ID	MOV	You must set up the taxable gross component ID before you can select it on this page.
   Add to Gross Pay	Selected
   Maintain Earnings Balances	Selected

Reference Table of Taxability and Withholding Setup

Use the table below to look up the table entries for any combination of federal and state/local taxing options that you might need for a particular earnings or taxable benefit. The table lists the correct values in the relevant fields on the Earnings table, Deduction table, and Taxable Gross Definition table.

Row 6 contains the setup values for the MOV earnings described in the example.

See Also

Defining Earnings Codes and Earnings Programs

Defining Deductions

Pages Used to Update the Taxable Gross Definition Table

Setting Up a Taxable Gross Definition

Access the Taxable Gross Definition Table page (Set Up HRMS, Product Related, Payroll for North America, Federal/State Taxes, Taxable Gross Definition Table, Taxable Gross Definition Table).

Taxable Gross

Adjustment to Base Gross

This scroll area lists the specific components for which adjustments are necessary.

See Also

Defining Deductions

(USA) Viewing State Marital Status Codes

To view state marital status codes, use the SWT Marital Status Table component (SWT_MAR_STATUS_TBL).

This section discusses how to view a state's marital status codes.

Pages Used to View a State's Marital Status Codes

(CAN) Viewing Canadian Tax Tables

To view Canadian tax tables, use the Canadian Tax Table component (CAN_TAX_TABLE).

This section provides an overview Canadian tax tables and discusses how to:

• View the wage thresholds and rates for calculating Canadian federal surtax.

• View the rates, thresholds, and constants to determine withholding of Canadian provincial taxes.

Understanding Canadian Tax Tables

The Canadian Tax tables are used during payroll calculation to compute all federal, provincial, and Quebec taxes. Because these tables are maintained largely by PeopleSoft and updated based on the standards outlined in the Canada Revenue Agency (CRA) publication Payroll Deductions Formulas for Computer Programs and the Revenu Quebec publication Guide for Employers: Source Deductions and Contributions, you shouldn't need to modify them. However, you can make changes using the Canadian Tax Table pages if you have the appropriate security authorization.

Pages Used to View Canadian Tax Tables

Viewing the Wage Thresholds and Rates for Calculating Canadian Federal Surtax

Access the Tax Rates, Credits and Other page (Set Up HRMS, Product Related, Payroll for North America, Canadian Taxes, Tax Table, Tax Rates, Credits, and Other).

Other

Labor Sponsored Funds (LCF)

Viewing the Rates, Thresholds, and Constants to Determine Withholding of Canadian Provincial Taxes

Access the Provincial Rates page (Set Up HRMS, Product Related, Payroll for North America, Canadian Taxes, Tax Table, Provincial Rates).

Maximum LCP Credit	For provinces where provincial labor-sponsored venture tax credits are available, you maintain the maximum LCP credit amount to be applied for that province on this table. This applies to employee purchases of shares in Labour Sponsored Venture Capital Corporations (LSVCC).
LCP Rate	For provinces where provincial labor-sponsored venture tax credits are available, you maintain the LCP rate to be applied for that province on this table. This applies to employee purchases of shares in Labour Sponsored Venture Capital Corporations (LSVCC).
Health Insurance Rate	You override the default health insurance rate on the Canadian Company Tax table.

See Also

Setting Up the Canadian Company Tax Table

(CAN) Setting Up Wage Loss Plans

To set up wage loss plans, use the Wage Loss Plan (WAGELS_PLN_TBL) component

This section provides an overview and discusses how to set up wage loss plans.

Understanding Wage Loss Plans

The Canadian Wage Loss Plan table identifies valid Canadian wage loss replacement plans. The Wage Loss Replacement Plan field in the Canadian Income Tax Data table at the employee level is edited against this table. You must create entries on this table before you enter any Canadian tax data for your employees.

You must set up at least one entry on the Wage Loss Plan table for each company. Typically, you create this entry using the default EI Employer Rate and corresponding Quebec EI Employer Rate. You must define additional entries for each wage loss plan your company has registered with CRA.

Pages Used to Set Up Wage Loss Plans

Defining Wage Loss Plans

Access the Wage Loss Plan Table page (Set Up HRMS, Product Related, Payroll for North America, Canadian Taxes, Wage Loss Plan Table, Wage Loss Plan Table).

Wage Loss Plan Information

(CAN) Defining Canadian WCB Assessment Reporting

To define Canadian WCB assessment reporting, use the WCB Classifications Component (CAN_WCB_CU_RATES). Use the CAN_WCB_CU_RATES component interface to load data into the tables for this component.

This section provides an overview of Canadian WCB assessment reporting and discusses how to:

• Define WCB assessable earnings.

• Define WCB classifications, rate groups, and assessment rates.

Understanding Canadian WCB Assessment Reporting

PeopleSoft Payroll for North America enables employers registered with the Workers' Compensation Boards (WCB) in Canada to report and pay assessments based on the total assessable earnings of their workers. The system accommodates the assessment reporting structures of all provinces. This functionality enables the reporting of assessments by rate groups and classification units.

Pages Used to Define Canadian WCB Assessment Reporting

Defining WCB Assessable Earnings

Access the Tax Form Definitions page (Payroll for North America, Year-End Processing CAN, Define Annual Tax Reporting, Tax Form Definitions, Tax Form Definitions).

To define WCB assessable earnings:

1. Establish a new Tax Form ID—WCB Assessable Earnings—and the associated tax form Boxes for each province on the Tax Form Definition page.

   The Boxes reflect the two-letter province code, preceded by a W.

2. Define and associate the assessable Earnings and Deduction Codes for each province with the WCB Assessable Earnings Tax Form ID.

   Select the applicable provinces and define the assessable earnings.

   The Earnings Codes defined as Regular Hours and Overtime Hours on the Pay Group table are automatically accumulated by the system as assessable earnings without defining them on the Tax Form Definitions page.

3. Associate the WCB Assessable Earnings tax form ID with the appropriate Plan Type, Deduction Code, Deduction Class, Sales Tax, and Earnings Code.

   Note. The earnings codes defined as Regular Hours and Overtime Hours on the Pay Group table are automatically accumulated by the system as assessable earnings without defining them on the Tax Form Definitions page.

See Also

Accessing Year-End Processing Instructions

Define WCB Classifications, Rate Groups, and Assessment Rates

Access the WCB Classifications page (Set Up HRMS, Product Related, Payroll for North America, Canadian Taxes, WCB Classifications).

This page can accommodate both a single classification assigned to a single province and multiple Rate Groups associated with multiple classifications (or CUs) for a single province.

(USF) Setting Up State and Locality Tax Routing

To set up state and locality tax routing, use the State Tax Routing USF component (GVT_STATE_TAX_ROUT) and the Locality Tax Routing USF component (GVT_LOC_TAX_ROUT).

This section lists the pages used to set up state and locality tax routing.

Pages Used to Set Up State and Locality Tax Routing

(E&G) Setting Up 1042 Processing for Non-resident Aliens

To establish 1042 processing for non-resident aliens, use the Treaty/NR Alien Table component (TREATY_NR_ALIEN_TA).

This section provides an overview of tax treaties and discusses how to set up 1042 processing for non-resident aliens.

Understanding Tax Treaties

The U.S. government has entered into tax treaties with nearly 40 foreign jurisdictions. Income tax treaties coordinate the tax systems of the United States and other countries that are parties to treaties. Treaty provisions affect the taxation of non-resident aliens working in the U.S. While tax treaties are generally based on a standard model, each treaty might have slightly different provisions.

In addition to employees covered by tax treaties, you must also report earnings on a 1042-S form for some non-resident alien employees, such as those with specific types of earnings such as scholarships, fellowships, and grants.

Employee and Employer Requirements

To claim benefits of a treaty, an employee must have a visa and be a resident of one of the treaty countries. An employee can claim benefits of only one treaty at any given time. Employees who want to claim benefits under a tax treaty must submit a written statement and applicable forms (W-4, Form 8233, Form 1001) to their employer.

As an employer, you must apply the specific treaty rules when calculating federal withholding tax. These rules often include time limits and earnings caps. Different types of earnings, such as scholarships, grants, and fellowships, might be subject to different taxation rates. You must produce a Form 1042-S and a 1042 summary form for each non-resident alien employee affected by the special withholding rates. If you file 250 or more 1042-S forms, you must report on magnetic media. Earnings reported on a 1042-S are not reported on a W-2; so, an employee may need both a W-2 and a 1042-S if some earnings are covered by the special tax treaty rates and some are not.

Tax Treaty Setup in Payroll for North America

Use the NR Alien Tax Treaty Table page to capture the tax rates specified in tax treaties (including exempt earnings, which are recorded with a 0% tax rate). This table identifies those earnings subject to a 30% flat withholding tax.

If you employ nonresident aliens from countries that do not have a tax treaty with the U.S., set up a record with NO TREATY as the treaty ID. You can either set up a record for each country that does not have a treaty, or one record for all countries without treaty. You must also identify these employees as nonresident aliens on their federal tax data records.

Note. PeopleSoft re-delivers the tax treaty table with each major version and, if required, with the year-end Tax Update. If interim changes are required, you must track and apply the changes in your environment.

See Also

Entering Federal Tax Data

Pages Used to Set Up 1042 Processing for Non-Resident Aliens

Setting Up the NR Alien Tax Treaty Table

Access the NR Alien Tax Treaty Table page (Set Up HRMS, Product Related, Payroll for North America, Federal/State Taxes, NR Alien Tax Treaty Table, NR Alien Tax Treaty Table).

Country	If you want to establish entries on the NR Alien Tax Treaty table that are applicable to more than one country (for example, to use for all scholarship income that is to be taxed at 30%, or for countries that do not have a treaty), you can use any value prefixed by a $ in the country code (for example, Country = $S).
Treaty ID	For countries that do not have a treaty agreement with the U.S., enter NO TREATY in this field on the search page.
Allowances Permitted	For each tax treaty record you establish, specify the number of allowances permitted by the treaty. The system issues an error message when the employee's claimed allowance is over the maximum allowance permitted. For countries with no treaty, enter 1.
Income Code (for 1042-S)	Select each type of earnings subject to special tax treatment under the treaty.
Max Earnings Eligible Per Year	Specify the earnings caps that apply for each earnings type.
Tax Rate After Form Received	Specify the taxation rates that apply for each earnings type.
Tax Rate Before Form Received	Specify the taxation rates that apply for each earnings type.

See Also

Entering Federal Tax Data

(USA) Establishing UI Report Codes

To establish UI report codes, use the UI Report Code Table component (CO_UI_RPTCD_TBL).

This section provides an overview and discusses how to set up UI report codes.

Understanding UI Report Codes

Information you enter on the UI Report Code Table page works with the Multiple Worksite Report (TAX004) to link a tax location code to a UI report code. When you add an entry to the UI Report Code table, the system prompts you to enter the company code and the location code of the site you want to establish for reporting worksite information to the U.S. Bureau of Labor Statistics.

Exceptions for MI and MN

Most states do not require the reporting of multiple worksite data at the individual state level if the information is consolidated and reported to the U.S. Bureau of Labor Statistics. However, the states of Michigan and Minnesota do require that this data be reported individually as part of the quarterly unemployment wage reporting using these reports:

• TAX810MN for commercial and E&G customers.

• TAX810MI for E&G customers only.

The TAX810MN and TAX810MI reports append the employer ID extension to Employer SUT ID (from the Company State Tax table) as a unique ID for reporting purposes.

Page Used to Establish UI Report Codes

Setting Up UI Report Codes

Access the UI Report Code Table page (Set Up HRMS, Product Related, Payroll for North America, Federal/State Taxes, UI Report Code Table, UI Report Code Table).

Company UI Information

(USA) Establishing Standard Occupational Classifications

To establish standard occupational classifications for Alaska, use the U.S. SOC Table component (US_SOC_TBL). Use the US_SOC_TABLE component interface to load data into the tables for this component.

This section discusses how to set up U.S. standard occupation classifications.

Page Used to Establish U.S. Standard Occupational Classifications

Setting Up U.S. Standard Occupational Classifications

Access the U.S. SOC Table page (Set Up HRMS, Product Related, Payroll for North America, Federal/State Taxes, U.S. SOC Table).

Note. Use the Job Code table to link Standard Occupational Classification codes with particular job codes in your organization. If your organization has employees in both Alaska and Wyoming, you must set up unique job codes for these two states because the SOC codes on this table are used differently in these two states.

(USA) Specifying Voluntary Disability Insurance Plan Location and Contact Information

To specify voluntary disability insurance plan location and contact information, use the VDI/FLI Administrator Table component (VDI_ADMINISTRATOR).

This section lists the pages used to enter voluntary disability insurance plan location and contact information.

Pages Used to Enter Voluntary Disability Insurance Plan Location and Contact Information

Entering VDI/FLI Administrator Information

Access the VDI/FLI Administrator Table page (Set Up HRMS, Product Related, Payroll for North America, Federal/State Taxes, VDI/FLI Administrator Table, VDI/FLI Administrator Table).

Note. After you've established your VDI and FLI administrators, assign administrators to their voluntary plans on the Company State Tax Table - VDI/FLI page.

(USA) Specifying Parameters for Quarterly Tax Reporting

To specify parameters for quarterly tax reporting, use the Tax Reporting Parameters component (TAX_RPT_PARAMETERS).

This section discusses how to define parameters for quarterly tax reporting:

Page Used to Specify Parameters for Quarterly Tax Reporting

Defining Parameters for Quarterly Tax Reporting

Access the Quarterly Tax Reporting Parameters page (Payroll for North America, U.S. Quarterly Processing, Define Quarterly Tax Reporting, Tax Reporting Parameters, Quarterly Tax Reporting Parameters).

Balances for Year	The value you enter here defines the reporting period.
Balances for Quarter	The value you enter here defines the reporting period.

Electronic Mag Media Rpt Parms

Setting Up Tax Types for PeopleSoft Enterprise Payables Integration

To set up tax types for PeopleSoft Enterprise Accounts Payables integration, use the Tax Type Table USA component (TAX_TYPE_TBL), Tax Type Table USF component (TAX_TYPE_TBL), or Tax Type Table CAN component (CAN_TAX_TYPE), the State Tax Types/Classes USA component (STAT_TAX_TYPE_TBL) or State Tax Types/Classes USF component (STAT_TAX_TYPE_TBL), and the Local Tax Types/Classes USA component (LOCL_TAX_TYPE_TBL) or Local Tax Type/Classes USF component (LOCL_TAX_TYPE_TBL). Use the TAX_TYPE_TABLE component interface to load data into the tables for the Tax Type Table USA component and Tax Type Table USF component

This section provides an overview of tax types for accounts payable integration and discusses how to:

• (CAN) Define Canadian federal and provincial tax types.

• (USA) Link tax types to federal or state tax vendors and tax classes.

• (USA) Link tax types to local tax vendors and tax classes.

• Maintaining the Tax Collector table for Payables.

See Also

Integrating with PeopleSoft Payables

Understanding Tax Types for PeopleSoft Accounts Payable Integration

If you plan to use PeopleSoft Accounts Payable to send tax authorities the taxes deducted from employees' paychecks, you must link the appropriate set of deductions to each tax vendor.

Tax types are used to link tax classes to vendors. A tax type represents a collection of tax classes, such as withholding, earned income credit, and so on, specific to a particular tax jurisdiction (federal, state, local, provincial).

Setting up tax types and linking them to vendors is done differently for the U.S. and Canada.

• Canada

  Use the Canadian Tax Types page to name the tax type and link it to tax classes and vendors.

• U.S.A.

  1. Define tax types on the Tax Type Table page.

  2. Link tax types to tax classes and vendors on the AP State Tax Types/Classes Table page or the AP Local Tax Types/Classes page.

Example

In the state of California, employees are subject to two taxes for short-term disability: SDI (paid to the state) and OASDI (paid to the federal government). Each tax is comprised of a different set of tax classes. In this case, you might create a tax type named Short-Term disability. You would then access the Fed/State Tax Type/Classes page and define what Short-Term Disability represents at the federal level: For the vendor, you select the Internal Revenue Service; for the tax classes you select only those included in OASDI. You then repeat the process to define Short-Term Disability at the state level. This time, you select the Franchise Tax Board as the vendor and just those tax classes that contribute to SDI.

Pages Used to Set Up Tax Types for PeopleSoft Accounts Payable Integration

(CAN) Defining Canadian Federal and Provincial Tax Types

Access the Canadian Tax Type Table page (Set Up HRMS, Product Related, Payroll for North America, AP - Tax Types/Classes, Tax Type Table CAN, Tax Type Table).

Source	Select the type of tax transaction from the options available. Values include Goods and Services Tax, Health and Payroll Taxes, Provincial Sales Tax, or Statutory Deductions.
Province	If you chose Provincial Sales Tax in the Source field, select the Province in this field.
Tax Class	Select the tax class you want to associate with this tax type and vendor from the options available. Add all applicable tax classes. The Source field determines which tax classes are available for selection. If Goods and Services Tax is selected, only federal sales tax types are allowed: G (GST) and H (HST). If Health and Payroll Taxes is selected, only health and payroll tax types are allowed: HTX and PYT. If Provincial Sales Tax is selected, only provincial sales tax types are allowed: I (PSTI), P (PST), Q (QSTI), S (QST), T (PPT), and U (QPT). If Statutory Deductions is selected, only income related tax types are available: CIT, CPP, CPR, EIE, EIR,QIE, QIR, QIT, QPP, QPR, RV2 and T4A.

See Also

Setting Up Vendors

(USA) Linking Tax Types to Federal or State Vendors and Tax Classes

Access the AP State Tax Types/Classes Table page (Set Up HRMS, Product Related, Payroll for North America, AP - Tax Types/Classes, State Tax Types/Classes USA, AP State Tax Types/Classes Table).

Note. Enter $U in the search page to enter federal tax type information.

(USA) Linking Tax Types to Local Vendors and Tax Classes

Access the AP Local Tax Types/Classes page (Set Up HRMS, Product Related, Payroll for North America, AP - Tax Types/Classes, Local Tax Types/Classes USA, AP Local Tax Types/Classes).

The fields on this page are the same as those on the AP State Tax Types/Classes Table page.

See (USA) Linking Tax Types to Federal or State Vendors and Tax Classes.

Maintaining the Tax Collector Table for Payables

Access the Vendor Information page (Set Up HRMS, Product Related, Payroll for North America, Federal/State Taxes, Tax Collector Table, Vendor Information).

Set up tax collectors as vendors using the Tax Collector Table (TAX_COLLECTOR_TBL) component or the Vendor Table component (VNDR_ID).

After entering information about the tax-collecting agency, enter the vendor code on the Local Tax Type-Classes page for .

Maintaining the Tax Collector Table for Pennsylvania

For each municipality and overlying school district, the State Tax Register lists the effective rates for both Earned Income and Emergency and Municipal Service taxes for residents and, when applicable, non-residents. Earned income and emergency and municipal service tax collector information for each municipality and school district are also listed. In some instances, there are different tax collectors for the municipality and the school district. When this occurs, employers must remit the school district's tax to its collector and the municipality's tax to its collector.

See Also

Setting Up Vendors

Setting Up Tax Types for PeopleSoft Enterprise Payables Integration