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*Discrepancy Between Federal & AZ State Taxable Gross Wages Causing W-2 Issue (Doc ID 2628923.1)

Last updated on JANUARY 15, 2020

Applies to:

PeopleSoft Enterprise HCM Payroll for North America - Version 9.2 and later
Information in this document applies to any platform.


When a specific Earnings code that is non-taxable is added to the payline, the Federal and State (AZ) taxable gross is not the same and AZ is overstated.

Even with the non-taxable earnings code attached, the customer is stating that the Federal and Arizona tax should have the same taxable gross.

Ensure the following:

1.  The employee is a resident of one state and works in another state.  (An Arizona resident working in California was the scenario for the customer)
2. On the pay line, the employee has a pre-tax deduction
3. The employee is paid multiple annualized earnings with the following attributes:
           a. Earnings 1: Add to Gross Pay and Subject to FWT
           b. Earnings 2: Do not add to Gross Pay, but Subject to FWT
           c. Earnings 3: Add to Gross Pay, but not Subject to FWT
4.  Prior to the application of the patch the resident state withholding tax was incorrectly calculated for this situation.



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