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.
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Federal (FIT) and state income taxes (SIT)
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Medicare
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Social Security
Each example provides sample values for the following rules and definitions.
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Component group
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References for wage basis rules
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References for calculation factors
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Wage basis rules
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Related elements
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Calculation factors for elements
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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:
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Calculating the base amount for the employee's contribution.
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Calculating the base amount for the employer's contribution.
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Calculating the employee's contribution amount.
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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.
The Social Security wage limit changes each year.
The payroll process calculates the deduction by:
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Calculating the base amount for the employee's contribution.
-
Calculating the base amount for the employer's contribution.
-
Calculating the employee's contribution amount.
-
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 |