Taxation for Healthcare Workers Special Bonus in New York (NY)

Overview

Updated 12/29/2022

What is the Taxation for Healthcare Workers Special Bonus? The generic transaction type of Healthcare NY Bonus can be used to exclude tax amounts and taxable wages from the employees’ payment. NY has authorized special bonus payments for healthcare workers. Clients have customers that need to pay it out. Clients requested that we use user-defined compensations. Due to this being a new point-in-time bonus, it was determined that we should exclude the tax amount and taxable wages on a return from Vertex. In order to get the correct supplemental taxation, we are passing the Vertex Comp Code of BONUS. To accomplish this, we created a new generic transaction type. This generic transaction type uses a Vertex code of Bonus, emphasizing that it must be used and processed independently from other compensation codes to not impact the taxation of the other earnings.

Chapters Basic Transaction Type Information Steps to Follow Setting Up the Transaction Type Using the Transaction Type

Click on the below links to access related information:

• Add / Edit Transaction Types – Avionte Classic

Basic Transaction Type Information

Basic transaction type details are as follows:

• Vertex Pay Code of "Bonus" (Supplemental Flat Rate of 22% for Federal)
• Hardcoded system name: HWSBNY
• Name: Healthcare NY Bonus
• Description: Healthcare Workers Special Bonus in New York
• Transactional
• Taxability is defined by compliance
• DRM is set so that Healthcare Workers Special Bonus in New York will not process combined with any other transaction type

Healthcare NY Bonus Transaction Type Details

• Healthcare NY Bonus Transaction type now has W2Box defaulted with a value of 14 and W2Label with a value of Healthcare worker bonus.
• When NY healthcare is paid:
  • NY WH, NEW YORK and YONKERS taxes should all have $0 Taxable Gross and $0 Tax Amount.
  • Federal WH should be taxed at the current supplemental flat rate (22% for 2022 at the time of this writing).
• When the paycode for NY Healthcare has been processed / posted for an employee, the wages are reflected on the W2 in Box 1, Box 16 and Box 14 with a label of "Healthcare worker bonus"

Jurisdictions that require changes in taxability

Excludes the following:

Jurisdiction	Detail
NY WH	Authority code 33-000-0000 Vertex tax ID [450]
New York Local	Authority code 33-061-2010 Vertex tax ID [530]
Yonkers	Authority code33-119-3230 Vertex tax ID [530]

Note: Due to the system removing the above taxes after the third-party tax calculation, this compensation code cannot be combined with any other transaction type.

Related Time Entry and Payroll DRM's

Type	Severity	System Name	Error text
Time Entry DRM	Severe Error	tbv_CheckForHealthcareNYBonusWithOtherPaycodes	"Employee has a transaction with pay codes other than Healthcare NY Bonus. The bonus must be processed separately from other pay."
Payroll DRM	Severe Error	pbv_CheckForHealthcareNYBonusWithOtherPaycodes	"Employee has pay codes other than Healthcare NY Bonus. The bonus must be processed separately from other pay."

Steps to Follow

Setting up the Transaction Type

The transaction type is added by default to all relevant clients.

1. Within Admin Tools > System > Transaction Type > Detail:
2. Search for the Name "healthcare"
3. Select Healthcare NY Bonus
4. Select the checkboxes in the "Shared By" section to include all branches to which it should be applied.
5. Save.

Screenshot: DRM Setup - Payment Batch Verification

Using the Transaction Type

Transactions with a type of "Healthcare NY Bonus" must be applied independently of other types.

In Time Entry > Sheet View:

If you attempt to process one with Reg or another type, you will receive the "Time Entry DRM" mentioned above.

If this is the case, zero out the Reg or other value and reverify the batch.

In Payroll:

When processing transactions that have "Healthcare NY Bonus" plus an additional type, you will receive the "Payroll DRM" mentioned above.

To address this, View Transactions, and Remove the one that has the additional type associated with it. Reprocess the payroll batch.

In Payroll > Checks:

• You will see NY WH (New York Withholding) - $0.00
• New York Local - $0.00
• YONKERS Withholding - $0.00
• Federal Income Tax will be at the flat rate of 22%