Tax Factor (75/TO)

You use tax factor codes when you want to pay an employee for more or less than a full pay period by using an interim payment. For example, if an employee begins working midway through a monthly pay period, you can set up a tax factor that is equal to .50. When you enter this tax factor on the interim payment that you create to pay the employee for the portion of the pay period in which that employee worked, the system automatically calculates the employee's taxes using the tax factor. This enables the system to annualize the employee's salary and tax the amount of the payment accordingly.

You can also set up tax factors to use when calculating interim payments that cover more than one pay period. For example, if you want to pay an employee for one and one-half pay periods, you could set up a tax factor that is equal to 1.5. When you enter this tax factor on an interim payment, the system annualizes the employee's salary and taxes the earnings accordingly.

You can use codes A through Z to define tax factor codes. The number that you enter in the Special Handling field is the numeric value that represents the portion of the pay period that the employee works. For example, if you want to create a tax factor to represent half of a pay period, you enter .5 in the Special Handling field for the specified code. This table illustrates how you might set up the .50 and 1.5 tax factor codes in UDC 75/TO:

Code	Description 01	Special Handling	Hard-Coded
A	Tax Factor .50	.5	N
B	Tax Factor 1.5	1.5	N