EPY: Excessive Resident State Tax on Supplemental Wages Paid for Work in Other Tax Jurisdictions Under Specific Conditions (Doc ID 1530729.1)

Last updated on DECEMBER 18, 2015

Applies to:

PeopleSoft Enterprise HRMS Payroll for North America - Version 8.8 and later
Information in this document applies to any platform.

Symptoms

Issues:

  1. State withholding tax on payments of supplemental wages paid separately from regular wages (separate on-cycle check) to employees who are paid for work performed in one or more tax jurisdictions outside of their residence state are excessive, when the residence state's specified supplemental tax method is Aggregate and the applicable reciprocity rule calls for the residence state's tax to be withheld to the extent that it exceeds the tax withheld for the work tax jurisdiction.




  2. The employee’s off-cycle supplemental check (attached to a standalone off-cycle calendar) is excessively taxed for resident taxes on supplemental wages when:

    A.  Employee lives in a state which uses the aggregate tax method for Supp payments,

    B.  The resident and employment state use Reciprocity Rule #2.  (i.e., live NJ, work NY),

    C.  Employee is paid a regular earnings and separate check for supplemental earnings in the current payroll, and it is confirmed.

    D. Then the employee is paid supplemental earnings attached to a standalone off-cycle calendar and the PPE for the stand alone calendar is after the last on-cycle’s P/E date.  

         Example:
         Employee is paid REG earnings on the confirmed 1/15/2013 payroll.  (NJ taxes are correct)

         Employee is paid REG and a separate check for supplemental earnings for the 1/31/2013 payroll, and the checks are confirmed.   (NJ taxes on both checks is correct)

         Then, the employee is paid additional supplemental earnings attached to a stand-alone off-cycle calendar for PPE 2/14/2013.  These earnings are paid after the 1/31/13 payroll, and
         should not be aggregated with the earnings for PPE 1/31/2013.   The supplemental earnings should be taxed by themselves.   The taxes are calculated correctly for NY, but not for NJ.


Cause

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