Limit Taxes

The payroll process enforces most tax limits at the payroll relationship level. This means it tracks them across the tax reporting units (TRUs) within their parent payroll statutory unit (PSU).

By default, the payroll process enforces the maximum wage and tax limits for all federal limit taxes at the PSU level. For state limit taxes, it does this at the TRU level.

However, you can override how the process tracks these limits.

Note: If you must have multiple PSUs, and you want the payroll process to access person-level balances across them, you can import balances from one PSU to another. For further info, see Oracle Cloud Human Capital Management for United States: Balance Adjustments (1600728.1) on My Oracle Support.

How Payroll Relationships Affect Limit Taxes

A payroll relationship is the association between a person and a PSU. It represents the highest level of balance aggregation.

Employees working in multiple TRUs under the same PSU would have a single payroll relationship. The payroll process would have access to payroll relationship-level balances that span multiple TRUs through their parent PSU.

Employees working in multiple PSUs must have multiple payroll relationships, one for each. In these cases, their person-level balances can't span across their payroll relationships.

How to Configure Federal Limit Taxes

Federal limit taxes include Social Security and FUTA. If you have multiple TRUs associated with your PSU, the process enforces the limits across all of them. For example, this is a common configuration if you're using a common paymaster.

However, you can override this default and track your federal-level limit taxes by individual TRU.

Perform this configuration before your first payroll run of the calendar year.

Caution: This procedure involves configuring your Federal Income Tax calculation component. FIT is NOT a limit tax. This won't impact your calculation of FIT. This solution was designed as a matter of convenience.

1. Start the Legal Reporting Unit Calculation Cards task from your implementation project.

2. Search for and select your TRU calculation card.

   Do this for each of your TRU cards.

3. In Calculation Card Overview, click Federal.

4. Click Federal Income Tax.

5. Click Enterable Calculation Values on Calculation Cards.

6. Click Add.

7. In Display Value, select Federal Tax Limit Enforcement Level.

8. In Value, enter Tax Reporting Unit.

9. Click OK.

10. Click Save and Close.

How to Configure State Limit Taxes

By default, the payroll process tracks all state taxes with limits at the individual TRU level, such as state unemployment insurance (SUI) and state disability insurance (SDI).

However, you can override this default and track your state-level limit taxes at the parent PSU level.

Perform this configuration before your first payroll run of the calendar year.

Caution: This procedure involves configuring your Federal component group and Federal Income Tax calculation component. FIT is NOT a state-level limit tax. This won't impact your calculation of FIT. This solution was designed as a matter of convenience.

1. Start the Legal Entity Calculation Cards task from your implementation project.

2. Search for and select your PSU calculation card.

3. In Calculation Card Overview, click Federal.

4. Click Federal Income Tax.

5. Click Enterable Calculation Values on Calculation Cards.

6. Click Add.

7. In Display Value, select State Tax Limit Enforcement Level.

8. In Value, enter Payroll Statutory Unit.

9. Click OK.

10. Click Save and Close.