E1: 07: Tax Method for W4 Exempt Status is Not Calculating Tax With Supplemental Pay Types
(Doc ID 2625944.1)
Last updated on JANUARY 03, 2020
Applies to:JD Edwards EnterpriseOne US Payroll - Version 9.2 and later
Information in this document applies to any platform.
If an employee is claiming exempt for 2020 you should use tax method (KM Doc ID 2617939.1) so employee is exempt from Federal Taxes. This does not work if an employee receives supplemental pay such as bonus, severance, commission or
COLA payments. According to IRS publication 15 - T these supplemental payments should be taxed at a supplemental rate regardless of exempt status written on the W4 form. This is not the case if using tax method 2 or X for an employee, the Federal Income Tax is not being calculated at the supplemental tax rate and it should.
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