EPY: After Tax Update 11-B SUI, SDI, and State Taxable Grosses are Incorrect if State has a Taxable Gross Definition Table entry where Tax Gross Effect is defined as 'Adds To'.
Last updated on DECEMBER 18, 2015
Applies to:PeopleSoft Enterprise HRMS Payroll for North America - Version 8 to 9.1 [Release 8 to 9]
Information in this document applies to any platform.
TAX CHANGES AND ISSUES
This modifies PSPPYNET.CBL to correctly calculate resident state withholding tax on a manual check for an employee in the following scenario:
- The employee lives in New Jersey and works in New York (State Tax Reciprocity Table = State Rule 2); and
- The employee’s wages are subject to the employer-paid New York MTA Payroll Tax; and
- The employee has prior existing tax balances for New Jersey withholding tax; and
- A manual check is entered and processed for the employee which does not include one-time tax overrides for New Jersey withholding tax.
Prior to the modifications, the following error was generated when Pay Calculation was processed for an employee when all of the above conditions were present:
“000051: The calculated values for total gross and net pay displayed below do not match the vales entered with the manual check”.
Delivered in Tax Update 12-C (1466405.1).
After applying Tax Update 11-B, State Unemployment (SUI), State Disability (SDI) and State Withholding (SWT) grosses may not be correct if the state does not follow federal taxation rules, and a taxable gross component definition entry is used to define the different tax requirements.
When the deduction is set up to be taxable at the state level using a Taxable Gross Component ID (Tax Gross Effect = Adds To) for SUI, SDI and SWT grosses, the taxable grosses (SUI, SDI and state) may be understated by the amount of the deductions associated with the TGCID.
- Scenario #1: Customer has set up the taxable gross component ID (401R) on their 401k employer match deductions to support the State of MA, IL and AK requirements that all 401k company match will be included in the SUI taxable gross wage. After 11-B, none of the company match deduction classifications were included in the SUI taxable wage.
- Scenario #2: Set up the taxable gross component ID HSA and HSR on various tax classes (before tax, nontax, nontax pretax) for Health Savings Account, since the deduction is taxable for SUI and SDI. The HSA deduction amounts are not reflected in the SUI and SDI taxable grosses.
- Scenario #3 Customer added a custom Taxable Gross Definition entry for GTL, and attached it to their GTL deduction, since it is taxable for SUI. The GTL amount is not reflected in the SUI taxable grosses.
We have found that in some cases, a manual check will contain negative NJ SDI and FLI taxable grosses.
An issue has been reported where users have defined a Taxable Gross Definition entry for NOSTX (Tax Gross Effect = Subtracts From) for SUI, SDI and state taxable grosses. Employee SDI status = Subject, and the EE has YTD balances.
- Scenario #1 A manual check is issued containing two earnings codes. Earning code 071 is fully taxable for federal, but not for state; earning code H77 is not taxable for federal or state taxes. The NJ SUI and FLI grosses are negative.
- Scenario #2 A manual check is issued for recording third party sick pay. The earning code does not add to gross, is fully taxable for federal taxes, but not state taxes. The NJ SUI and FLI grosses are negative.
For instance, in AR, IL and MA, the company 401k match is not subject to
FUTA, but is subject to SUTA. Customer has setup the delivered taxable gross
component ID (401R) on their 401k employer match deductions so the 401k
company match will be included in the SUI wage gross. In 11-B, none of the
company match deductions were included in the SUI taxable or no-limit
grosses. 401k is only one scenario. The same issue did occur with other
deductions that were set up to be taxable at the state level, but not at the
If the employee is paid a small amount of REG earnings and PTO, and PTO is
not subject to CA SDI (or VDI) and CA UI, and the employee had a large pretax
deduction, the CA SDI (or VDI) and CA UI taxable and no-limit grosses are
Also, when the employee is subject to NJ SDI (or NJ VDI) and NJ FLI (or NJ
Vol FLI), or any combination of, and the manual check contains earnings that
are not subject to state taxation (UI, DIS or SWT), negative NJ SDI (or VDI)
and FLI (or VFLI) taxable and no-limit grosses are calculated.
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