US Payroll - Tax Calculation Method

Screenshot of Tax Calculation Method.

Pgm: PYSUPMET – Tax Calculation Method; standard Treeview path: US Payroll > Administration > Taxes > Calculation Method

The Tax Calculation Method screen allows for the entry of alternate pay types against specific pay runs. These pay types can distinguish supplemental pay runs from regular pay runs for the purposes of tax calculation in specific states.

NOTE: This screen has been updated as part of ongoing Vertex enhancements and is currently in Beta testing.

Pay Run, State Code, Work Location, Tax Code

Enter/select the pay run, state code, work location, and tax code to which the alternate pay type should apply or select "All" to apply to all pay runs/states/work locations/taxes.

Pay Type

Select the pay type for the pay run and state. The system allows selection from the following options:

  • 00: Supplemental with regular pay.

  • 01: Regular pay only.

  • 02: Supplemental pay without regular pay.

Effective Date, End Date

Enter/select a range of effective dates for the alternate pay type.

Tax Type

Select the tax type for the tax being assigned. The system allows for the following options:

  • Both: The tax requires the calculation of taxes at the employee's location of residence as well as the individual work locations as indicated by the employee timesheets.

  • Resident: The tax only requires the calculation of taxes at the employee's location of residence.

  • Work: The tax only requires the calculation of taxes at the employee’s work location. In this situation the taxes are pro-rated based on the hours worked in individual work locations.

NOTE: Taxes will not calculate if this tax type is set up incorrectly. For example, SUI and FUTA taxes must be set to "Work" for these taxes to calculate.

Calculation Method

Enter/select the calculation method that applies to the tax. The list of available methods changes depending on the Vertex Tax ID code selected.

Alternate Code

Enter/select the alternate calculation code associated with the tax. This code is typically set at '00'. Check the Vertex Calculation guide for situations where a different code is required.

This code is only applicable on certain state taxes (including NJ, AR and AZ), and for the federal EIC tax. See the Notes on EIC section in this guide for more details.

Jurint Type

Enter/select a jurisdiction integer type to override reciprocities or enable volunteer form withholding at both the state and employee levels. The description will default in the Jurint Type Description field. The available jurint types include:

  • 2: Credit the resident tax by the amount of work tax withheld. Always accumulate wages.

  • 3: Credit the resident tax by the amount of work tax withheld. Accumulate wages only if resident tax is withheld.

  • 4: Eliminate the resident tax if the work tax is > zero. Always accumulate wages.

  • 5: Eliminate the resident tax if the work tax is > zero. Accumulate wages only if resident tax is withheld.

  • 6: Eliminate the resident tax if work tax is imposed on nonresidents. Always accumulate wages.

  • 7: Eliminate the resident tax if work tax is imposed on nonresidents. Accumulate wages only if resident tax is withheld.

  • 8: Calculate work taxes only.

  • 9: Misc Behavior Maryland.

  • 10: Credit the resident tax by the amount of the work tax withheld. Accumulate wages only if out of state tax is not withheld.

  • 99: Calculate the tax for this jurisdiction independent of all other jurisdictions.

These types are not dependent on the particular taxing jurisdiction and the options vary between taxing jurisdictions. If the user sets a jurint type to a value in the range of 2-8 that differs from the default value, the system will use the selected value only if it is available in the Vertex Payroll Tax database. Otherwise, the default value is used. Users can verify the value on the employee Vertex report.

This field is also available in the Tax Overrides screen, launched from the [Overrides] button on the Tax tab of the Employee Profile screen. When the Jurint type is configured in both screens, the employee override will take precedence.

NOTE: This field requires the tax setup type "VPRTSETTAXHDL29 – Vertex NEW Reciprocal Treatment Initiation" to be set to "Y" in the Tax Settings screen.

Notes to remember:

The following taxes must be setup (as per Vertex Documentation) in the Payroll Tax Accounting tables in order to calculate correctly:

SUI: The location must be set to “WORK”.

FUTA: The location must be set to “WORK”.

State Withholding: The location must be set to “BOTH”.