Estimated or Actual Wages

When you calculate state tax liability, you can choose to calculate the amount based on actual wages for the given time period or on estimated wages, which are calculated using the wages that were accumulated for the same time period of the previous tax year. If you select actual wages, the system uses the actual wage amounts, which are stored in F75A0406, for the selected time period.

When you select estimated wages, the system uses the wages from the same time period of the previous tax year along with the thresholds, rates, and proration formulas for the current year to determine the tax liability.

Note: To use the estimated method of calculation, the company or company group must have been operational during the entire time period of the previous tax year. Additionally, the system includes state wage history records that are manually entered into the system (those with a history type other than 1), such as third-party payments, in the state payroll tax calculation regardless of whether you choose to base the calculation on actual or estimated wages.