Use Element Entries for Tax Refund Balance Adjustments for the US

You can define elements specifically for tax balance adjustments. Use them to adjust the predefined taxes through their element entries.

You have a couple options when it comes to configuring these elements and their input values.

What you can do	How you do it
Use the Elements task	Use the Elements task to define elements strictly for adjusting tax balances. These elements use the Employee Tax Deductions and Employer Taxes primary classifications.
Use the HCM Data Loader (HDL)	Use HDL to define multiple tax elements and their related input values simultaneously. For further info, see HCM Data Loader guide in the Help Center.

This method:

• Reduces the steps involved when performing multiple balance adjustments

• Gives you the ability to define costing that might be different than what you have set up for the predefined tax elements

• Lets you process these adjustments in a payroll calculation or QuickPay process and have the results reflected on the employee's payslips

  This is especially useful when you want to:

  1. Refund taxes withheld in error.

  2. Have them included in the employee's payment.

  3. Have them displayed at the same time on the payslip.

• Can have its transactions picked up by downstream tax reporting processes and reports

To perform this type of balance adjustment:

1. Identify the tax balances you're adjusting.

2. Define the tax adjustment elements.

3. Add element entries for these elements.

4. Process payroll.

   The payroll process adjusts the corresponding taxes using the element entries.

For further info, see the following sections.

What Tax Balances Need Adjusting

This method uses elements you've defined for balance adjustments. Therefore, you must manually identify which tax balances are impacted and define their feeds.

Use the Balance Results task to see what tax balances apply to a balance group in the target person's payroll relationship. For example, a search for the Federal Income Tax (FIT) balance group returns balances for FIT Gross, FIT Subject Withholdable, FIT Subject Withholdable, and FIT Withheld.

These tax balances form the basis for that tax's reporting.

For example, the sum of the Subject Not Withholdable and Reduced Subject Withholdable balances for FIT is the amount Form W-2 reports as "Wages, tips, other compensation" in Box 1. FIT Withheld is the balance reported as "Federal income tax withheld" in Box 2. Because adjusting tax balances can impact legislative reporting, it's important you know what balances you are updating. Otherwise, it could result in out-of-balance conditions that you must address when you perform periodic or year-end tax reporting.

Here's an overview of the different types of tax balances you can adjust.

Type of tax balance	What it tracks
Gross	Total earnings, calculated from earnings elements (regular, supplemental, and imputed earnings), except nonpayroll payments.
Exempt	Earnings elements that aren't subject to tax. Some imputed earnings fall into this category.
Subject Withholdable	All taxable earnings from which the payroll process calculates taxes that pretax deductions don't reduce. Most regular, supplemental, and imputed earnings are subject to tax.
Subject Not Withholdable	All taxable earnings from which taxes aren't calculated or withheld during payroll processing. Group Term Life Insurance imputed income is an example of a taxable earning for which taxes aren't withheld.
Pretax Reductions	The total amount of pretax deductions that reduce taxable earnings, such as 401 (k), 403 (b), 457, Dependent Care, and Section 125.
Deferred Compensation 401k Reductions	Section 401 (k) amount that reduces taxable earnings.
Deferred Compensation 403b Reductions	Section 403 (b) amount that reduces taxable earnings.
Deferred Compensation 457 Reductions	Section 457 (b) amount that reduces taxable earnings.
Dependent Care Reductions	Dependent care amount that reduces taxable earnings. Note: This isn't included in the Section 125 Reductions total because it's covered separately according to Section 129 of the IRS code.
Section 125 Reductions	Section 125 amount that reduces taxable earnings.
Other Reductions	Pretax amount that: Doesn't fall into the 401 (k), 403 (b), 457 (b), Dependent Care, and Section 125 categories. Reduces taxable earnings.
Reduced Subject Withholdable	All taxable earnings reduced by Subject Not Withholdable earnings and pretax reductions.
Taxable	The amount of taxable earnings subject to limits, such as Social Security (SS), Federal Unemployment Tax (FUTA), State Disability Insurance (SDI), and State Unemployment Insurance (SUI). When earnings reach the limit, taxable amounts don't continue to increase past the limit. Thus, when you're making balance adjustments for taxes subject to limits you must make sure you keep this upper limit in mind.
Excess	Taxable earnings subject to earnings limits, such as SS, FUTA, SDI, and SUI, whose taxable earnings are greater than the defined limit. If the taxable balance isn't equal to the government-regulated limit, the excess balance should be $0.
Withheld	The amount of tax withheld from the employee and is reported on the W-2.
Liability	The amount of the employer tax.

How to Configure the Tax Adjustment Elements

If you plan to use HCM Data Loader (HDL), use these Task and Task Action Names to configure the element and input values. For further info, see the following.

• Loading US Data Using HCM Data Loader (2558276.1) on My Oracle Support

• Overview of Loading Elements in the Help Center

You can create elements to adjust these taxes.

For this tax type	Check here in the Help Center
City taxes	Configure City Tax Residence Elements for Balance Adjustments Configure City Tax Work Elements for Balance Adjustments Configure Head Tax Elements for Balance Adjustments
County taxes	Configure County Mental Health Work Tax Elements for Balance Adjustments Configure County School District Tax Work Elements for Balance Adjustments Configure County Residence Tax Elements for Balance Adjustments Configure County Work Tax Elements for Balance Adjustments
Federal taxes	Configure FIT Elements for Balance Adjustments Configure FUTA Elements for Balance Adjustments Configure Medicare Employee Tax Elements for Balance Adjustments Configure Medicare Employer Tax Elements for Balance Adjustments Configure Social Security Employee Elements for Balance Adjustments Configure Social Security Employer Elements for Balance Adjustments
School district tax	Configure School District Residence Tax Elements for Balance Adjustments
State taxes	Configure FLI Employee Tax Elements for Balance Adjustments Configure SDI Employee Elements for Balance Adjustments Configure SDI Employer Elements for Balance Adjustments Configure SIT Residence Elements for Balance Adjustments Configure SIT Work Elements for Balance Adjustments Configure SUI Employee Elements for Balance Adjustments Configure SUI Employer Elements for Balance Adjustments Configure State Transit Tax Elements for Balance Adjustments
Voluntary tax	Configure Voluntary Plan Employee Disability Insurance Tax Elements for Balance Adjustments

During element definition:

• Be sure to give them meaningful names to help you remember they're for tax adjustments.

  Such as Tax Adjustment State Income Tax or TA State Income Tax.

• If you're using the state, county, or city geography codes as input values, configure their display sequence in this order.

  Geography code	Display sequence
  State	1
  County	2
  City	3

Create the Element Entries for Your Elements

You perform the balance adjustment by creating the element entries for your tax balance adjustment elements.