This chapter discusses how to:
Allocate tips.
Administer U.S. Savings Bonds purchases.
Adjust imputed income for U.S. group-term life insurance.
(E&G) Certify time and effort.
See Also
(USA) Setting Up Additional U.S. Payroll Functionality
Setting Up for FLSA Calculation
This section provides overviews of the tip allocation process and tip allocation calculation methods, lists prerequisites, and discusses how to:
Enter employee tip allocation data.
Select the tip allocation end date.
Calculate allocated tips.
Update allocation balances.
View allocations for an establishment.
Review the tips allocation process status.
Most large hospitality industry employers must report additional information to the Internal Revenue Service (IRS) concerning the establishment's receipts and the employees' tip incomes, by establishment. A large establishment is one that employs more than 10 people on a typical business day.
Tip allocation is required when the amount of tips reported by tipped employees for a pay period is less than a specified percentage of the establishment's gross receipts for that period. The amount that you allocate is the difference between the total reported tips and the specified percent of the establishment's gross receipts. You can apply for a lower percentage, if you can show, in writing, that the tip rate at the establishment is less than the specified percent.
Each tip establishment allocates tips. An establishment is an individual restaurant, hotel, and so on, at a unique location. If a company has 15 restaurants, it allocates tips separately for each restaurant. In addition, allocated tips are not subject to withholding; therefore, the system does not withhold taxes. However, the system maintains the year-to-date allocated tips shortfall balance and reports it on the employee's Form W-2. Also, the system reports allocated tips on the paycheck stub as memo earnings because memo earnings do not add to the check gross and are not included in taxable grosses.
The tip allocation process consists of four steps:
Calculate the allocated tips.
Use the Structured Query Report (SQR) reports to check the results.
You can calculate allocated tips any number of times for an allocation date before approving the calculation.
Approve the tip allocation results.
After you approve the calculation for an allocation date, you cannot recalculate for that date.
Update the allocated tip balances.
Allocated tips must be approved before the balances can be updated.
Reporting on the Tip Allocation Process
The system provides the following tip allocation reports:
Allocation Earnings (PAY052)
Employee Gross Receipts (PAY055)
Allocation by Establishment (PAY050)
Allocation by Employee (PAY051)
See Also
PeopleSoft Enterprise Payroll for North America Reports
There are three acceptable tip allocation calculation methods:
Gross receipts
Hours worked
Good faith agreement
In each method, the company allocates tips once per month, quarterly, annually, or for each pay period.
This method calculates an allocation amount for each directly tipped employee, using the gross receipts that are attributable to directly tipped employees. These steps are based on Form 8027.
To use the gross receipts method:
Calculate the allocation base for an allocation period:
gross receipts in that period × specified percent
Calculate the tipped employee allocation base:
allocation base − total tips reported by indirectly tipped employees
For each directly tipped employee, calculate the employee's gross receipt ratio:
total gross receipts for all tipped employees / gross receipts attributable to the employee
Calculate the employee's share of the allocation base:
tipped employee allocation base × employee's gross receipt ratio
Calculate the employee's shortfall:
employee's share of the allocation base − employee's reported tips
If the amount is less than zero, it is considered zero.
Calculate the total shortfall by summing all employees' shortfall amounts.
Calculate the total tips by summing all the tips that are reported by directly and indirectly tipped employees.
Calculate the total allocation amount:
allocation base − total tips
Calculate the employee's shortfall ratio:
employee's shortfall / total shortfall
Calculate the employee's allocated amount:
total allocation × employee's shortfall ratio
This method calculates an allocation amount for each directly tipped employee using the hours that are worked by the employee.
Note. Only establishments that employ fewer than 25 employees (tipped and nontipped) during a pay period can use this method.
To use the hours worked method:
Calculate the allocation base for an allocation period:
gross receipts in that period × specified percent
Calculate the tipped employee allocation base:
allocation base − total amount of tips reported by indirectly tipped employees
For each directly tipped employee, calculate the employee's hours worked ratio:
employee's total hours worked during this period / total hours worked by all tipped employees that worked during this period
Calculate the employee's share of the allocation base:
tipped employee allocation base × employee's hours worked ratio
Calculate the employee's shortfall:
employee's share of the allocation base − employee's reported tips
If the amount is less than zero, it is considered zero.
Calculate the total shortfall by summing all employees' shortfall amounts.
Calculate the total tips by summing all tips that are reported by both directly and indirectly tipped employees.
Calculate the total allocation amount:
allocation base − total tips
Calculate the employee's shortfall ratio:
employee's shortfall / total shortfall
Calculate the employee's allocated amount:
total allocation amount × employee's shortfall ratio
A good faith agreement is a written agreement between the employer and at least two-thirds of the employees in each occupational category that receives tips (for example, waiters, waitresses, and bus persons). The agreement must provide an allocation of the difference between total tips reported and the specified percent of the gross receipts among the tipped employees. The company decides how to configure the system to allocate tips; however, the formula the company creates must allocate tips based on the actual distribution of tip income among the employees.
Before you can allocate tips, you must set up the following information for tipped employees:
Company table.
Pay Group table.
Federal and state Tax table.
Tip Establishments table.
General earnings code information.
Earnings code tax information.
Earnings code tax calculation information.
Job Data record.
Form W-2.
See Also
Setting Up the Payroll System for Tip Allocation
Page Name |
Definition Name |
Navigation |
Usage |
TIPS_EMPL_INPUT |
Payroll for North America, Periodic Payroll Events USA, Tip Allocation, Update Employee Gross Receipts, Update Employee Gross Receipts |
Specify the gross receipts to which an employee's tips apply in each tip establishment. |
|
TIPS_ALLOC_PD |
Set Up HRMS, Product Related, Payroll for North America, Tip Allocation, Allocation End Date, Tip Allocation End Date |
Select the end date for the tip allocation. Use the same pay end date as your allocation end date. |
|
RUNCTL_TIPS_ALLOC |
Payroll for North America, Periodic Payroll Events USA, Tip Allocation, Calculate/Approve Allocation, Calculate/Approve Tip Allocation |
Run the Run Tip Allocation COBOL SQL process (PSPTARUN), and (after you are satisfied with the results) approve the allocated tips. |
|
RUNCTL_TIPS_ALLOC |
Payroll for North America, Periodic Payroll Events USA, Tip Allocation, Update Allocation Balances, Update Tip Allocation Balances |
Run the Update Allocation Balances SQR Report process (PAY053) and produce the Update Allocations Balances audit report. The report lists, by employee, the current allocation amount, the year-to-date (YTD) allocation amount after the current update, the YTD hours (if tip allocation method is hours), and the allocated tips earnings code that is updated. Before using this page, you must approve the allocated tips calculation. |
|
TIPS_EMPL_PD |
Payroll for North America, Periodic Payroll Events USA, Tip Allocation, Review Allocation by Employee, Review Tips Allocation by Employee |
View the record of an individual employee's allocations. |
|
RUNCTL_TIPS_ALLOC |
Payroll for North America, Periodic Payroll Events USA, Tip Allocation, Allocation by Employee Report, Tip Allocation by Employee Report |
Generate the PAY051 report, which lists tip employees, sorted by establishment. |
|
RUNCTL_TIPS_ALLOC |
Payroll for North America, Periodic Payroll Events USA, Tip Allocation, Allctn by Establishment Report, Tip Allocation by Establishment Report |
View tip allocation data, by employee, for an establishment. Use the subtotals on this page for troubleshooting. |
|
RUNCTL_TIP_PAY055 |
Payroll for North America, Periodic Payroll Events USA, Tip Allocation, Employee Receipt Report, Employee Receipt Report |
Generate the PAY055 report, which lists gross receipts for each employee in a selected time period, sorted by input date. Also provides subtotals for each tip establishment and total receipts for the company. |
|
TIPS_ESTAB_PD |
Payroll for North America, Periodic Payroll Events USA, Tip Allocation, Review Allctns by Establishment, Review Tips Allocations by Establishment |
Generate the PAY050 report, which lists tip allocation information for establishments. |
|
TIPS_ALLOC_ST |
Payroll for North America, Periodic Payroll Events USA, Tip Allocation, Review Allocation Status, Review Tips Allocation Status |
Review the status of the tip allocation process for a company. |
|
RUNCTL_TIP_PAY |
Payroll for North America, Periodic Payroll Events USA, Tip Allocation, Balance Verification Report, Balance Verification Report |
Generate the PAY052 report, which lists directly tipped employees and their YTD and pending allocated tips. This is a point-in-time report of all employees with allocated tips, sorted by company. |
Access the Update Employee Gross Receipts page (Payroll for North America, Periodic Payroll Events USA, Tip Allocation, Update Employee Gross Receipts, Update Employee Gross Receipts).
Input Date |
Enter the input date, which should be between the start date and the end date (posted date) of the period for which you're calculating or approving the tip allocations. |
Employment Record (employment record number) |
Enter an employment record number for employees with multiple jobs. |
Receipts Data
Gross Receipts |
Enter the gross receipts to which the employee's tips apply. |
Access the Tip Allocation End Date page (Set Up HRMS, Product Related, Payroll for North America, Tip Allocation, Tip Allocation End Date, Tip Allocation End Date).
Posted Date |
This date must match the date that is entered on the run controls for calculating allocated tips and for updating the balances. |
Access the Calculate/Approve Tip Allocation page (Payroll for North America, Periodic Payroll Events USA, Tip Allocation, Calculate/Approve Allocation, Calculate/Approve Tip Allocation).
Posted Date |
Select the end date of the period for which you're calculating or approving the tip allocations. |
Start Date |
Select the start date of the period for which you're calculating or approving the tip allocations. |
Calculate Allocated Tips |
Select to run or rerun the calculation process. You can run the calculation process as many times as you like until you run the approve process. After you run the approve process, you cannot run the calculation process again for that company and allocation date. |
Approve Allocated Tips |
After you check the results of the calculation process, and you are satisfied with the calculation, select this check box to run the approve process. |
Access the Review Tips Allocation by Employee page (Payroll for North America, Periodic Payroll Events USA, Tip Allocation, Review Allocation by Employee, Review Tips Allocation by Employee).
Note. You can view all the allocations of an individual employee even if that employee has allocations for more than one establishment. This page is display-only.
Access the Update Tip Allocation Balances page (Payroll for North America, Periodic Payroll Events USA, Tip Allocation, Update Allocation Balances, Update Tip Allocation Balances).
Company |
Enter the company which you are updating tip allocation balances. |
Posted Date |
Select the end date of the period for which you're updating tip allocation balances. The value comes from the Tip Allocation End Date page. |
Access the Review Tips Allocations by Establishment page (Payroll for North America, Periodic Payroll Events USA, Tip Allocation, Review Allctns by Establishment, Review Tips Allocations by Establishment).
Note. Access the Review Tips Allocation by Employee page to view allocations for an individual employee.
Access the Review Tips Allocation Status page (Payroll for North America, Periodic Payroll Events USA, Tip Allocation, Review Allocation Status, Review Tips Allocation Status).
Tips Allocation Status
This group box indicates the company's tip allocation status as of the allocation end date.
Note. At the end of the process, all boxes should be selected as complete for that cycle.
This section provides an overviews of U.S. Savings Bonds purchase administration and discusses how to:
Enter bond purchase data.
View bond purchase and amount activity.
Produce magnetic media output in Federal Reserve System format.
(USF) Produce magnetic media output in Federal Reserve System format for U.S. Federal Government.
Cancel bonds.
As part of their employee benefits package, many employers offer their employees the opportunity to purchase U.S. Savings Bonds through a Payroll Savings Plan. PeopleSoft delivers the U.S. Savings Bond table complete with all savings bond types that employees can purchase through a payroll deduction. The system uses this table to edit employee bond specifications and to process bonds during pay confirmation.
Bond Purchases
Payroll for North America enables you to:
Keep track of bond owners, beneficiaries, and purchase distribution information.
Deduct the appropriate installments from employee paychecks.
Define different deduction characteristics for each pay group within your company.
Track the accumulation of funds for each denomination, for each bond owner.
Automatically process the resultant deduction amounts and goal balances for:
Deductions from employees' pay.
Compliance with annual purchase limits.
Reporting.
Magnetic media output in Federal Reserve System format.
Enable the employee to purchase multiple bonds, using a single general deduction.
Track bond purchases, and suspend purchases when an employee or other owner reaches the annual purchase limit for a bond series.
The Bond Purchases report (PAY016A and FGPY011A), lists all bonds that have been purchased since the report was last run. The system marks a bond as having been purchased (that is, when the employee's deductions are sufficient to cover the cost of the bond) by setting the BOND_LOG_STATUS to R (ready to purchase) in the PS_BOND_LOG table. The Bond Purchases report SQR selects all Bond Log rows with a BOND_LOG_STATUS of R and prepares the report. It then sets the status to D (disbursed) for each row that is selected. The report also identifies relevant information on co-owners and/or beneficiaries.
PAY016A or FGPY011A also prepares a Bond Purchase file; each transaction contains the fields shown in the following table:
Field |
Number of Positions |
Denomination |
5 positions |
No. of Bonds Purchased |
3 positions |
Purchase Date |
6 positions − YYMMDD |
Owner Name |
30 positions |
Owner SSN |
9 positions |
Other Registrant Name |
30 positions; optional field |
Other Registrant SSN |
9 positions |
Other Registrant Type |
1 position; optional field |
You can change this format to accommodate your particular interface requirements.
Annual Purchase Limits for U.S. Savings Bonds
The U.S. Department of the Treasury imposes an annual limit on U.S. Savings Bond purchases. This limit is imposed per social security number, and applies separately to Series EE and Series I savings bonds. In the PeopleSoft system, the limit is specified on the U.S. Savings Bond Table page.
Note. Oracle delivers all information for U.S. Bonds. You do not have to enter the annual limit on the U.S. Savings Bond Table page.
PeopleSoft Payroll for North America suspends bond purchases for a Bond ID/Owner combination that has reached the annual purchase limit (or for a Bond ID/Owner combination that would exceed the limit if an additional bond were purchased), and automatically refunds to the employee any undisbursed funds associated with suspended bond purchases.
Although the system automatically suspends bond disbursements, it does not automatically stop bond deductions. To stop future bond deductions when bond purchases have been suspended, either delete the U.S. Savings Bond Specification record associated with the suspended bond purchase or end the General Deduction for bond purchases.
See Cancelling Bonds.
To help you identify employees who have reached annual bond purchase limits, use the U.S. Savings Bond Suspensions report (PAY058).
To support refund processing for employees who reach the annual purchase limit or who cancel their bond deductions, you must set up an earnings code for bond refunds and enter it in the Refund earnings code field on the Pay Group Table - Calc Parameters page. You can create different refund codes for different pay groups.
Important! The refund earnings code must be configured appropriately. On the Earnings Table - Taxes page, the Add to Gross and Maintain Earnings Balances check boxes must be selected, and the earnings code must not be subject to any taxes.
Be sure to add the earnings code to the appropriate earnings program for the pay group.
See Also
Entering Special Options and Tax Methods for Earnings Codes
Setting Up Payroll Calculation Parameters for Pay Groups
Page Name |
Definition Name |
Navigation |
Usage |
SAVINGS_BOND_TABLE |
Set Up HRMS, Product Related, Payroll for North America, Deductions, U.S. Savings Bond Table, U.S. Savings Bond Table |
View bond deduction criteria for U.S. savings bonds. This table controls bond purchasing within Payroll for North America. Note. Oracle delivers all information for U.S. Bonds. You do not have to enter information on this page. |
|
PRCSRUNCNTL |
Set Up HRMS, Product Related, Payroll for North America, Deduction Table Reports, U.S. Savings Bond, U.S. Savings Bond Report |
Generate the Bond Table report (PAY706). The report lists information from the U.S. Bond table, which contains bond types. See PAY706 - Bond Table. |
|
SAVINGS_BOND_SPEC |
|
Enter data to process payroll accumulations toward the purchase of U.S. Savings Bonds. |
|
SAVINGS_BOND_LOG |
|
Display the activity of bond purchases and amounts collected. |
|
Bond Purchase Suspensions |
RUNCTL_PAY058 |
|
List employees who have one or more bond purchases that have been suspended due to reaching the annual bond purchase limit. When the Show Suspension Detail check box is selected, the report lists the complete bond purchase history for employees with one or more suspended bond purchases. When the Show Suspension Detail check box is not selected, the report lists only the specific bond purchases that have been suspended. |
RUNCTL_PAYINIT2 |
|
Generate the PAY016A and FGPY011A (USF Bond Purchases) reports that list all bonds purchased since the last process run. |
|
RUNCTL_PAY016B |
Payroll for North America, Payroll Processing USA, Pay Period Reports, Bond Purchase-Federal Reserve, Bond Purchase Report - Federal Reserve |
Produces magnetic media output (report PAY016B) in Federal Reserve System format for the purchase of bonds. |
|
RUNCTL_FGPY011B |
Payroll for North America, Payroll Processing USF, Pay Period Reports, Federal Bond Reserve File, Federal Bond Reserve File |
(USF) Produces magnetic media output (report FGPY011B) in Federal Reserve System format for the purchase of bonds. |
Access the Create U.S. Savings Bonds page (Payroll for North America, Employee Pay Data USA, Deductions, Purchase U.S. Savings Bonds, Create U.S. Savings Bonds).
Priority |
Enter a priority number. During bond deduction processing, distributions are made to bond denominations in order of the priority that is established on this page. As with other deductions, the lower the number, the higher the priority. Priorities for the bonds themselves become part of the key information for the bond, so each bond denomination must have a unique priority. Bond priority, however, has nothing to do with deduction priority. Do not use priority 999; it's reserved for system use only. |
Denomination |
Select a denomination for the bond. The denominations that are displayed are the only ones that are offered by the U.S. federal government for payroll purchase of bonds. |
Bond Owner
Employee |
Select if the employee is the registered owner of the savings bond. |
Dependent ID |
Select the dependent's ID if the employee is buying the bond for someone else. This person must be on the employee's dependent/beneficiary list. |
Other Registrant
None |
Select if the employee's name is the only one on the savings bond. |
Co-Owner |
Select if there are two owners of the bond. Additional fields become available for entering the co-owner information. |
Beneficiary |
Select if there is a beneficiary for the bond. Additional fields become available for entering the co-owner information. |
Employee |
Select if the employee is the co-owner or beneficiary. |
Dependent ID |
Enter the dependent ID if a dependent is the co-owner or beneficiary. This field appears only if the Employee check box is not selected. |
Note. The bond owner, co-owner, or beneficiary must be either the employee or someone on the employee's dependent/beneficiary list (on the Dependent/Beneficiary pages in the Benefits menu). The system does not allow you to specify the same person as both the bond owner and co-owner/beneficiary. If there is another registrant, select dependent/co-owner; then you can enter the appropriate ID.
Deduction
The fields in this group box determine how the bond deduction is distributed.
Flat Amount |
Enter a flat amount to apply to this bond. Typically, only one deduction is set up for bonds, but you can distribute the deduction among multiple bond specifications. Use either this field or the % of Deduction (percent of deduction) field for a given bond denomination, but not both. |
% of Deduction (percent of deduction) |
Enter a percent of the total bond deduction that applies to this bond. |
Excess |
Select if you want this bond denomination to receive any funds that are left over after bond distributions are completed. At least one bond must have this check box selected, even if the employee has only one denomination. For example, assume that a bond deduction is 100 USD per pay period. You could specify that 50 USD of the deduction be applied toward one bond, 20 USD toward another bond, and 10 percent toward the third bond. Because the three deductions add up to only 80 USD, the excess 20 USD is posted to the bond denomination that is selected to receive the excess. |
Partial Amount |
Select to enable the distribution to be less than the amount that is defined for the bond denomination. Assume that you have a bond deduction of 100 USD, and you have specified that 70 USD goes toward one bond and 30 USD toward another. If you have only 90 USD to disburse, and the Partial Amount check box is selected for the second bond, 20 USD is allocated for the second bond. |
Delivery Address
Same Address as Employee |
Select if the address that you want the bond certificate mailed to is the same as the employee's address. |
Address Type |
If the employee is the bond owner, select the appropriate address from the list of employee addresses. |
If a dependent is selected as the bond owner, co-owner, or beneficiary, you can have the bond certificate mailed to a dependent's address.
To send a bond certificate to an address other than the employee's, deselect the Same Address as Employee check box. The Which Dependent's Address? group box appears within the Delivery Address group box asking you whether the delivery address should be for the bond owner or other registrant. The default is Bond Owner and the bond owner address displays. If Other Registrant is selected, the address of the other registrant displays.
Access the Review U.S. Savings Bonds page (Payroll for North America, Employee Pay Data USA, Deductions, Review U.S. Savings Bonds, Review U.S. Savings Bonds).
This is a display-only page that is maintained by the system to show the status of bond activity. The system doesn't purchase bonds for you, but it does show how much money has been deducted toward bond purchases and how many units that money will buy. It's updated when you run the Pay Confirmation COBOL SQL process (PSPCNFRM).
Bond Activity Status |
The status of the bond activity appears: Funds Not Ready: Indicates that there are insufficient funds to purchase the bond. Funds Ready to Disburse: Indicates that there are sufficient funds to purchase the bond when you run the Bond Purchases report. Funds Disbursed: Indicates that you have run the Bond Purchases report and that the funds have been disbursed for every employee whose record showed Funds Ready to Disburse prior to running the report. Refunded Balance: Indicates that a transaction has been processed to initiate an Additional Pay transaction to refund to the employee any remaining undisbursed funds associated with a suspended bond purchase. Suspended Due to Annual Limit: Indicates that bond purchases for the Bond ID/Owner combination have been suspended as a result of reaching the annual purchase limit, and the amount in the Remaining Balance field represents undisbursed funds due to be refunded to the employee. (USF) This field is updated by the Treasury/Bond Interface. Details are presented in the Purchase Details group box. |
AP Status (accounts payable status) |
This is system-maintained and indicates whether bond monies have been sent to PeopleSoft Enterprise Payables for payment. This is not applicable to U.S. federal organizations. |
(USF) Purchase Details
These fields are updated after the Treasury/Bond Interface is run. This group box applies to U.S. federal organizations only.
Bond Purchase Units |
The number of units purchased in the pay period. |
Bond Purchased Date |
The paycheck issue date of the pay period in which units were purchased. |
Access the Bond Purchase Report - Federal Reserve page (Payroll for North America, Payroll Processing USA, Pay Period Reports, Bond Purchase-Federal Reserve, Bond Purchase Report - Federal Reserve).
PAY016B works the same way as PAY016A, but it produces magnetic media/electronic output in Federal Reserve System format for the purchase of bonds.
Note. You must use the file name PSBOS.DAT when submitting savings bond purchase data to the Federal Reserve Bank. In some environments, you might need to rename the PAY016B.SQR output file as PSBOS.DAT.
Access the Federal Bond Reserve File page (Payroll for North America, Payroll Processing USF, Pay Period Reports, Federal Bond Reserve File, Federal Bond Reserve File).
FGPY011B works the same way as FGPY011A, but it produces magnetic media output in Federal Reserve System format for the purchase of bonds. The output file name is BONDFILE.
You cancel bonds when an employee elects to cancel the bond or when bond purchases have been suspended for an employee who has reached the annual purchase limit for a bond. Only bonds with Not Ready to Disburse status can be cancelled.
When an employee cancels a bond, any money that has been deducted from the employee's paycheck for that bond must be refunded. Therefore, when you cancel the bond, the system creates an Additional Pay record for the correct refund amount and processes it in the next pay run.
Note. If you do not cancel bonds when purchases have been suspended, the system continues to take the deduction and then automatically refund the deduction amount.
Bond Refund Setup
Before you can process bond refunds, you must set up an earnings code for the refund and enter it in the Refund earnings code field on the Pay Group Table - Calc Parameters page.
The refund earnings code must be configured appropriately. On the Earnings Table - Taxes page, the Add to Gross and Maintain Earnings Balances check boxes must be selected, and the earnings code must not be subject to any taxes.
See Setting Up Payroll Calculation Parameters for Pay Groups.
Cancelling the Bond
There are two ways to cancel bonds:
To discontinue bond deductions for the employee and refund all deductions that have not yet been disbursed, enter a deduction end date on the Create General Deductions page for the U.S. Savings Bond deduction.
The deduction end date serves as the effective date of the additional pay line that is created for the refund amount. No further bond deductions are taken.
To cancel specific bonds without stopping deductions, delete specific rows on the Create U.S. Savings Bonds page.
The effective date on the Create U.S. Savings Bonds page serves as the effective date of the additional pay line that is created for the refund amount. If multiple rows are deleted, the additional pay is for the combined refund amount.
The system continues to take bond deductions based on the remaining bond specifications.
Regardless of the page you use to cancel the deduction, the system changes the bond activity status on the Bond Activity Log to Refunded Balance.
This section provides an overview of the Imputed Income COBOL SQL process (PSPIMRUN), lists a prerequisite, and discusses how to
Run the Imputed Income process.
View imputed income calculation results.
See Also
Setting Up Group-Term Life Insurance in the U.S.
Payroll for North America addresses imputed income every pay period. Although imputed income calculations are accurate with the information available in a pay period, you might require adjustments at the end of the year, as a result of changes in coverage or an employee being terminated. To make adjustments, use the Imputed Income Adjustment process.
The Imputed Income process performs calculations and creates a file containing one-time adjustment records for all employees who require them.
Review the calculation results using the Imputed Income Adjustment report before loading the transactions into paysheets.
When you're ready to load the imputed income transactions into paysheets, run the Imputed Income process in Update Paysheets mode, and the system makes the adjustments as one-time deductions with a taxable benefit deduction classification. The system establishes these one-time deductions as off-cycle manual checks (paylines).
The manual checks that the Imputed Income process creates do not have an amount in the Total Gross and Net Pay fields. This is not necessary, because the imputed income adjustment that the process creates is a taxable benefit deduction class, and it does not affect gross or net pay.
When the Imputed Income process creates the adjustment paysheet, it changes the Deductions Taken field value on the By Paysheet - One-Time Deductions page to None. This prevents the system from taking normal taxable benefits and employer deductions on the adjustment check.
You cannot rerun the Imputed Income process. For example, suppose you run the process once and it produces an error after loading some paysheets. If you run it again using the same run control information (the same company, pay group, pay end date, date range, and so on), you receive another error, because the system attempts to insert duplicate rows into the database. Therefore, if you must rerun the process, delete the paysheets that the process added previously.
Attach your adjustment paysheets to a pay calendar that does not contain any other off-cycle paysheets. In other words, there should be no other off-cycle paysheets entered for the same calendar in which you create the imputed income adjustments.
Joanne is a CCB employee in a monthly pay group. Her coverage changes in the middle of the year. From January 1 to June 30, she has basic and supplemental life. Her basic life is fully employer-paid; her supplemental life is fully employee-paid:
Plan Type |
Description |
Coverage |
Premium |
20 |
Life |
25,000 USD |
Employer-paid premium: 15 USD |
21 |
Supplemental Life |
25,000 USD |
Employee-paid premium: 1.25 USD |
Because the IRS does not consider the first 50,000 USD of coverage taxable, the system performs no imputed income calculations for Joanne during the first half of the year.
On July 1, however, Joanne suddenly gets a big increase in her basic life coverage:
Plan Type |
Description |
Coverage |
Premium |
20 |
Life |
50,000 USD |
Employer-paid premium: 30 USD |
21 |
Supplemental Life |
25,000 USD |
Employee-paid premium: 1.25 USD |
Because Joanne now has coverage totaling 75,000 USD, starting with the next payroll after July 1, 25,000 USD is considered taxable as imputed income.
Joanne is 37 years old. In this age bracket, the Uniform Premium table calls for a calculation of .11 USD per month per 1,000 USD of coverage:
25,000 USD / 1,000 USD x .11 USD = 2.75 USD
The system subtracts Joanne's employee-paid, after-tax contribution to the coverage:
2.75 USD – 1.25 USD = 1.50 USD taxable benefit.
These calculations are correct beginning with the end-of-July payroll. However, the IRS stipulates that any contributions that are made by the employee must be factored into the equation. In Joanne's case, you must include all her contributions from January 1 to June 30. The result is a reduction in her true tax liability for the year as a whole.
At the end of the year, Imputed Income processing:
Recalculates Joanne's imputed income (without subtracting her monthly contributions) for every month of the year.
Adds up the monthly figures to arrive at a total.
Adds up her monthly contributions.
This table shows the process:
Month |
Imputed Income |
Employee Contribution |
January |
0 USD |
1.25 USD |
February |
0 USD |
1.25 USD |
March |
0 USD |
1.25 USD |
April |
0 USD |
1.25 USD |
May |
0 USD |
1.25 USD |
June |
0 USD |
1.25 USD |
July |
2.75 USD |
1.25 USD |
August |
2.75 USD |
1.25 USD |
September |
2.75 USD |
1.25 USD |
October |
2.75 USD |
1.25 USD |
November |
2.75 USD |
1.25 USD |
December |
2.75 USD |
1.25 USD |
Totals: |
16.50 USD |
15 USD |
Joanne's total imputed income for the year is 16.50 USD; her contributions amount to 15 USD. On this basis, her taxable benefit for the year should be only 1.50 USD (16.50 − 15 USD). However, because the system calculates her taxable benefit on a month-by-month basis, her taxable benefit is 9 USD (6 months × 1.50 USD per month). Therefore, the system must reduce Joanne's taxable benefit for the year by 7.50 USD:
Total taxable benefit from month-by-month calculations (9.00 USD) – total taxable benefit from end-of-year calculation (1.50 USD) = end-of-year adjustment (1.50 USD).
See Also
Understanding Imputed Income Calculation for U.S. Group-Term Life Insurance
Before running imputed income adjustment processing, you must establish the taxable benefit deduction that you plan to use for adjustments. You can use either an existing deduction code or establish a new deduction code only for adjusting imputed income. The deduction code should have plan type in the range 20–29, 2Y, or 2Z.
See Also
Setting Up Group-Term Life Insurance in the U.S.
Page Name |
Definition Name |
Navigation |
Usage |
RUNCTL_IMP_CALC |
|
Calculate imputed income adjustments and update paysheets with the adjustment amounts. |
|
RUNCTL_PAYINIT2 |
|
Generate the PAY033 report, which contains the results of imputed income adjustments. |
Access the Calculate Imputed Income Adjustments page (Payroll for North America, Periodic Payroll Events USA, Imputed Income Adjustments, Calculate Adjustments, Calculate Imputed Income Adjustments).
Process From Month and Thru Month |
Enter a numerical value for the first and last months in the date range. (Ordinarily, this is 1 through 12—January through December). |
Processing Mode
Calculate Impute Adjust Only (calculate imputed adjustment only) |
Calculates imputed income for the selected period and creates transaction files, but does not load the transactions into paysheets. |
Update Paysheets Only |
Loads calculated imputed income transactions that are created in a previous run into paysheets as one-time deductions. |
Both |
Calculates imputed income and creates transaction files, then loads the transactions into paysheets as one-time deductions. Use these options as follows:
|
Apply GTL/DPL adjustments to
Use this group box to designate the deduction codes to which you want the system to apply the imputed income transactions when it loads the transactions into paysheets.
DPL Effect (dependent life effect) |
Select the type of adjustment. You must have one row for Add to DPL (add to dependent life) and one row for Add to GTL (add to group-term life). Note. Under ordinary circumstances, the run control has only two rows in the Apply GTL/DPL adjustments to (apply group-term life/dependent life adjustments to) group box. Even if some employees have more than one GTL or DPL plan, the process applies their adjustments to a single plan—one for GTL and one for DPL. |
Deduction Code |
Deduction codes must be valid for all employees in the run. |
Important! This COBOL process takes one or two minutes to process each employee. If you have many employees, the process could take hours or even a full day.
Access the Imputed Income Adjustment Report page (Payroll for North America, Periodic Payroll Events USA, Imputed Income Adjustments, Adjustment Report, Imputed Income Adjustment Report).
Note. If you used the process to load adjustment transactions into paysheets, use the Paysheet or Payline pages to view the one-time deductions.
This section provides an overview of time and effort certification and discusses how to:
Specify time and effort earnings codes.
Run the time and effort report.
Higher education organizations can use the Grants Time and Effort Certification report (GMTEC002) to satisfy A-21 Certification requirements. Time and effort certification applies to any individual who receives funding through your institution's sponsored programs office and to anyone who charges more than one funding source or project/grant. Each institution handles this reporting requirement differently.
See Also
PeopleSoft Grants PeopleBook
Page Name |
Definition Name |
Navigation |
Usage |
GM_TEC_OT_ERNCD |
Set Up HRMS, Product Related, Payroll for North America, Compensation and Earnings, Grants Time and Effort Certif, Grants Time and Effort Certification |
Select earnings codes to include in time and effort certification. |
|
RC_GM_TE |
Payroll for North America, Payroll Distribution, Additional Integrations, Time/Effort Certification Rpt, Time/Effort Certification Report |
Run the GM Time and Effort Certification report. |
Access the Grants Time and Effort Certification page (Set Up HRMS, Product Related, Payroll for North America, Compensation and Earnings, Grants Time and Effort Certif, Grants Time and Effort Certification).
Earnings Code |
Select the earnings code to include in the time and effort certification. The SQR normally includes all regular earnings hours and amounts, but each employee can have a number of other earnings (additional pay, overtime, bonus, parking allowance, expense reimbursement, and so on). You will not want all of these earnings to be included in the GM Grants Time and Effort Certification report. You can control which of these other earnings to include in the report by listing the specific earnings codes on this page. |
Access the Time/Effort Certification Report page (Payroll for North America, Payroll Distribution, Additional Integrations, Time/Effort Certification Rpt, Time/Effort Certification Report).
This page is identical to the common run control page used for many payroll processes and reports.
See Using the RUNCTL_PAYINIT and RUNCTL_PAYINIT2 Pages.