Employee Payroll - Tax

Updated December 20, 2024 19:29

Within the Employee Payroll section of Avionté, taxes can be set up for an employee.

CHAPTERS

Create Taxes for a New Employee
Create Additional Taxes
Local Tax Overrides
Edit Taxes
View Tax History
Additional Configuration
Tax setup Options

Create Taxes for a New Employee

For newly-created employees, taxes will need to be created. Along with typical default state and federal taxes, local taxes may also need to be added (this is covered in a later topic). In the Employee section, search for and select the new employee.

Expand the Payroll option in the Employee sub-menu and select the Tax option. The Tax tab appears with three vertical tabs displayed to the right:

Tax Setup (default)
U.S. Federal Tax
Tax History
Click the Create Default Taxes button. The Employee’s tax information, based on the Employee's geocode, will be generated and appear in the grid.

Note: If the Employee record does not have a geocode, an error message will appear. Go to the Employee Detail tab and make sure the geocode is entered on the Address sub-tab for the employee.
Review the filing status and exemptions that appear in the grid for each tax displayed, and enter any withholding the employee may have requested in the Add WH field. If any change is made, simply tab out of the edited field to save the change.

Note: Canadian customers will have a column labeled Exemption Amount instead of Exemptions. The values in this column are expressed in dollar amounts in the Canadian version.

State Exceptions:

Nonresident Connecticut Withholding - Tax return a specified % of the original calculation

This applies to nonresidents who have filled out the appropriate supplemental form to the W4 where it specifies what percentage of a talent's job occurs in Connecticut.

We have the ability to have a tax liability calculation return a specified percentage of the original tax calculation for Connecticut Withholding. With this enhancement, the user can configure the system to apply only a percentage of the full tax calculation on taxable wages for Connecticut Withholding.

To apply this configuration, access Employee > Payroll > Tax for an employee that has Connecticut withholding set up.

Double click on the CT WH [State Withholding] item and a new screen appears - Additional Tax Details - CT. You will be prompted to enter the Employer (dropdown), Work Year (dropdown), and % of CT Services (decimal value). If the talent in question worked 80% of their job in Connecticut, you would enter "80.00".

Click Save.
Different amounts can be entered by year if you wish. Reopen the screen and select a different Work Year to apply a different value.
When a new payroll batch is processed, Connecticut Withholding (CT WH) will be updated to reflect the values entered.

The system takes the amount calculated by Vertex and multiplies it by the CT WH values defined by the user. This enables Connecticut customers to be in compliance with the nonresident form. Workarounds attempting to manipulate the fixed percent field to get tax amounts are no longer necessary and are not recommended.

This service is only available for Connecticut at this time.

Create Additional Taxes

Once an employee has default taxes applied, any other taxes that need to be set up for that employee can be created. Additional taxes are those such as local municipality or school district taxes.

Click the Create Additional Tax button. The Employee Tax Add window appears.
Choose the appropriate tax from the Select Tax drop-down. To quickly find a particular tax, begin entering the first few characters of the tax name if known (for example, "stil" for Stillwater) and press Enter. A list will display with results that match the current entry.
Depending upon the tax selected, you may need to select a Filing Status. If the drop-down is blank, you can skip this field, otherwise select a value from the list displayed.
Enter the values in the Exemptions and Dependents fields.
If needed, enter a value in the Additional Withholdings field.
Once all the information is entered, click Finish. The newly-created tax information appears in the grid along with the default taxes created for the Employee.

Note: If the new tax does not appear in the grid, check the View drop-down in the upper-left corner of the window and make sure it is set to All Taxes.

Local Tax Overrides

The ability to override local taxes is linked to the Config Option AllowUserOverrideLocalTax.

Edit Taxes

Once an employee has taxes set up, you can edit their tax setup when the employee requests a change to their filing status, exemptions, or withholding.

In the Employee section, search for and select the employee for which you are editing taxes.
Expand the Payroll option in the Employee sub-menu and select the Tax option. The Tax tab appears with four vertical tabs displayed to the right:
To change the filing status, exemptions, or withholdings for a tax, click on the cell in the tax row and directly update the value.
If the Employee would like additional withholdings from his/her check, designate that in the Add WH column.

Note: Other information can be changed as required by entering or selecting the value from the drop-down menu for each tax record row.

It is essential for an employee to have a tax record for his/her paychecks to be processed. Additional Taxes for the Employee can also be created by clicking on the Create Additional Tax button.

View Tax History

The Tax History tab displays the taxes that have been deducted from the Employee’s previous paychecks. Every time an Employee receives a paycheck, the gross, taxable gross, and the tax amount will be added to the respective fields in the Tax History.

Additional Configuration

Admin Tools: System > Config Options

The following config options should be configured by the administrator as needed for employee-related taxes:

Other Tax Setup

In addition, the following tax configurations may need to be performed in Admin Tools at your site:

Tax setup Options

To display a column, open the field chooser to indicate which parameters to view.

Tax Setup Parameters

Classic Back Office Tax Setup Parameters	US Parameter Description	Canadian Parameter Description
Exemption Amount	This is an editable field. Only applicable for Colorado and Mississippi. Colorado Annual Withholding Allowance amount Mississippi Total Exemption Amount For Federal Withholding - this is a Pre-2020 configuration	Exemption Amount is an editable field. This is the Total Claim Amount based on result of the Canadian TD1 Personal Tax Credit Return. By applying the Use Default Exemption Amount flag, the standard default Claim amount will be applied and not editable in the Exemption Amount field. Exempt Tax, Update Taxable wages - In most cases, when an employee is exempt from Income tax, they are to not have any taxes taken, but need to maintain reporting the taxable wages. Enter Exemption Amount = 999999 under Federal Withholding Tax. As a result of Vertex returning both Federal Tax and Provincial Tax as one value under Federal, this will stop the taxes for both Federal and Provincial calculations. Total Income Less Than Claim - When an employee has indicated on their TD1, no tax should be calculated but the taxable wages need to be maintained. Enter Exemption Amount = 9,999,999.99 under Federal Withholding Tax. More Than 1 Employer - If you have more than one employer or payer at the same time and you have already claimed personal tax credit amounts on another Form TD1 for the year, you cannot claim the tax credit on a second employer. Enter Exemption Amount = 00000 Non-Resident with less than 90% or less of taxable income in Canada enter Exemption Amount = 00000 for both Federal and applicable Provincial Withholdings [if over 90%, then enter applicable Total Claim Amounts] Exempt Tax, Update Taxable wages - In most cases, when an employee is exempt from Income tax, they are to not have any taxes taken, but need to maintain reporting the taxable wages. Enter Exemption Amount = 999999 under Federal Withholding Tax. As a result of Vertex returning both Federal Tax and Provincial Tax as one value under Federal, this will stop the taxes for both Federal and Provincial calculations.
Use Default Exemption Amount	Only displays if there is a Canada [CA] configuration under Admin Tools > Employer > Locality/Country > Country Code. Is not applicable for the US.	This checkbox is used to determine if the employee's Exemption Amount is to remain at the authority Default. By selecting this checkbox, the amount will automatically default to the authority default value. While checked, the Exemption Amount field cannot be adjusted. By deselecting this checkbox, the Exemption Amount field can now be altered.
Add WH	This is an editable field. If Additional Withholding is to be deducted from each payment, additional tax to be deducted can be requested. For Federal Withholding - this is a Pre-2020 configuration	This is an editable field. If Additional Withholding is to be deducted from each payment, additional tax to be deducted can be requested. This tax parameter is applicable for Federal Withholding and Quebec Provincial Withholding. All other provinces, additional withholding requirements should be applied at the federal level.
Is Tax Exempt	This is an editable field. By selecting this checkbox, the employee is to be Exempt Tax AND Taxable Wages By indicating Is Tax Exempt, taxes are not calculated, and taxable wages are not reported. This is only available if the user has user permissions under Config Option: AllowShowIsTaxExempt For Federal Withholding - this is a Pre-2020 configuration	This is an editable field. By selecting this checkbox, the employee is to be Exempt Tax AND Taxable Wages By indicating Is Tax Exempt on Federal Withholdings, both Federal and Provincial taxes are not calculated, and taxable wages are not reported. This is only available is the user has user permissions under Config Option: AllowShowIsTaxExempt
Active	This is an editable field. When Active is checked, indicates that the tax is currently active for the employee. If unchecked, is not an active tax and should not calculate any tax value when the employee is processed. This checkbox would commonly be used in the US to inactivate a local tax that was assigned in error by locator. Once that is done a user can “manually add” the correct local tax.	This is an editable field. When Active is checked, indicates that the tax is currently active for the employee. If unchecked, is not an active tax and should not calculate any tax value when the employee is processed.
Fixed %	This is an editable field. This option will return a tax value of Fix % x Gross Taxable Wages	This is an editable field. Overriding the compliant system calculated income tax is not recommended for Canadian Taxes. This option will return a tax value of Fix % x Gross Taxable Wages for Federal Withholding Tax and QUEBEC PWT.
Fixed Amt	This is an editable field. This option will return a tax value of a Fix Amount.	This is an editable field. Overriding the compliant system calculated income tax is not recommended for Canadian Taxes. This option will return a federal income tax value of the Fix Amount.
Exemptions	This is an editable field. By configuring Exemptions = 999, this indicates that the tax is Exempt Tax, Update Taxable wages	This is an editable field. This field is not applicable for Canadian Tax Types. Any value entered other than zero will be ignored.
Dependents	This is an editable field. This field would contain the total number of dependents determined on the applicable W4. For Federal Withholding - this is a Pre-2020 configuration	This is an editable field. This field is not applicable for Canadian Tax Types. Any value entered other than zero will be ignored.
Filing Status	If applicable for the tax, this is an editable field. For Federal Withholding - this is a Pre-2020 configuration	This is an editable field. This field is not applicable for Canadian Tax Types and should display N/A
GeoCode	This is a display only field. The geocode is a computational identification of a location. This is used by Avionte and Vertex to determine specific tax withholdings for the employee and employer to ensure correct tax payments.	This is a display only field. The geocode is a computational identification of a location. This is used by Avionte and Vertex to determine specific tax withholdings for the employee and employer to ensure correct tax payments.
VertexTaxId	This is a display only field. This ID is the Vertex defined ID used to identify specific tax types	This is a display only field. This ID is the Vertex defined ID used to identify specific tax types
Tax Type	This is a display only field. This field is used to indicate the Authority type [Federal, FICA, City, SD, FUTA etc.]	This is a display only field. This field will indicate that is a Canadian Tax Type and not display the authority type.
Tax Name	This is a display only field. This field will display the defaulted Tax Name	This is a display only field. This field will display the defaulted Tax Name
TaxID	This is a display only field. This is a unique identifier for the Tax in the database [TaxMaster table]. It is just informative and most commonly used for troubleshooting.	This is a display only field. This is a unique identifier for the Tax in the database [TaxMaster table]. It is just informative and most commonly used for troubleshooting.
EmployeeTaxID	This is a display only field. This is a unique identifier specific to a configuration row in the database [EmployeeTax table]. It is just informative and most commonly used for troubleshooting.	This is a display only field. This is a unique identifier specific to a configuration row in the database [EmployeeTax table]. It is just informative and most commonly used for troubleshooting.
Date Entered	This is a display only field. This is a timestamp of when the tax row was created. It is just informative and most commonly used for troubleshooting.	This is a display only field. This is a timestamp of when the tax row was created. It is just informative and most commonly used for troubleshooting.
Resident	This is a display only field. This is a US specific field to display if the tax is assign based on the Resident / Live address.	This is a display only field. Not applicable in Canada
NonResident	This is a display only field. This is a US specific field to display if the tax is assign based on the Non-resident / Work address.	This is a display only field. Not applicable in Canada
PSD Code	This is a display only field. Should display the PSD code for US Pennsylvania configurations only	This is a display only field. Not applicable in Canada
IRS Lock-In	This is an editable field for authorized users. An IRS Lock-In letter is sent to an employer to deduct federal income tax withholding at a higher rate for an employee. This is a US specific field to lock down the Federal Withholding Tax only. By selecting this checkbox, the system does not allow any manual updates to the W4 configurations by any unauthorized users.	This is a display only field. Not applicable in Canada
US Withholding Type	This drop down will indicate if the employee is: Citizen or Resident or a Nonresident Alien. This indication will impact the calculated result of the employees Income Taxes	This is a display only field. Not applicable in Canada
NR_CERT	This is used to indicate the presence of a reciprocal agreement between states. An employee that is a resident in one state but works in a different state that have entered into a reciprocal agreement for taxation. For example, if a talent lives in Kentucky but works in Indiana they will be exempt for Indiana Withholding in a reciprocity situation. The way this will automatically happen in onboarding is that when the talent selects their resident state of Kentucky from the guided flow, a trigger will be sent to the Back Office to check the Certificate of Non-Residency [NR_CERT]. Note: Note: The NR_CERT flag is ONLY ever checked on a WORK state.	This is a display only field. Not applicable in Canada

US Federal Tax Parameters

Not applicable for Canadian Employee configurations

Classic Back Office US Federal Tax Parameters	US Parameter Description
Extra WH	This is an editable field. If Additional Withholding is to be deducted from each payment, additional tax to be deducted can be requested.
Deductions	This is an editable field. This is used if the employee expects to claim deductions other than the standard deduction and want to reduce their withholding. By configuring Deductions = 999999, this indicates that the tax is Exempt Tax, Update Taxable wages
Other Income	This is an editable field. This is used if the employee wants tax withheld for other income expected in the year that will not have withholding otherwise, such as interest, dividends and retirement income.
Qualifying Children	This is an editable field. This is used to define the number of qualifying children under the age of 17 multiplied by the applicable rate per qualified child. [Please see the current Federal W-4 form to find the applicable rate]
Other Dependents	This is an editable field. This is used if the employee wants tax withheld for other income expected in the year that will not have withholding otherwise, such as interest, dividends and retirement income.
Total Dependents	This is a display only field. This field displays the added values of Qualifying Children and Other Dependents to give a Total Dependent value use to pass to Vertex for the calculation of Income Tax.
Filing Status	This is an editable field. This is used to indicate the employees anticipated filing status. If left blank, Single is the default value.
Multiple Jobs	This checkbox is used if you (1) the employee has more than one job at the same time, or (2) the employee is married filing jointly and they and their spouse both work.
Date Completed	This is a display only field. This is a timestamp of when the tax row was created. It is just informative and most commonly used for troubleshooting.
First Work Date	This is a display only field and indicates the date the employee was hired.
IRS Lock-In	This is an editable field for authorized users. An IRS Lock-In letter is sent to an employer to deduct federal income tax withholding at a higher rate for an employee. This is a US specific field to lock down the Federal Withholding Tax only. By selecting this checkbox, the system does not allow any manual updates to the W4 configurations by any unauthorized users.
US Withholding Type	This drop down will indicate if the employee is: Citizen or Resident or a Nonresident Alien. This indication will impact the calculated result of the employees Income Taxes
Is Tax Exempt	This is an editable field. By selecting this checkbox, the employee is to be Exempt Tax AND Taxable Wages By indicating Is Tax Exempt, taxes are not calculated, and taxable wages are not reported. This is only available if the user has user permissions under Config Option: AllowShowIsTaxExempt

Canadian Tax Parameters

Use Field Chooser to activate.

Canadian Tax Requirement	Classic Back Office Tax Parameter	Description
Prescribed Zone Deduction	Prescribed Zone	This is an annual deduction for living in a prescribed zone, or a housing deduction for a prescribed northern zone/intermediate zone. If the annual amount is on or prior to pay period 1, then enter the full calculated value. If the annual amount is not provided on or prior to pay period 1, a calculation should be made to adjust the credit value to be applied over a reduced number of pay periods by entering the value derived from the following formula: [(Value x Total pay periods in the year) / Pay periods remaining in the year)] The field becomes editable when the "Federal Withholding Tax" row is selected. Federal Withholding Tax amount updated after reprocessing payroll.
Annual Deduction	Annual Deduction	An employee may apply to CRA or Revenu Quebec to be eligible for a Reduction at Source by applying to the agency. Once approved, the employee will receive a letter with their eligibility that they can submit to their employer. [The letter will define it as an F1 value] This value is an annual value, which is traditionally used for a salaried employee that has consistent payments for the year. It is not easily maintainable if the employee is paid sporadically throughout the year. (as Vertex takes the annual value received, which is then divided by the pay frequency in the calculation) If the employer receives the letter prior to pay period 1, they will enter the full value indicated in the letter. If the employer receives the letter mid-year, they will need to perform the calculation described in the letter [(Value x Total pay periods in the year) / Pay periods remaining in the year)] for the employee to get the full deduction in the remaining pay periods of the year. This value should only be applied to a singular year, as the employee is required to apply annually for Annual Deductions.
Annual Credit	Annual Credit	An employee may apply to CRA or Revenu Quebec to be eligible for a Reduction at Source by applying to the agency. Once approved, the employee will receive a letter with their eligibility that they can submit to their employer. [The letter will define it as a K3 (Federal) or K3P (Provincial) value]. This value is an annual value, which is traditionally used for a salaried employee that has consistent payments for the year. It is not easily maintainable if the employee is paid sporadically throughout the year. (as Vertex takes the annual value received, which is then divided by the pay frequency in the calculation) If the employer receives the letter prior to pay period 1, they will enter the full value indicated in the letter. If the employer receives the letter mid-year, they will need to perform the calculation described in the letter [(Value x Total pay periods in the year) / Pay periods remaining in the year)] for the employee to get the full credit in the remaining pay periods of the year. This value should only be applied to a singular year, as the employee is required to apply annually for Annual Credits.

Employee Payroll - Tax

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