Examples of Payroll Calculation Info for the US

The following examples help illustrate how various rules and definitions work together to calculate deductions.

Here are the deductions being calculated.

• Federal (FIT) and state income taxes (SIT)

• Medicare

• Social Security

Each example provides sample values for the following rules and definitions.

• Component group

• References for wage basis rules

• References for calculation factors

• Wage basis rules

• Related elements

• Calculation factors for elements

• Associations for tax reporting

Income Tax Deductions for Federal and State

You must provide sufficient info for the payroll process to apply the correct SIT and FIT deductions for each employee.

Based on regional values from the employee's record, the payroll process uses the following to calculate the SIT.

What it uses	Where it comes from
Declared allowances	These are defined on the employee tax card. For further info, see Tax Withholding Card in the Help Center.
Marital status, where appropriate	These are defined on the employee tax card.
Taxable wages	These are determined by your wage basis rules. For further info, see Tax Wage Basis Rules for the US in the Help Center.

To view the wage basis rules the payroll process uses to calculate the FIT and SIT deductions, use the Component Group Rules task.

For example, the following displays some of the values for FIT and California SIT.

Primary classification	Secondary classification	Is it subject FIT?	Is it not withholdable for FIT?	Is it subject to SIT?	Is it not withholdable for SIT?
Standard Earnings	All	Yes		Yes
Imputed Earnings	Cash Tips Reported	Yes		Yes
	Domestic Partner Nondependent	Yes
	Group Term Life		Yes		Yes
	Moving Expense Nonqualified and Taxable	Yes		Yes
	Noncash Award	Yes		Yes
	Personal Use of Company Car		Yes	Yes
Pretax Deductions	Health Savings Account			Yes
	Health Savings Account Catch Up			Yes
Supplemental Earnings	Awards and Prizes	Yes		Yes
	Bonus	Yes		Yes
	Cafeteria Plan	Yes		Yes
	Commission	Yes		Yes
	Deferred Compensation Distribution	Yes		Yes
	Dismissal Payments	Yes		Yes
	Jury Duty Pay	Yes		Yes
	Moving Expense Nonqualified	Yes		Yes

Medicare Deductions

For Medicare, both the employer and the employee contribute to the tax, but the employee contribution rate varies based on their wages.

The payroll process calculates the deduction by:

1. Calculating the base amount for the employee's contribution.

2. Calculating the base amount for the employer's contribution.

3. Calculating the employee's contribution amount.

4. Calculating the employer's contribution amount.

To view the wage basis rules the payroll process uses to calculate the Medicare tax deductions, use the Component Group Rules task.

Primary classification	Secondary classification	Is it subject to Medicare?
Standard Earnings	All	Yes
Imputed Earnings	All	Yes
Pretax Deductions	Deferred Compensation 401k	Yes
	Deferred Compensation 401k Catch Up	Yes
	Nonqualified Deferred Compensation	Yes
Supplemental Earnings	Awards and Prizes	Yes
	Bonus	Yes
	Commission	Yes

Social Security Deductions

For Social Security, both the employer and the employee contribute to the tax.

Note: The Social Security wage limit changes each year.

The payroll process calculates the deduction by:

1. Calculating the base amount for the employee's contribution.

2. Calculating the base amount for the employer's contribution.

3. Calculating the employee's contribution amount.

4. Calculating the employer's contribution amount.

To view the wage basis rules the payroll process uses to calculate the Social Security tax deductions, use the Component Group Rules task.

Primary classification	Secondary c	Is it subject to Social Security?
Standard Earnings	All	Yes
Imputed Earnings	All	Yes
Pretax Deductions	Deferred Compensation 401k	Yes
	Deferred Compensation 401k Catch Up	Yes
	Nonqualified Deferred Compensation	Yes
Supplemental Earnings	Awards and Prizes	Yes
	Bonus	Yes
	Commission	Yes