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Additional Federal Income Tax (FIT) and State Income Tax (SIT) Are Deducted from Earnings Before Pre-Tax Deductions (Doc ID 270136.1)

Last updated on AUGUST 15, 2024

Applies to:

Oracle HRMS (US) - Version 12.1.3 and later
Information in this document applies to any platform.

Symptoms

Additional Federal Income Tax (FIT) and State Income Tax (SIT) are deducted from earnings before pre-tax deductions.

Example:

Employee has pre-tax deduction for $30 and supplemental Bonus element $34. After the payroll run, the statement of earnings (SOE) shows that the system took FIT tax, Social Security (SS) and Medicare, leaving employee with zero net pay.

Scenario 1 - there is FIT additional tax and not enough earnings to cover that

Additional FIT tax is $150
Bonus element entry values amount $34
Pre-tax deduction amount is $30

SOE for a QuickPay shows:

Gross Pay:      34.00
FIT:                 31.01
Medicare:          0.49
SS:                  2.10
SDI (CA):         0.40
SIT (CA):         0.00
Pre-tax Med      0.00
Net Pay:           0.00

In this case, the system takes taxes first and then considers pre-tax deductions.


Scenario 2 - there is no additional FIT

SOE for a QuickPay shows:

Gross Pay:    34.00
FIT:                0.00
Medicare:       0.06
SS:                0.25
SDI (CA)        0.05
SIT (CA):         .00
Pre-tax Med: 30.00
Net Pay:         3.64

In this case, system takes pre-tax deduction first and then calculates taxes.

Steps to Reproduce
----------------------

From US HRMS Manager responsibility:

  1. Enter extra FIT tax amount for an assignment.
        Navigate: People > Enter and Maintain > query for employee > Assignments > Tax Info
  2. Run QuickPay (or payroll process) for a period with low earnings
        Navigate for QuickPay: People > Enter and Maintain > query for employee > Assignments > Others > QuickPay
        Navigate for payroll process: Processes and Reports > Submit Processes and Reports > Single Request
  3. Review SOE and see taxes were taken, but pre-tax deduction was not.
        Navigate: People > Enter and Maintain > query for employee > Assignments > Others > Statement of Earnings

 

Changes

 

Cause

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