Create Net-to-Gross Earnings Elements for the US

Define Net-to-Gross Earnings that Include All Tax Calculations

In this example, you have an employee that that you want to pay a bonus of $500 net pay. They have already earned over $1-million in bonuses, so this bonus must be taxed at the highest rate.

In this case, you would perform the following operations.

What you need to do	What happens
Define a bonus net-to-gross earnings element	Use the Elements task to define a net-to-gross earnings element for the bonus. Use this element to enter the net payment you want the employee to receive. The payroll process uses it to determine what the gross amount should be.
Configure federal income tax (FIT) withholding	Because the employee has already received over $1 million in supplemental earnings, you must update their Tax Withholding card to withhold at the highest FIT supplemental rate.
Define element entries	Use the Element Entries task to define element entries for the element. For Net, enter the amount of the bonus, `500.00`. Use To Within to inform the payroll process how close to the net amount it must get during its calculations. Note: The higher the precision, the longer the payroll calculations may take. For example, if you enter a Net of $500.00, and your To Within amount is `1.00`, the employee could receive anywhere between $499.00 and $501.00.
Run a QuickPay	This generates the net-to-gross bonus payment.

The following sections describe these operations in detail.

Define the Bonus Net-to-Gross Earnings Element

To configure an element to perform net-to-gross on an employee bonus:

Start the Elements task.

Define the net-to-gross earning element.

Field name	What you enter
Primary Classification	Supplemental Earnings
Secondary Classification	Bonus
Category	Standard
Element name / Reporting name	Bonus GU
Employment Level	Assignment level
Recurring or Nonrecurring	Nonrecurring
Process the element only once in each payroll period?	Yes
Can person have more than one entry in period?	Yes
Process and pay separate or with other earnings?	Process separately and pay separately
Tax across multiple pay periods?	No
Prorate across all periods earned and consider for overtime?	No
Calculation Rule	Flat amount
Default Periodicity	Periodically
Periodicity Conversion Rule	Periodic Work Schedule Rate Annualized
Work Units Reported	None
Subject to Retro	No
Calculate gross amount from specified net amount?	Yes
Include in earnings calculation of overtime?	No
Include in hours calculation overtime?	No

Create element eligibility.
1. Click Element Eligibility in Element Overview.
2. Select Create Element Eligibility from Actions.
Click Submit and then Done.

Configure Federal Income Tax Withholding

Because the employee has already received over $1 million in supplemental earnings, you must update their Tax Withholding card to withhold at the highest FIT supplemental rate.

To do this:

Use the Calculation Cards task to open the person's Tax Withholding card for editing.
Override the Supplemental Rate percentage for Federal. Set it to the highest tax rate.

Define Element Entries

To define the element entries for the net-to-gross element:

Start the Element Entries task.
Search for the person receiving the earnings.
Click Create.
Enter an appropriate effective date, and select the net-to-gross earnings element you defined previously.
As this person is receiving a $500, enter 500.00 in Net.
Change To Within to 1.00.
Click Submit and Done.

Perform a QuickPay Operation to Generate the Net-to-Gross Payment

To process the net-to-gross bonus payment using the QuickPay action:

Calculate quick pay, using the Supplemental run type. Make sure you include your Bonus GU element in the run.

For further info, see How QuickPay Is Processed in the Help Center.
Once the process completes, view the Statement of Earnings to review the results.

Exclude Specific Taxes from the Gross-up Calculation but Still Withhold Them

When calculating a net-to-gross payment, you're not required to include all taxes as part of the net-to-gross calculation, as long as the required taxes are still withheld.

In this example, you have an employee receiving a bonus of $1000. As their manager, you want to pay the employee's portion of Social Security and Medicare tax on this bonus but not federal. You do not want to include FIT as part of the net-to-gross calculation, but you still want to withhold the FIT tax.

To do this:

Define the net-to-gross element, as described in the previous example.
In Element Overview of the base element, click Gross Balance Exclusions.
Select Exclude Balances for the FIT Withheld tax.

Click Save.

In this case, the payroll process would perform the following calculations.

Calculations	Amounts
(Gross Bonus) - (Social Security Tax) - (Medicare) = (Subtotal)	1082.84 - 67.14 - 15.70 = $1000
(Subtotal) - (FIT) = (Net)	1000 - 238.22 = $761.78

Define Imputed Net-to-Gross Earnings that Include All Tax Calculations

In this example, you have awarded an employee with a $500 gift card. You want to:

Process an imputed gross-up earnings for the amount.
Calculate the taxes on this amount, and pay them on the employee's behalf.

In this case, you would perform the following operations.

What you need to do	What happens
Define an imputed net-to-gross earnings element	Use the Elements task to define a net-to-gross earnings element for the bonus. This element performs the gross-up of the taxes that are due for the value of the gift card.
Set the processing priority	Use the Elements task to change the priority of the imputed earnings element and all of its indirect elements. This ensures that the imputed element is processed in the correct order.
Modify the element's fast formulas	Use the Fast Formula task to modify the fast formula.
Define a supplemental earnings element	Use the Elements task to define a supplemental earnings element. This element creates the additional earnings needed to withhold the proper taxes.
Update your imputed earnings element's status processing rule	Use the Elements task to update the status processing rule to coincide with the changes you made to the fast formula.
Define element entries	Use the Element Entries task to define element entries for your imputed net-to-gross element. Here you enter the net amount of your imputed earnings.
Run a QuickPay	This generates the net-to-gross imputed earnings transaction.

The following sections describe these operations in detail.

Define the Imputed Earnings Net-to-Gross Element

To configure an element to perform gross-up on an imputed earning:

Start the Elements task.

Define the imputed net-to-gross earning element.

Field name	What you enter
Primary Classification	Imputed Earnings
Secondary Classification	Noncash Award
Category	Standard
Element Name and Reporting Name	Imputed GU Award
Employment Level	Assignment level
Recurring or Nonrecurring	Nonrecurring
Process the element only once in each payroll period?	Yes
Can person have more than one entry in period?	No
Process and pay separate or with other earnings?	Process separately but pay with other earnings
Tax across multiple pay periods?	No
Calculation Rule	Flat amount
Default Periodicity	Periodically
Periodicity Conversion Rule	Standard Rate Annualized
Work Units Reported	None
Subject to Retro	No
Calculate gross amount from specified net amount?	Yes
Include in earnings calculation of overtime?	No
Include in hours calculation overtime?	No

Create element eligibility by clicking Element Eligibility in Element Overview and then selecting Create Element Eligibility from Actions.
Click Submit and then Done.

Set the Processing Priority

You want your net-to-gross elements to run in the proper order. Therefore, you need to update the processing priority for your imputed earnings element and all of its indirect elements.

To to do this:

Start the Elements task.
Select the element's effective date.
For the base imputed earnings element and all indirect elements, change the priority number to 3250.

Modify the Element's Fast Formulas

Modify two of the new element's fast formulas to properly process the imputed earnings gross-up calculation.

To to do this:

Start the Fast Formulas task.
Search for and select the "Imputed GU Award Earnings" formula.
Click Edit and then Correct.
Insert a row at the end of the Defaults section.

In the new row, enter:

DEFAULT FOR IMPUTED_GU_AWARD_CLASSIFICATION IS ' '
Find the Grossup Processing Begin section.

Insert a row after the EXITING FLAT AMOUNT FORMULA statement.

In the new row, enter:

If IMPUTED_GU_AWARD_CLASSIFICATION = 'Taxable Benefits' then
(if (additional_amount was not defaulted and additional_amount > 0) then
(L_value = l_value - additional_amount))
l_periodicity = 'PRD'

Change the return l_value line to:

return l_value, additional_amount, l_periodicity

Click Submit, and then compile your formula.
Click Done.
Search for and select the "Imputed GU Award_EARN_BASE" formula.
Click Edit and then Correct.

Find the section with the GET_OUTPUT statements, and add the following rows after the last statement.

l_periodicity                   =   GET_OUTPUT('L_PERIODICITY', 'PRD')
additional_amount               =   GET_OUTPUT('ADDITIONAL_AMOUNT', 0)

Find the Return section, and add a comma to the l_multiple statement.
```
l_multiple,
```
After that line, add the following.
```
l_periodicity,
additional_amount
```
Click Submit, and compile your formula.
Click Done.

Define a Supplemental Earnings Element

You now need an element to that creates the additional earnings needed to withhold the proper taxes.

To do this:

Use the Elements task to define a Supplemental Earnings element.

Field name	What you enter
Primary Classification	Supplemental Earnings
Secondary Classification	Awards and Prizes
Category	Standard
Element Name and Reporting Name	Award Noncash
Employment Level	Assignment level
Recurring or Nonrecurring	Nonrecurring
Process the element only once in each payroll period?	Yes
Can person have more than one entry in period?	No
Process and pay separate or with other earnings?	Process and pay with other earnings
Tax across multiple pay periods?	No
Calculation Rule	Flat amount
Default Periodicity	Periodically
Periodicity Conversion Rule	Standard Rate Annualized
Work Units Reported	None
Subject to Retro	No
Include in earnings calculation of overtime base rate?	No
Include in hours calculation of overtime base rate?	No

Create element eligibility by clicking Element Eligibility in Element Overview and then selecting Create Element Eligibility from Actions.
Click Submit.
Configure the Periodicity Conversion Rule input value.
1. Select the Periodicity Conversion Rule input value.
2. Click Edit and then Correct.
3. Deselect Required.
4. Click Submit.
Configure the Reporting Unit input value.
1. Select the Reporting Unit input value.
2. Click Edit and then Correct.
3. Deselect Required.
4. Click Submit.
Click Done.

Update Your Imputed Earnings Element's Status Processing Rule

You need to update the status processing rule to coincide with the changes you made to the fast formula.

To to do this:

Using the Elements task, search for and select your Imputed GU Award element, using the effective date of the element.
Select the Imputed GU Award Earnings status processing rule.

Add a row.

Field name	What you enter
Result Returned	`ADDITIONAL_AMOUNT`
Result Rule	Indirect Result
Target Element Name	Award Noncash
Target Input Value	Amount

Add another row.

Field name	What you enter
Result Returned	`L_PERIODICITY`
Result Rule	Indirect Result
Target Element Name	Award Noncash
Target Input Value	Periodicity

Click Submit and then Done.

Define Element Entries

To define the element entries for the net-to-gross element:

Start the Element Entries task.
Search for the person receiving the earnings.
Click Create.
Enter an appropriate effective date, and select the imputed earnings element you defined previously.
Enter the net value you want to use for the net-to-gross calculation in Net.
Click Submit and Done.

Perform a QuickPay Operation to Generate the Imputed Net-to-Gross Payment

To process the imputed net-to-gross payment using the QuickPay action:

Perform a QuickPay operation using the Regular run type and the pay period during which you entered the Imputed Gross-Up Earnings element to the person's element entry.

Deselect all elements except:
- US Taxation
- Imputed GU Award
For further info, see How QuickPay Is Processed in the Help Center.
Once the process completes, view the Statement of Earnings to review the results.