Help:PY1-Edit Local Tax Deduction
This window titled Adding a Local Tax Deduction is used to add a local tax deduction. The window titled Changing a Local Tax Deduction is used to change an existing local tax deduction. The window titled Removing a Local Tax Deduction is used to remove a local tax deduction. The information on each of these windows controls how the local tax deduction will be calculated. NOTE: ALL TAX DEDUCTIONS MUST BE SET UP BEFORE THEY WILL BE APPLIED DURING THE PAYCHECK CALCULATION.
Please note there are two tabs at the top of each of these windows named Settings and Local Instructions. The Settings tab displays the specific calculation settings for the deduction. The Local Instructions tab will only be available for those local tax deductions which use a Calculation Basis of Tax Table. The Local Instructions tab will display any special instructions regarding the Local Code which is selected for this deduction.
Local taxes are more complex in some States than Federal or State taxes. To accommodate a more complex local tax structure, the program functions in this way:
Deduction Number 6 This is the standard local tax deduction as set up in the program. This will use as its tax basis the Local Tax Basis as calculated during the paycheck calculation program. This Local Tax Basis is the Gross Wages less any deduction which is deductible for local tax purposes. Any deduction can be flagged as deductible from Local Taxes by checking the [X] Local box under the Exempt From Taxes prompt on the Miscellaneous Deduction Window.
Please note that the IBS Payroll system will automatically setup this Deduction #6 in the Employee Master File for each new employee and the IBS System is programmed to print this Deduction #6 on the employee's W2 form in the section designated for Local Taxes. If your locality does not have a local tax withholding, you should delete Deduction #6 from the Deduction window of each new employee in the Employee Master File before you begin processing payroll checks for that new employee. The deletion of this deduction from the employee's master file will prevent the system from accumulating any gross pay amounts for this deduction in the employee's YTD amounts file, thereby eliminating the possibility that the system will attempt to print any local tax information on the employee's W-2 form at year-end.
Deduction Numbers 7-9 These local tax deductions can be set up by the user if more than one local tax is applicable to the employee. These will use for the tax basis the Local Tax Basis as calculated during the paycheck calculation program. This Local Tax Basis is the Gross Wages less any deduction which is deductible for local tax purposes. Any deduction can be flagged as deductible from Local Taxes by checking the [X] Local box under the Exempt From Taxes prompt on the Miscellaneous Deduction Window.
Please note that the IBS System will print Deduction Code #7 (Local Tax Deduction) in the Local Tax section(s) on the employee's W-2 form. Since the W-2 form only has space for two Local Tax deductions, the IBS System is currently programmed to print Local Tax Deduction #6 and/or #7 in the Local Tax section(s) on the W-2 form.
Deduction Numbers 10-99 Currently, Ohio is the only state which requires these deductions. These local tax deductions can be set up by the user. These work differently than deductions 6-9, since they use a tax basis other than the Local Tax Basis. These local tax deductions use as their Tax Basis the gross wages which are flagged with this deduction number as their Local Tax Group number. So, an employee can be subject to this local tax for only part of the wages earned.
Full Description: Enter a complete description of this deduction.
Check Description: Enter the short description of this deduction which will appear on the paycheck stub to identify this deduction.
G/L Number: Enter the general ledger account number to which this Local Withholding Tax is to be posted. The name of the selected general ledger account will be displayed to the right of this field. Press the {?} to the right of this field to open a window titled Select an Active and Not Restricted General Ledger Account which displays a listing of the current unrestricted general ledger accounts.
Calculation Basis: This determines how the deduction will be calculated. Each local tax can be calculated by one of three methods, as explained below. Point your mouse cursor to the desired method and left-click your mouse one time to select that option.
Percentage Select this calculation basis if the local withholding tax is a fixed percentage of the Local Tax Basis.
Tax Table Select this calculation basis if the local tax requires a special tax table calculation. The city taxes which are included with this program will be listed below under the Local Code View Button.
Fixed Amount Select this calculation basis if the local withholding tax is a fixed dollar amount.
[Ö] Exempt from Local Gross Basis Reductions: Each regular deduction can be deductible from the Local Tax Base. However, if there are multiple local taxes, all of them might not accept a reduction in the Gross Basis by the local tax exempt deductions. Check this box if this local tax does not accept any reductions to the local tax base.
Percentage or Fixed Amount: This section enables you to enter the necessary information to calculate a local tax which is based on a percentage or flat amount.
Rate: Enter the applicable rate. If the Calculation Basis is a Fixed Amount, then this amount will be the actual deduction. If the Calculation Basis is a Percentage, then the rate is the percentage by which the Local Tax Basis is multiplied. NOTE: Enter 1% as 1.00.
Deduction Limit: Enter the maximum yearly limit for this deduction. If there is no limit, then enter 999,999.99.
Weekly Limit: Enter the maximum weekly (per check) limit for this deduction. If there is no limit, then enter 999,999.99.
Deduction Week: If this deduction is to be taken out of every paycheck, then enter a"0" (zero). If this deduction is only to be taken out on one specific week of the month, then enter that week number here. The pay week is identified to the program when the paychecks are calculated.
Tax Table: If this locality requires a special table driven calculation, then it should be selected in this section.
Local Code: Enter the appropriate Local Code for the local taxes to be withheld. This program will calculate the taxes for many of the common localities which require a tax table. The Locality's Name and the effective date of that tax table will be displayed to the right of this field. Press the {?} to the right of this field to open a window titled Select Local Tax Code which displays a listing of all the Local Codes which are currently defined in the IBS Payroll System.
NOTE: IF YOUR LOCALITY IS NOT REPRESENTED OR IF THE DATE BY THE LOCALITY IS MISSING OR INCORRECT, THEN NOTIFY OUR TECHNICAL SUPPORT STAFF IMMEDIATELY. THEY WILL TELL YOU WHAT WE NEED TO PROPERLY UPDATE YOUR PROGRAM.
Tax Status: Enter the appropriate withholding Tax Status for this employee. The description of the selected Tax Status will be displayed to the right of this field. Press the Ú to the right of this field to open a drop-list of the available tax statuses. If this field does not apply, then it will be disabled.
Dependent Exemptions: Enter the number of dependency exemptions you wish to claim on this deduction, if applicable. If this field does not apply, then it will be disabled.
Personal Exemptions: Some localities have both personal exemptions and dependency exemptions. If this field is highlighted, then the Local Code selected uses this field. Enter the number of personal exemptions as defined by this locality. If this field does not apply, then it will be disabled.
Use Table: Some localities calculate their taxes by using various tax tables. Enter the Tax Table to be used for this calculation as defined by this locality. If this field does not apply, then it will be disabled.
Other Amount: Some localities calculate their taxes by using alternative deduction amounts or percentages. Enter that amount or percentage, as defined by this locality. If this field does not apply, then it will be disabled.
Add-on Tax: Enter the amount to be added to the calculated tax, if any. Some employees choose to have additional taxes taken out to cover any investments or additional income that they might have. This amount is usually claimed on that employee's Federal W-4 form or the equivalent Local form.
[ Add ] This button will appear if you pressed the [Insert] button on the previous window to insert a new deduction. Press this button to add this new deduction, as defined in this window to the system.
[ Save ] This button will appear if you pressed the [Change] button on the previous window to change an existing deduction. Press this button to save any changes made to this deduction in the system.
[ Delete ] This button will appear if you pressed the [Delete] button on the previous window to delete an existing deduction. Press this button to confirm your desire to delete this deduction from the system.
[ Cancel ] Press this button to close this window and return to the previous window. NOTE: If you make any changes in this window and then press the [Cancel] button to ignore those changes, then another window titled Save Record will open which asks "Do you want to save the changes to this record?". For additional information, please see Save Record.
[ Help ] Press this button (if available) or the F1 key to view the Help text for this window.
