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Tax Wage Types

Attachments:1 Added by S Karthik, last edited by Gabriel Bellina on Apr 05, 2012 (view change)

Purpose
This document provides basic information about WT configuration for tax calculation and output technical wage types.

Overview
US payroll will perform tax calculation (payroll function USTAX) accordingly to the configuration of each wage type assigned to each employee. The tax calculation process outputs are used to fill technical wage types and, later, the cluster tables.

A. User-defined tax wage types

Tax wage types are defined by Processing Class 68, 69, and 71: PRCL 68 - determines the tax method PRCL 69 - defines if it is an earning or deduction PRCL 71 - indicates the tax class (customer-defined)

Fig. 1 Screenshot of tcode SM30 view V_512W_O: wage type M003 processing class configuration

Taxable earnings PRCL 68 must be set to one of the following 6 values: * 1 - regular * 2 - supplemental * 3 - cumulative * 4 - vacation * 5 - gross-up regular * 6 - gross-up supplemental (BSI only allows for these types of taxable earnings) PRCL 69 must be set to: * 1 - taxable earning PRCL 71 must be set to: * one tax class based on the tax model

B. SAP technical tax wage types

Most commonly used: /3xx - total gross earnings (w/o deductions) /4xx - tax amount (returned from BSI) /6xx - gross earnings (w/ deductions) /7xx - taxed earnings (returned from BSI) Other technical wage types: /Qxx - taxable not taxed /Nxx - tax not taken /Ixx - deductions not applied /3xx - Gross earnings: Total gross earnings not including any pre-tax deduction. Example: Salary : $1,000 401K pre-tax deduction : $ 200 /3xx : $ 1,000 /4xx Tax amount Tax calculated and returned by BSI /6xx Taxable earnings: Gross earnings less pre-tax deduction amount. Amount passed to BSI for tax calculation. Example: Salary : $1,000 401K pre-tax deduction : $ 200 /6xx : $ 800 /7xx Taxes earnings Taxed earnings returned by BSI. Reportable earnings amount. Example: /603 EE FICA : $10,000 YTD /603 : $80,000 FICA ceiling : $87,000 /703 : $7,000

/Qxx Taxable but not taxed Any reportable amount from which no taxes are withheld. PRCL 69 = 3 Usually used for assessments of non-cash benefits. Example: Use of company car : $500 (assessed value) /4xx : $0 /Qxx : $500 /Nxx Tax note taken Tax calculated but not able to be taken (not enough cash). These wage types are built in payroll function UTPRI and depend upon settings in table T5US0 and T51P1. /Ixx Pre-tax deductions not taken Result of pre-tax deductions exceeding taxable earnings. /Ixx stores the amount that would have been reduced if taxable earnings existed to be reduced. Example: Vacation Payout : $1,000.00 Medical deduction : $100.00 Fed: 01 (FIT) : 1000 - 100 = 900 03 (EE FICA) : 1000 - 100 = 900 CA: 01 (SIT) : 1000 - 100 = 900 41 (SDI) : 0 - 100 = -100 moved into /I41 $100 /Ixx holds a taxable deduction that has not been used for the EE's benefit.

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