Tax Override Methods for Employee Withholding

SuitePeople U.S. Payroll uses tax rates to calculate the amount of taxes to withhold from employee paychecks. These tax rates are based on each employee's home address and workplace and are listed on the Taxes subtab of each employee record's Payroll subtab. On this same subtab, you can set up tax override methods for special cases where employee withholding should vary from automated tax calculations.

A tax override supersedes the use of allowances to determine employee withholding. For example, an employee may request an override to increase withholding to avoid underpayment of taxes at year end.

Note:

Paychecks are sometimes used to make only non-taxable payments to employees, such as reimbursing expenses. In these cases, because the employee’s taxable wages are zero, tax amounts are zero and tax overrides are not applied.

For information about how to set up override methods and enter tax information onto employee records, see Employee Tax Withholdings and Allowances. For information about entering other payroll information onto employee records, see Payroll Setup for Employees.

You can choose from three different methods for calculating tax overrides. For any tax item listed for an employee, you can select one of these methods and specify an override amount.

Percentage - This method calculates the override withholding as a percentage of the standard withholding amount. The override amount for this method should be entered as a decimal. For example:
- To decrease withholding by half (50%), enter an override amount of 0.5.
- To increase withholding by 25%, enter an override amount of 1.25.
Adjustment Amount - This method increases or reduces the standard withholding amount by a set dollar amount. The override amount for this method should be entered as a positive or negative number, that corresponds to a dollar amount. For example:
- To decrease withholding by $50 per paycheck, enter an override amount of -50.
- To increase withholding by $50 per paycheck, enter an override amount of 50.
Fixed Amount - This method replaces the standard withholding amount with a set dollar amount. The override amount for this method should be entered as a positive number. For example, to withhold $100 per paycheck instead of the standard withholding amount, enter an override amount of 100.

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