Config for Separate Aggregation method

[Former Member]

Hi All,

As per the IRS Guidelines for Supplemental Wgae Types which is as mentioned below-

Supplemental wages identified separately from regular wages. If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold income tax from your employee's regular wages.

1. If you withheld income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages.

a. Withhold a flat 25% (no other percentage allowed).

b. If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages. If there are no concurrently paid regular wages, add the supplemental wages to alternatively, either the regular wages paid or to be paid for the current payroll period or the regular wages paid for the preceding payroll period. Figure theincome tax withholding as if the total of the regular wages and supplemental wages is a single payment. Subtract the taxwithheld from the regular wages. Withhold the remaining tax from the supplemental wages. If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, calculate the tax on the total, subtract the tax already withheld from the regular wages and the previous supplemental wage payments, *and withhold the remaining tax. *

If we set the Processing class 68 for a Wage Type as 2 then it is Withholding @ flat 25% as mentioned in above A Clause.

WHAT WE NEED TO DO SO THAT IT WORKS AS PER THE DEFINITION MENTIONED IN B Clause?

[Former Member · Accepted solution]

Hi there, To combine the bonus payment with the most recent

regular gross payment, the separate aggregate override method may be

used. You can set this method in the Additional Withholding

Information U.S. infotype (0234). Alternatively, you may specify the

separate aggregate method override in the schema. For example, in

the delivered U.S. tax schema UTX0, the separate aggregate taxation

method is the specified override for all retro differences in

payroll adjustment (pay type 'B') runs.

[Former Member · Accepted solution]

Thanks Giselle for your reply.

What i can understand from your inputs is that this will work in 2 conditions -

1. Off-cycle payroll for that Specific Wage Type which needs to be calculated by Aggregrate method

2. If we changes the schema UTX0 as you mentioned then it will calculate the taxes for all the Wage types with Aggregrate

method. Please correct me if i am wrong.

As per our requirement this Wage type will be given with all other Wage types in the regular Payroll and the Aggregrate method should be used for calculating the tax for Supplemental Wage type.

We want to do the set up for this requirement.

Thanks,