(USA) Viewing Federal and State Tax Tables

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:

Calculation Rules

On the Program ID Association Page, each tax class is associated with a calculation rule that tells the COBOL programs where the tax rate is stored and how to calculate the premium for the paid leave program.

Payroll for North America provides scripts to deliver new calculation rules as needed to support new programs when they are announced.

Tax Calculations

The taxes for the Colorado FAMLI program are calculated when the following employee conditions are met:

• State on the employee’s State Tax Data page = CO; and

• The UI Jurisdiction check box is selected on an employee’s Colorado State Tax Data page; and

• Tax Status = Subject (or Voluntary) on the employee’s Colorado State Tax Data page, Other Program Details section; and

• The employee is paid wages in Colorado (State = CO on payline).

  Note: If the earnings are paid in another state and not the UI state, the taxes will be calculated if the Evaluate Program Taxes When No Wages in this State check box is selected on the Program ID Association Page for the program. Also, the calculation basis of associated calculation rules must be one of these values: Always, UI Jurisdiction or UI Jurisdiction or Resident.

If the employee is paid wages in Colorado and another state(s), all wages are subject to taxation.

For example, the employee is paid $1000 in Colorado and $2000 in Utah. The taxable gross is $3000. The FAMLI tax is $13.50 ($3000 * 0.45%) for the employee and employer.

Tax Calculations

Taxes for Paid Leave Oregon are calculated when the following employee conditions are met:

• State on the employee’s State Tax Data page = OR; and

• The UI Jurisdiction check box is selected on an employee’s Oregon State Tax Data page; and

• Tax Status = Subject (or Voluntary) on the employee’s Oregon State Tax Data page, Other Program Details section; and

• The employee is paid wages in Oregon (State = OR on payline).

  Note: If the earnings are paid in another state and not the UI state, the taxes will be calculated if the Evaluate Program Taxes When No Wages in this State check box is selected on the Program ID Association Page for the program. Also, the calculation basis of associated calculation rules must be one of these values: Always, UI Jurisdiction or UI Jurisdiction or Resident.

If the employee is paid wages in Oregon and another state(s), all wages are subject to taxation. For example, the employee is paid $500 in Oregon and $500 in California. The taxable gross is $1000. Paid Leave Oregon tax is $6.00 ($1000 * 0.6%) for the employee and $4.00 ($1000 * .4%) for the employer.

Premium Calculation Example

This example illustrates the calculation of premium payments for Massachusetts Paid Family and Medical Leave. The employer in this scenario has more than 25 covered employees, which means that the employer is responsible for the employer share of the medical leave premium.

The rate used in this example is effective as of October 1, 2019, and is subject to change.

For an employee who earned $5,000 in unemployment wages, the total premium payment is $37.5 ($5,000 * 0.75%). The Family Leave portion of the premium is $6.56 ($37.5 * 17.5%), which is contributed entirely by the employee. The Medical Leave portion of the premium is $30.94 ($37.5 * 82.5%), which is split between the employee ($30.94 * 40%) and the employer ($30.94 * 60%).

This diagram illustrates the example of a premium calculation for Massachusetts Paid Family and Medical Leave.

Special Accumulator Code for Gross Wages

The system delivers a new special accumulator code, GRS (Reserved for Gross Wages), to track the gross wages paid in the employee’s check. It automatically accumulates the employee’s gross wages paid for each check in the GRS special accumulator code, when the Add to Gross Pay check box is selected on the Earnings Table - Taxes Page for the earnings code of gross wages.

The GRS value updates automatically in pay calculation for all employees in all states. The value appears on the Paycheck Earnings Page of the employee’s check, after the check is calculated.

Premium Calculation Example

This example illustrates the calculation of premium payments for Washington Paid Family and Medical Leave. The rate used in this example is effective as of January 2, 2019, and is subject to change.

For an employee who earned $3,000 in gross wages, the total premium is $12 ($3,000 * 0.04%). This equates to a maximum employee deduction of $7.6 and a minimum employer contribution of $4.4.

This diagram illustrates the example of a premium calculation for Washington Paid Family and Medical Leave.

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.

If you must set up Local Tax Data records for multiple LS Tax jurisdictions for an employee 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.

Covered Employees and Taxable Wages

The definition of employees who are required to contribute to the WA Cares Fund refers back to the definition of employees who are required to participate in the Washington Paid Family and Medical Leave Program (PFML). The same “localization test” used to define employees who are covered by the Washington PFML is used to define Washington employees who are covered by the WA Cares Fund. Generally, employees covered by Washington PFML are also covered by the WA Cares Fund.

Similarly, for purposes of the WA Cares Fund, the definition of taxable wages is the same as the definition of taxable wages under the Washington PFML.

Employee Exemption from WA Cares Fund

An employee can receive an exemption from participating in the WA Cares Fund by attesting to having sufficient long-term care insurance purchased before November 1, 2021. The Washington Employment Security Department (ESD) will accept applications for this exemption between October 1, 2021 and December 31, 2022 only. If ESD approves the application, the exempt employee must submit written notification of the exemption to the employer. Employers must retain the notifications. Exempted employees cannot opt back into the program.

Employee Tax Rate

Employers are required to withhold 0.58 percent of an employee’s wages as premiums for the WA Cares Fund. Employee payroll deductions are self-adjusting, in order to ensure that YTD tax is always equal to 0.58 percent of YTD taxable wages. The rate is stored on the tax table, and is subject to change in future years.

Setup

To support the calculation of the premiums, the system delivers tax class AE (Long Term Care - EE) that is used for employee deductions for the WA Cares Fund. The tax class is added to the state tax table for Washington on the Tax Table - Additional Rates Page.

To set up the system to calculate the premiums for eligible employees:

1. For each company with a Company State Tax Table entry for the WA state, add a new row and complete the Long Term Care section setup on the Company State Tax Table - General Page page.

   For employees to be covered by the WA Care Fund, the LTC Not Applicable check box should be cleared (default).

   For employees not to be covered by the program, the LTC Not Applicable check box should be selected.

2. Update the Company State Tax Table - GL Accounts Page with the General Ledger liability account number to be used for employee deductions for the WA Cares Fund.

3. For each eligible employee, add a new row and update the LTC status on the State Tax Data Page. The default LTC status for existing employees is Not Applicable.

   To implement WA Cares Fund payroll deductions for a current employee who is covered by the program, update the employee’s State Tax Data record for the WA state by changing the LTC status to Subject.

   Note: Washington LTC employee tax and taxable gross is calculated when the LTC status of the employee is set to Subject. There is no requirement that the UI Jurisdiction or Resident check box needs to be selected, or that there are Washington earnings on a given paycheck in order for LTC employee tax to be calculated.

   If the employee is no longer required to pay the Washington LTC tax, the LTC status must be set to Not Applicable. This is especially important when the employee is transferred out of Washington to a new state and is not subject to the LTC tax anymore.

   To designate a current employee as exempt from participation in WA Cares Fund, update the employee’s State Tax Data record for the WA state by changing the LTC status to Exempt.

   Apply the same LTC status update to any existing future-dated rows as well.

   Important! You must update the LTC status as needed before calculating the first payroll for which WA Cares Fund premium deductions are required.

   Note: If the Automatic Employee Tax Data option is selected on the Products Page of the Installation Table, the system automatically defaults the LTC Status field on the State Tax Data Page for newly hired or transferring employees to match the WA Cares Fund coverage status indicated on the Company State Tax Table - General Page for the company.

   If the LTC Not Applicable option is cleared on the Company State Tax Table, the default value of the LTC Status field is Subject. If the LTC Not Applicable option is selected, the default value of the LTC Status field is Not Applicable.

Supplemental Method

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

See Supplemental Tax Calculations.

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.

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.