Calculation Rules for Federal Taxes

You can define the following calculation rules on the organization cards.

Tax type	What you can select	What it does
Federal income tax (FIT)	Supplemental Tax Calculation Method	Indicates how the process taxes supplemental earnings. You can select the following. Aggregation Flat Percentage Do this from Calculation Component Details for the FIT component. For further info, see Tax Calculation Methods for the US in the Help Center.
	Tax Withholding Rules	Taxes all earnings based on withholding rules. You can select: All states Only states under state tax rules If you select this, you must add those states in Regional Component Group. Do this from Calculation Component Details for the FIT component.
	Enable Period-to-Date Tax Calculation	By default, multiple regular payroll runs in the same period are taxed as if they're individual payments. When you set this to Yes, multiple payroll runs are taxed as if they're paid as one payment. This option can possibly increase the tax bracket. Do this from Calculation Component Details for the FIT component. Note: This applies to state income tax (SIT) as well.
	Aggregate Overtime Premium Rate for all TRUs within the PSU	Determines how to calculate the premium overtime rate of multiple tax reporting units (TRUs) under the same payroll statutory unit (PSU). Do this on the Overtime Rules calculation component.
	Enforce Federal Income Tax Look-Back Rule	Determines if the payroll process withholds FIT from the employees' supplemental earnings using the aggregate tax method instead of the flat rate. Do this from Enterable Calculation Values on Calculation Cards for the FIT component. For further info, see Federal Income Tax Look-Back Rule in the Help Center.
Medicare	Self-Adjustment Method	Evaluates the earnings and tax amounts to ensure they're correct with a given tax rate. When all subject earnings reach the annual maximum limit, the payroll process no longer calculates the tax. For further info, see Self-Adjustment Methods for Tax Withholding in the Help Center.
Federal unemployment insurance (FUTA)	Employer Self-Adjustment Method	Evaluates the earnings and tax amounts to ensure they're correct with a given tax rate. When all subject earnings reach the annual maximum limit, the payroll process no longer calculates the tax. For further info, see Self-Adjustment Methods for Tax Withholding in the Help Center.
	Federal Unemployment Employer Rate override	If you have locations in a FUTA credit reduction state, your FUTA rate might change. FUTA credit reduction rates are predefined for each of the states that require a credit reduction and are updated annually. In certain circumstances, you must override these rates. Use the Calculation Value Definitions task to set an override rate. For further info, see Federal Unemployment Tax Act Calculations in the Help Center.
Social Security	Self-Adjustment Method	Evaluates the earnings and tax amounts to ensure they're correct with a given tax rate. When all subject earnings reach the annual maximum limit, the payroll process no longer calculates the tax. For further info, see Self-Adjustment Methods for Tax Withholding in the Help Center.
Limit taxes	Federal Tax Limit Enforcement Level	Define how the payroll process tracks limits for federal taxes. For further info, see Limit Taxes in the Help Center.
	State Tax Limit Enforcement Level	Define how the payroll process tracks limits for state taxes.

To define these calculation rules:

Start the Legal Entity Calculation Cards task from your implementation project, and open the card.
Select Federal.
Provide the effective date, and select the appropriate calculation component.
In Details, set the values you want to use.
Click Save and Close.