Elements of Paycheck Taxes About Your Presenter Nicole

Elements of Paycheck Taxes

About Your Presenter Nicole Apostola Peoplesoft Applications Specialist, University of Massachusetts Background: PS business analyst since v 7. 5; HR, FS

Agenda Federal Taxable Gross Calculation Federal Withholding Calculation ◦ Annualized ◦ Supplemental FICA Additional Medicare State Withholding Reciprocity Rules

Federal Taxable Gross Calculation

Federal Taxable Gross is based on… Formula: Total Earnings Subject to FWT Less: Pretax Deductions Plus: Taxable Benefit Deductions Important to review: Earnings Setup for Erncds on the Paycheck Deductions Setup for Dedcds on the Paycheck

Total Gross

Earnings Setup – Taxes Tab

Taxable Gross: Earnings

Taxable Gross: Earnings Code EER REG PUA Total 51. 00 12, 378. 50 5, 193. 52 Add to Gross? Subject to FWT? Y Y N N Y Y 17, 572. 02

Taxable Gross: Deductions

Taxable Gross: Deductions Deduction Classification After Tax Before Tax Nontaxable Benefit Nontaxable Btax Benefit Taxable Benefit Effect on Federal Taxable Gross No effect Subtract No effect Add

Taxable Gross: Putting it Together Total Earnings Subject to FWT 17, 572. 02 Less: Pretax Deductions (2, 399. 60) Plus: Taxable Benefit Deductions 30. 46 15, 202. 88

Taxable Gross: Putting it Together

Federal Withholding Calculation

Federal Withholding is based on… Earnings Setup: Annualized or Supplemental Pay Frequency/Tax Periods from Paycheck Employee Tax Data ◦ ◦ Special Withholding Status Tax Marital Status Withholding Allowances Additional Amount Tax Table ◦ Allowance Amount ◦ Supplemental Wage Rate ◦ Low Gross, Low Tax, Tax Rate

Earnings Setup: Tax Method

Earnings Setup: Specified on Paysheet

Evaluating Earnings Codes Earnings Code EER REG PUA Total 51. 00 12, 378. 50 5, 193. 52 Add to Gross? Y Y N Subject to Annualized or FWT? Supplemental N n/a Y A Y S

Evaluating Earnings Codes Earnings At Supplemental Earnings At Annualized Rate Code Rate (Add to Gross) REG PUA Total 12, 378. 50 0 0 0 Earnings At Supplemental Rate (Don’t Add to Gross) 0 5, 193. 52

Arriving at Taxable Wages Earnings At Annualized Rate Earnings At Supplemental Rate (Don’t Add To Gross) Earnings Subject to FWT 12, 378. 50 5, 193. 52 Less: Pretax Deductions -2, 399. 60 n/a Plus: Taxable Benefit Deductions Taxable Wages 30. 46 10, 009. 36 n/a 5, 193. 52

Federal Withholding is based on… Earnings Setup: Annualized or Supplemental Pay Frequency/Tax Periods from Paycheck Employee Tax Data ◦ ◦ Special Withholding Status Tax Marital Status Withholding Allowances Additional Amount Tax Table ◦ Allowance Amount ◦ Supplemental Wage Rate ◦ Low Gross, Low Tax, Tax Rate

Pay Frequency/Tax Periods

Earnings - Annualized Earnings At Annualized Rate Taxable Wages Times Pay Frequency’s PPs per Year Divided by Tax Periods Annualized Earnings 10, 009. 36 x 26 ÷ 1 260, 243. 36

Federal Withholding is based on… Earnings Setup: Annualized or Supplemental Pay Frequency/Tax Periods from Paycheck Employee Tax Data ◦ ◦ Special Withholding Status Tax Marital Status Withholding Allowances Additional Amount Tax Table ◦ Allowance Amount ◦ Supplemental Wage Rate ◦ Low Gross, Low Tax, Tax Rate

Employee Tax Data

Tax Table: General Tab

Annualized Taxable Earnings Taxable Gross Earnings At Annualized Rate 10, 009. 36 Times Number of Pay Periods x 26 Divided by Tax Periods Annualized Earnings ÷ 1 260, 243. 36 Allowance Amount from Tax Table 4, 500. 00 Times Employee's Allowances x 5 Less: Allowances (20, 250. 00) Annualized Taxable Earnings 239, 993. 36

Tax Table: Rates Tab

Annualized Tax Withholding Annualized Taxable Earnings At Annualized Rate 239, 993. 36 Less: Low Gross from Tax Table (160, 450. 00) Remainder to tax at rate from table 79, 543. 36 Times Tax Rate from Fed Tax Table x 0. 28 Calculate Tax from Low Gross 22, 272. 14 Plus Low Tax from Fed Tax Table 29, 517. 50 Total Annualized Tax Withholding 51, 789. 64

Biweekly Annualized Tax Withholding Earnings At Annualized Rate Total Annualized Tax Withholding 51, 789. 64 Divide by Number of Pay Periods ÷ 26 Current Tax Calc Additional Amt from EE Tax Data 1, 991. 91 Total Annualized Tax Withholding 1, 991. 91 0. 00

Supplemental Wage Rate

Supplemental Tax Withholding Earnings At Supplemental Rate (Don’t Add To Gross) Taxable Wages Times the Supplemental Wage Rate Supplemental Withholding 5, 193. 52 x 0. 25 1298. 38

Total Withholding Earnings At Supplemental Rate (Don’t Add To Gross) Annualized Tax Withholding PLUS Supplemental Withholding Total Withholding 1, 991. 91 1, 298. 38 3, 290. 29

FICA Calculations

FICA Taxable Gross and Withholding Job Setup: Subject to FICA, Medicare Only, or Exempt Taxable Gross: ◦ Earnings subject to FICA ◦ Minus “Subtracts From” Deductions ◦ Plus “Adds To” Deductions Tax Table YTD Tax Balances Prior to Current Paycheck

Job FICA Status

Earnings FICA Status

Earnings Setup

FICA: Earnings Code EER REG PUA Total 51. 00 12, 378. 50 5, 193. 52 Add to Gross? Subject to FICA? Y Y N N Y Y 17, 572. 02

Deduction Setup

Evaluating Deductions Deduction Code DDTLNF IMPINC 457 DEF 403 EMP HCSAF D_PKBT GICBHB GICBLI Effect on FICA Gross No effect Adds to No effect Subtracts from Subtracts from Amount on Paycheck 22. 80 30. 46 2181. 80 50. 00 1. 15 19. 23 145. 79 1. 63

FICA Taxable Gross Earnings Subject to FICA Less: Subtracts From Plus: Adds to Total 17, 572. 02 -217. 80 30. 46 17, 384. 68

Federal Tax Table – Additional Rates

YTD Tax Balances Prior to Current Paycheck YTD Taxable Gross Plus: Current Taxable Gross New YTD Taxable Gross Times Tax Rate Calculated YTD Tax Less YTD Tax Calculated Current Tax Medicare 278, 635. 80 17, 384. 68 296, 020. 48 0. 0145 4, 292. 30 (4, 040. 22) 252. 08

Additional Medicare

Federal Tax Table – Special Tax Amts

Federal Tax Table – Additional Rates

YTD Tax Balances Prior to Current Paycheck New YTD Taxable Gross Less: Special Tax Amount Additional Medicare Taxable Amount Times Tax Rate Calculated YTD Tax Less YTD Tax Calculated Current Tax Medicare 296, 020. 48 200, 000. 00 96, 020. 48 0. 009 864. 18 (707. 72) 156. 46

State Taxable Gross

State Taxable Gross is based on… Formula: Total Earnings Subject to SWT Less: Pretax Deductions Plus: Taxable Benefit Deductions Important to review: Tax Location(s) Earnings Setup for Erncds on the Paycheck Deductions Setup for Dedcds on the Paycheck

Tax Location Code on Job

Update Tax Distribution page

State on Paycheck Earnings

Employee State Tax Data

Taxable Gross Component

Taxable Gross Definition Table

State Tax Reciprocity