E1:07: Payroll Calculates Taxable Gross Incorrectly with Tax Exempt Fringe Benefit DBA (Doc ID 3068801.1)

Last updated on JANUARY 23, 2025

Applies to:

Symptoms

Payroll is incorrectly calculating Taxable Amounts for Pennsylvania State and Local Taxes for employees using Company Vehicles and residing in PA (Tax Area 39) but working in a different state like New York (Tax Area 33).

More specifically, the Vehicle Fringe Benefit DBA Amount is being doubled when added to the Gross Wages in the Pennsylvania Tax Areas and results in Taxable Gross Amounts that are too high.

Steps to Duplicate:

Setup:
1. Setup Basic DBA information (P059116) for Benefit DBA 6777:
     a. Method of Calculation = D (Rate x Days)
     b. Effect on Gross/Net Pay = 3 (Non Cash Benefit - Taxable)
     c. Amount Rate 1 = 3.000 (3 dollars per day)
     d. Calculate only Once Per Pay Period

2. Tax Exemptions (P05TAX) has four Tax Exemptions
     a. F (State Income Tax)
     b. M (City Income Tax)
     c. MR (City Income Tax)
     d. N (Schools Tax)

3. Employee National and Fiscal Data (P0801US) has the following setup:
     a. Tax Area Residence 390113975 (PA)
     b. Tax Area Work 391331057 (PA)
     c. School District 6750 (PA)

4. Employee DBA Instructions (P050181)
     a. DBA Code 6777 (Fringe - Car)

Test #1 - Employee Resides in PA but works in NY
1. Create Interim Payment (P07210I) – Add Interim
     a. Enter Employee
     b. Pay Type = 1 (Regular Hours)
     c. Hours = 40
     d. Lump Sum Amount = 2,000.00
     e. Work Location is 331110088 (New York)
     f. Click Purple Calculator

2. Review Tax Detail (P073530)
     a. 33 F (State Income Tax NY) Gross = 2,003.00, Excludable = 3.00, Taxable = 2,000.00 (Correct)
     b. 39 F (State Income Tax PA) Gross Pay = 2,006.00, Excludable 2,006.00 (Incorrect - both should be 2,003.00)
     c. 390113975 M (City Income Tax PA) Gross = 2,006.00 (Should be 2003.00), Excludable = 3.000 (Correct), Taxable 2,003.00 (should be 2,000.00)
     d. 390113975 N (School Tax PA) Gross Pay = 2,006.00, (Should be 2003.00), Excludable = 3.000 (Correct), Taxable 2,003.00 (should be 2,000.00)
     e. Fringe was doubled, 6.00 added to Gross Pay instead of 3.00

Test #2 - Employee Resides and works in PA
1. Create Interim Payment (P07210I) – Add Interim
     a. Pay Type = 1 (Regular Hours)
     b. Hours = 40
     c. Lump Sum Amount = 2,000.00
     d. Work Tax Area = 391331057 (Pennsylvania)
     e. Click Purple Calculator

2. Review Tax Detail (P073530)
     a. 39 F (State Income Tax PA) Gross = 2,003.00, Excluable = 3.00, Taxable = 2,000.00 (Correct)
     b. 390113975 M (City Income Tax PA) Gross = 2,003.00, Excluable = 3.00, Taxable = 2,000.00 (Correct)
     c. 390113975 N (School Tax PA) Gross = 2,003.00, Excluable = 3.00, Taxable = 2,000.00 (Correct)

Changes

Cause

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