Legislative Balance Initialization

Legislative Balance Initialization

This essay supplements the technical essay entitled Balances in Oracle Payroll. Specifically, it covers the following topics:

Balance Initialization Elements

US users should run the "Initial Balance Structure Creation" process to create the elements and input values required to feed the predefined legislative balances.

Note: You can remove these elements by running the Initial Balance Structure Creation (Undo) process. You cannot run the Undo process if there are any payroll actions in your business group.

You may need to define additional elements and input values to set up initial balances for your own earnings and deductions.

Supported Dimensions

The following balance dimensions (BD) are currently supported:

At the Federal level, the SUBJECT_TO_TAX dimension is supported for balances that hold Earnings/Deduction amounts that are subject to Tax:

For Jurisdiction (State, County, City, School District) level taxes, the dimension of Jurisdiction (JD) is supported:

Overview of Tax-related Balances

In accordance with the tax related information entered in the Oracle HRMS database, the payroll run can build tax-related balances for each of the following tax types.

Federal

The federal tax types follow:

State

The state tax types follow:

Local

The local tax types follow:

Balances Created for Each Assignment

The following tax-related balances are created for each employee assignment:

Balances Created for Taxes with Upper Earnings Limits

For taxes with upper earnings limits, the following balances are created.

Balances Created for Non-Resident Alient Earnings

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Where Tax-related Balances Exist in the System

Tax-related balances exist in the system in the following locations:

Balances That Require Initializing

Following is a list of US balances that should be initialized in Oracle Payroll in order to obtain accuracy and consistency in the different areas of the system that use and report such balances.

Earnings and Deductions

The US earnings and deductions balances that should be initialized follow:

Federal Level Tax-related Balances

For each Federal Tax type, you must load the following appropriate balances in order to get accurate values for derived balances:

Oracle Payroll differentiates between Earnings Types for tax calculation rules and as such holds balances for the different types (Regular Earnings and Supplemental Earnings in particular). Supplemental Earnings and Imputed Earnings that are subject to tax are rolled into a single balance: Supplemental Earnings for Tax. If your current system does not maintain these split balances, you could roll your single "Subject to Tax" Earnings balance into either bucket. Additionally, a bucket, Supplemental Earnings for NWTax, is provided for your Supplemental and Imputed Earnings that are subject to tax, but are not withholdable.

Tax Calculation requires the amount that is reduced from the Subject to Tax Earnings amount. This reduced amount is derived from subtracting the amount of Pre-Tax Deductions that are subject to Tax from the total Pre-Tax Deduction amount. Example: Def Comp 401K is the total pre-tax amount. Def Comp 401K for Tax is the amount of pre-tax deduction that does NOT reduce Subject to Earnings, and as such must be initialized only if it is nonzero. The same is true for Section 125, Dependent Care, and Other Pretax.

Taxable Earnings must be set for FUTA, SS and Medicare. The balance initialization process does not include validation for upper limit and hence the amount initialized must NOT exceed the upper limit.

Note: Medicare Taxable will be equal to the subject amount following recent legislation changes.

The following balances are DERIVED from the values entered in the balances mentioned above.

Note: Do not initialize these explicit balances for Federal level taxes.

State, County, and City (Jurisdiction) Level Tax-related Balances

For each Jurisdiction Tax type, the following appropriate balances must be initialized:

Note: At the jurisdiction level, the subject balances do not require the "SUBJECT_TO" dimension.

Because of the earnings accumulations rules (due to possibility of a percentage of time worked in different jurisdictions), for nonfederal taxes, the "Subject" and "Reduced" tax-related balance values are not derivable directly from the cumulative Earnings/Deductions type balances. Hence the "Subject" and "Reduced" tax-related balance values must be initialized explicitly.

Do not initialize the Supplemental Earnings, Withholdable and Notwithholdable, balances for jurisdiction level taxes. Instead, initialize the following explicit balances:

The following balances are derived:

Other Balances

Other balances to consider follow:

You must initialize the above two balances in order to see accurate YTD Net Pay figures on the on-line Statement of Earnings. Currently the YTD Net on the check stub and deposit advice is derived and does not use these balances explicitly. However, a design change has been scheduled for the near future to make these reports consistent, so that all of them will use the explicit Payments/Net Balance.

The W2 Balances hold the specific W2 Box related balances; as such, they must be initialized based on your reporting requirements.

For ongoing maintenance of these balances, you must set up the Balance feeds explicitly for these balances. To do so, use the Balance/Balance Feeds window. W2 related balances do not have pre-defined feeds.

Required US Legislative Balances

The following table lists required US legislative balances.

Note: The Balance Names and Dimension Names are case sensitive and MUST be loaded in Initcaps. This is similar to how they are stored in the Balance Type and Dimension tables in Oracle Payroll.

Balance Dimension
Gross Earnings Assignment within GRE Year to Date
Net Assignment within GRE Year to Date
Payments Assignment within GRE Year to Date
Regular Earnings Assignment within GRE Year to Date
Supplemental Earnings for Federal Tax Subject to Tax for Assignment within GRE Year to Date
Supplemental Earnings for NW Federal Tax Subject to Tax for Assignment within GRE Year to Date
Pretax Deductions Assignment within GRE Year to Date
Pretax Deductions for Federal Tax Subject to Tax for Assignment within GRE Year to Date
Def Comp 401K Assignment within GRE Year to Date
Def Comp 401K for Federal Tax Subject to Tax for Assignment within GRE Year to Date
Def Comp 403B Assignment within GRE Year to Date
Def Comp 403B for Federal Tax Subject to Tax for Assignment within GRE Year to Date
Def Comp 457 Assignment within GRE Year to Date
Def Comp 457 for Federal Tax Subject to Tax for Assignment within GRE Year to Date
Section 125 Assignment within GRE Year to Date
Section 125 for Federal Tax Subject to Tax for Assignment within GRE Year to Date
Dependent Care Assignment within GRE Year to Date
Dependent Care for Federal Tax Subject to Tax for Assignment within GRE Year to Date
Other Pretax Assignment within GRE Year to Date
Other Pretax for Federal Tax Subject to Tax for Assignment within GRE Year to Date
EIC Advance Assignment within GRE Year to Date
Federal Tax 125 Redns Assignment within GRE Year to Date
Federal Tax 401 Redns Assignment within GRE Year to Date
Federal Tax 403 Redns Assignment within GRE Year to Date
Federal Tax 457 Redns Assignment within GRE Year to Date
Federal Tax Dep Care Redns Assignment within GRE Year to Date
Federal Tax Other Pretax Redns Assignment within GRE Year to Date
Federal Tax Pre Tax Redns Assignment within GRE Year to Date
Federal Tax Gross Assignment within GRE Year to Date
Federal Tax Subj Whable Assignment within GRE Year to Date
Federal Tax Subj NWhable (Applicable only for FIT) Assignment within GRE Year to Date
Federal Tax ER 125 Redns Assignment within GRE Year to Date
Federal Tax ER 403 Redns Assignment within GRE Year to Date
Federal Tax ER 457 Redns Assignment within GRE Year to Date
Federal Tax ER Dep Care Redns Assignment within GRE Year to Date
Federal Tax ER Other Pretax Redns Assignment within GRE Year to Date
Federal Tax ER Pre Tax Redns Assignment within GRE Year to Date
Federal Tax ER Gross Assignment within GRE Year to Date
Federal Tax ER Subj Whable Assignment within GRE Year to Date
Federal Tax Withheld Assignment within GRE Year to Date
Federal Upper Limit Tax Taxable Assignment within GRE Year to Date
Federal Tax Withheld Assignment within GRE Year to Date
Federal Tax ER Assignment within GRE Year to Date
Jurisdiction Tax Gross Assignment in JD within GRE Year to Date
Jurisdiction Tax Subj Whable Assignment in JD within GRE Year to Date
Jurisdiction Tax Subj Nwhable Assignment in JD within GRE Year to Date
Jurisdiction Tax 401 Redns Assignment in JD within GRE Year to Date
Jurisdiction Tax 403 Redns Assignment in JD within GRE Year to Date
Jurisdiction Tax 457 Redns Assignment in JD within GRE Year to Date
Jurisdiction Tax 125 Redns Assignment in JD within GRE Year to Date
Jurisdiction Tax Dep Care Redns Assignment in JD within GRE Year to Date
Jurisdiction Tax Other Pretax Redns Assignment in JD within GRE Year to Date
Jurisdiction Tax Pretax Redns Assignment in JD within GRE Year to Date
Jurisdiction Tax Withheld Assignment in JD within GRE Year to Date
Jurisdiction Tax Withheld in State Assignment in JD within GRE Year to Date
Jurisdiction MISC1_COUNTY_TAX_WITHHELD_RS Assignment in JD within GRE Year to Date
Jurisdiction MISC1_COUNTY_TAX_WITHHELD_RS Assignment in JD within GRE Year to Date
Jurisdiction Misc1 State Tax Liability Assignment in JD within GRE Year to Date
Jurisdiction Misc1 State Tax Withheld Assignment in JD within GRE Year to Date
Jurisdiction Upper Limit TAX Taxable Assignment in JD within GRE Year to Date
Jurisdiction Tax ER Assignment in JD within GRE Year to Date
W2_UNCOLL_SS_TAX_TIPS Assignment within GRE Year to Date
W2_UNCOLL_MED_TIPS Assignment within GRE Year to Date
W2_GROUP_TERM_LIFE Assignment within GRE Year to Date
W2_401K Assignment within GRE Year to Date
W2_403B Assignment within GRE Year to Date
W2_408K Assignment within GRE Year to Date
W2_457 Assignment within GRE Year to Date
W2_501C Assignment within GRE Year to Date
W2_NONTAX_SICK Assignment within GRE Year to Date
W2_EXCISE_PARACHUTE Assignment within GRE Year to Date
W2_EXPENSE_REIMB Assignment within GRE Year to Date
W2_UNCOLL_SS_GTL Assignment within GRE Year to Date
W2_UNCOLL_MED_GTL Assignment within GRE Year to Date
W2_QUAL_MOVE Assignment within GRE Year to Date
W2 NONTAX COMBAT Assignment within GRE Year to Date
W2_MSA Assignment within GRE Year to Date
W2_408P Assignment within GRE Year to Date
W2 Adoption Assignment within GRE Year to Date
W2_NONQUAL_STOCK Assignment within GRE Year to Date
W2 BOX 14A through W2 BOX 14J Assignment within GRE Year to Date
W2 State Pickup Assignment within GRE Year to Date
W2 HSA Assignment within GRE Year to Date
W2 Nonqual Def Comp Assignment within GRE Year to Date
W2 409A Nonqual Income Assignment within GRE Year to Date
W2 MIF Assignment within GRE Year to Date
W2 Pension Plan Assignment within GRE Year to Date
Capital Gain Assignment within GRE Year to Date
EE Contributions Or Premiums Assignment within GRE Year to Date
Unrealized Net ER Sec Apprec Assignment within GRE Year to Date
Other EE Annuity Contract Amt Assignment within GRE Year to Date
Total EE Contributions Assignment within GRE Year to Date

Important: The list of balances related to the Federal Level that capture the values calculated in Payroll run are maintained by the system. These balances will be used in reporting if the "PAY: Use Direct Balances for US Federal Taxes" profile option is set as Yes. If this profile option is not set, then these balances will be not be used. If a customer is using Direct Balances for US Federal Taxes, i.e. if they have their profile PAY: Use Direct Balances for US Federal Taxes set as Yes, then it is necessary to perform balance adjustments to these balances also.

Note: For Pennsylvania you must initialize both Jurisdiction Tax Withheld and Jurisdiction Tax Withheld in State to correctly load the balances for Head Tax. For all other states with a Head Tax, you only initialize Jurisdiction Tax Withheld.

The following balances are delivered to capture the Pre-Tax Deductions calculated for each Federal tax during payroll processing. These are going to be used in Reporting like Employee W2, Year End Reports etc.

Determining Taxes and Wages Applicable to Resident and Work Locations

For an employee, it is necessary to determine the taxes and wages that are applicable to the Resident and Work locations. This needs to be done at the State, County, and City levels if these localities have taxes. Once the taxes and wages of employee at resident and work locations are estimated in the legacy system, then balance adjustments or Initial Balance Upload can be performed in the Oracle system. To indicate which value corresponds to which location, it is necessary to use the related Jurisdiction Code in Balance Adjustment/Initial Balance Upload for Jurisdiction Input Value.

To adjust Resident and Work City tax values, it is necessary to have two different elements created. One for Resident value, which feeds City RS Reduced Subject and City RS Withheld balances. Other for Work value, which feeds City RS Reduced Subject and City RS Withheld balances. Both these elements must feed City Withheld balance also. While uploading or adjusting the City level tax values for the Resident Value, use the elements which feed to City RS Reduced Subject and City RS Withheld balances. For Work Value, use the elements which feed to City WK Reduced Subject and City WK Withheld balances. For each of these elements, it is necessary to specify the appropriate Jurisdiction to get the values considered as required.

Balances Reported on W2 and 941

The following table shows balances reported on W2 and 941 forms.

Balance Name On W2 On 941
Reduced Subject Withholdable (Derived) Yes Yes
Subject not Withholdable Yes Yes
FIT Wittheld Yes Yes
SS EE Taxable Yes Yes
SS EE Withheld Yes Yes
Medicare EE Taxable Yes Yes
Medicare EE Withheld Yes Yes
EIC Advance Yes Yes
Dependent Care Yes  
*W2_UNCOLL_SS_TAX_TIPS Yes  
*W2_UNCOLL_MED_TIPS Yes  
*W2_GROUP_TERM_LIFE Yes  
*W2_401K Yes  
*W2_403B Yes  
*W2_408K Yes  
*W2_457 Yes  
*W2_501C Yes  
*W2_NONTAX_SICK Yes  
*W2_EXCISE_PARACHUTE Yes  
*W2_EXPENSE_REIMB Yes  
*W2_UNCOLL_SS_GTL Yes  
*W2_UNCOLL_MED_GTL Yes  
*W2_QUAL_MOVE Yes  
*W2 NONTAX COMBAT Yes  
*W2_MSA Yes  
*W2_408P Yes  
*W2_ADOPTION Yes  
*W2_NONQUAL_STOCK Yes  
* W2 BOX 14A through W2 BOX 14J Yes  
W2 State Pickup Yes  
W2 HSA Yes  
W2 Nonqual Def Comp Yes  
W2 409A Nonqual Income    
W2 MIF Yes  
* W2 Pension Plan Yes  
SIT Subj. Whable Yes  
SIT Withheld Yes  
County Subj Whable Yes  
County Withheld Yes  
City Subj Whable Yes  
City Withheld Yes  

* Balance feeds for these balances are not pre-defined and must be defined by the user based on specific reporting requirements.