Examples:

This section will give some examples of how these tables, along with the associated fields in the Employee record, are used to calculate the state withholding tax amount.

I ‑ Example 1:  CALIFORNIA ‑ MARRIED

The tax table information should be entered as follows (remember that it is the annual table that should always be used):

 1.       Table ID M 2.       Description California - Married 3.       Calculation Method D Directly On Earnings 4.       % of FWT to Deduct .00 5.       Ded for FICA W/H ? N 6.       STD DED % of Grs Pay .000 7.       Adjustment to STD Ded .00 8.       Min STD Ded Amt 1,710.00 9.       Max STD Ded Amt 3,420.00 10. Yearly W/H Allowance 1,000.00 11. Credit per Exemption .00 12. Max Wages for STD Deduction .00 13. Max FWT to Deduct .00

 OVER TAX-AMT PLUS-% 1.   -0- .00 1.00 2.   7,000 70.00 2.00 3.   12,000 174.00 3.00 4.   17,420 330.00 4.00 5.   22,740 593.00 5.00 6.   28,000 806.00 6.00 7.   33,240 1,120.00 7.00 8.   38,440 1,484.00 8.00 9.   43,700 1,905.00 9.00 10. 48,940 2,377.00 10.00 11. 54,160 2,899.00 11.00 12.     0 .00 .00 13.     0 .00 .00 14.     0 .00 .00 15.     0 .00 .00 16.     0 .00 .00

The fields on the Employee record involved with the state withholding tax are:

i) St Table ID

ii) SWT No Exm

SWT \$ Exm (these are just one field)

iii)    St Tax Cr

If the employee is married and his yearly gross income is less than \$11,280.00, enter 99 deductions for the State Tax Number of exemptions, since his income is below the income stated in the Low Income Exemption Table.  This will result in no state withholding tax being taken.

If the employee's yearly salary is above \$11,280.00, enter M for the State Tax Table.  For the State Tax Number of Exemptions, enter the number of additional withholding allowances claimed for itemized deductions on Form DE‑4, W‑4, or W‑4A.

For the State Tax Credit, enter the figure in the Tax Credit Table that corresponds to the number of allowances entered on the DE‑4, W‑4, or W‑4A form.

Whenever the employee submits a new DE‑4, W‑4,or W‑4A form, the number of exemptions and Tax Credit fields must be changed, accordingly.

II ‑ Example 2 ‑ CALIFORNIA

 STATE TAX CODE:  CA  CALIFORNIA 1.       Table ID 1 2.       Description 10% Table 3.       Calculation Method P = Percent of FWT 4.       % of FWT to Deduct .00 5.       Ded for FICA W/H ? N 6.       STD Ded % of Grs Pay .000 7.       Adjustment to STD Ded .00 8.       Min STD Ded Amt .00 9.       Max STD Ded Amt .00 10. Yearly W/H Allowance .00 11. Credit per Exemption .00 12. Max Wages for STD Deduction .00 13. Max FWT to Deduct .00

 OVER TAX-AMT PLUS-% 1.       0 .00 10.00 2.       0 .00 .00 3.       0 .00 .00 4.       0 .00 .00 5.       0 .00 .00 6.       0 .00 .00 7.       0 .00 .00 8.       0 .00 .00 9.       0 .00 .00 10. 0 .00 .00 11. 0 .00 .00 12. 0 .00 .00 13. 0 .00 .00 14. 0 .00 .00 15. 0 .00 .00 16. 0 .00 .00

The employee must elect the 10% or 20% table within five days of employment.  Assuming the employee has elected the 10% table; enter 1 for the State Table code.  Enter 0 for both the State Number of Exemptions and the State Tax Credit.

It is strongly advised that you consult your accountant or state income tax officials to help in deciding which deduction parameters need to be set up in‑order to achieve the correct payroll deductions for each particular state. Some states do not require that a state withholding tax be computed on wages earned, for these states; simply enter a blank for the State Table code, by pressing RETURN.

It may be possible that a state's withholding tax calculation will not fit into the Elliott state tax calculation scheme supplied with this package.  If you wish to operate this package in those states, you may need to have the state withholding tax calculation portion of the Calculate program modified.

Multiple state and city tax codes may be assigned to each employee by using the Employee Tax Code File Maintenance application.

Vacation And Sick Hour Accrual

Vacation and sick hours due to an employee may be accrued on a pay period by pay‑period basis by using the accrual codes defined on Payroll Setup.  Six different codes are provided for vacation accrual and four for sick accrual.  If no code is entered for vacation accrual in Employee File Maintenance, then vacation hours due will not be accrued for the employee and must be entered manually.  Similarly for sick accrual in Employee File Maintenance.  Otherwise, whenever a payroll check for a manual payroll transaction is posted, vacation and sick hours due for the employee will be accrued based on the codes specified for the employee.

It is always a certain number of hours that are accrued, based on hours, days, weeks or months worked, as defined in Payroll Setup.  If the accrual time period is per hours, then the hourly accrual rate will be applied to the total number of regular, overtime, special, vacation, sick and holiday hours reported for the employee for the pay period (no maximum is applied).  If a salaried employee is accrued on this hourly basis, then only hours reported for the employee will be used for accrual.  If a salaried employee is paid his salary for a pay period, then it is automatically considered that his regular hours for the pay period are equal to the regular hours recorded for him on his Employee record.

Any manual payroll transaction with a positive number in the Weeks Worked field of Manual Transaction Processing will be subject to vacation and sick hour accrual, on the same basis as a usual payroll time transaction.

If the accrual time period is per day, the number of hours in a day (recorded in Payroll Setup) will be used in conjunction with the total hours reported (regular, overtime, special, vacation, holiday and sick), entered for the payroll time transaction or manual payroll transaction, to determine the number of days worked, and the accrual rate will be applied to this number of days.

If the accrual time period is per week, then the number of weeks worked entered for the payroll time transaction or manual payroll transaction will be used.  Each advance vacation week paid will be considered as exactly one week, for accrual purposes.

If the accrual time period is per month, then there is a special way that the user must signify that the current pay period is one for which the monthly vacation and sick hours are to be accrued.  In the Calculate Payroll application, the screen on which the user specified the frequencies of permanent deductions/earnings to be taken must contain an M, for monthly, among the frequencies for the current pay period.  Advance vacation weeks will be ignored for this type of accrual.  For a manual payroll transaction, the Number of Weeks Worked field will be used to determine the whole number of months worked to be used as the basis for accrual.

Each accrual code has a maximum value associated with it.  Once an employee's accrued hours due reaches this maximum, no more hours will be accrued until the employee actually takes some of these hours (which increases the Hours Used field and decreases the Hours Due field), or the Hours Due fields are fully or partially cleared (as described below).  Note that vacation or sick hours will begin accruing again for an employee; as soon as the Payroll Check Posting program detects that the number of hours due is below the maximum (not the sum of the hours due and the hours already taken).

The user has various options in clearing the accrued vacation or sick hours due if the employee has not used them by the end of the year.  The last three fields on the fourth screen of Payroll Setup apply to this.  If vacation or sick hours due are not allowed to fully carry over from one year to the next, you must use Payroll Setup.  Set the maximum number of vacation and sick hours due which may be carried from one year to the next.

Every employee on file will be subject to these maximum carry‑over values.  (Enter 9999 to indicate no maximum.)  This screen determines when the vacation maximum value will be applied.  (The sick maximum value is always applied at calendar year end.)  It may be applied uniformly to all employees at the end of the calendar year (in which case, the calculation and resetting of the Hours Due fields will be done by the Clear Employee Totals application, when run at the end of the year), or it may be applied on the anniversary of the individual employee's hire date in the Employee File, in which case, the calculation and resetting will be done on an employee‑by‑employee basis.

Worker's Compensation

The accounting necessary for worker's compensation varies from state to state.  Enough flexibility has been used here to adequately handle most states' requirements.  However, it is possible that for your state some modification of the program may have to be done.  The basic data concerning a state's worker's compensation calculation and reporting requirements is entered using the State/City Tax Code File application.  The premium may be calculated by one of two methods (field 1 of screen 2 of the State/City Tax Code File), as an hourly rate for all hours the employee works (regular, overtime and special), or as a non‑taxable earnings, meals, or tips.

A rate is entered on each Employee's record in Employee File Maintenance.  This rate is either a number of dollars and cents per hours, or a percentage of wages, depending on the calculation method.  When payroll checks are being posted in the Print Payroll Checks application, the premium due for each employee is calculated, based on this rate and the employee's total wages or hours, and this amount is posted as an expense and as a liability to the Payroll Distribution File (the G/L accounts used are described in the preceding section, General Ledger Account Distributions).

A maximum cutoff is allowed for the wages or hours subject to the worker's compensation premium of State/City Tax Code File.  This maximum is only applied if an individual employee is flagged as using it on the Employee record in the Employee File.  This maximum cutoff is often called an Executive Exemption, so the employee must be flagged as an executive in order to get it.  There are two other pieces of data needed by the payroll check posting logic in order to determine exactly when this maximum cutoff will be applied.  One is the accumulation period for worker's compensation (which may also be thought of as the reporting period).  This is entered in the State/City Tax Code File application, and may be by period (e.g. monthly), by quarter, by calendar year or by anniversary year.  By period means that the premium is calculated on an employee's period‑to‑date (PTD) wages or hours, which is usually monthly.  (This should not be confused with the employee's pay period, to which it does not necessarily correspond.)  Reporting is also done by period (e.g. monthly).  By quarter means that the premium is calc­ulated on the employee's quarterly wages or hours and is reported quarterly.  By calendar year means that the premium is calculated on the employee's wages or hours for the period starting January 1 and ending December 31, and reported as of December 31.  By anniversary year means that the premium is calculated based on the employee's wages or hours accrued, starting on the first day that the worker's compensation insurance policy is put into effect (which may be any day within the year), and ending the day before the same day in the following calendar year.  In this case, the anniversary date is entered in State/City Tax Code File.  The second piece of data needed in determining when to apply the maximum cut off value is the accum­ulated worker's compensation wages or hours, appearing in the Employee File.  Amounts are accum­ulated auto­matically in this field when payroll checks and manual payroll trans­actions are posted. This field is cleared based on the accumulation period.  For Period, Quarter, and Calendar Year accum­ulation periods, the field is cleared by the Clear Employee Totals application, when this is run to clear period‑to‑date, quarter‑to‑date, and year‑to‑date totals, respectively.  For the anniversary year accumulation period, the user must clear the Accumulation field as an option of the Print Worker's Compensation Report function of the Print Employee Reports application.  A safeguard is built into the package for this case.  If the last pay period date is before the anniversary date, then the user will not be allowed to print payroll checks for the current period until the Worker's Compensation Report has been printed for this state and the corresponding accumulation fields have been cleared.

The Worker's Compensation Report should be printed at least at the end of each accumulation period, before the accumulated totals are cleared.  This report shows the total premium due for all employees in that state, grouped by the Worker's Compensation code in the Employee File, with subtotals by code.  The final premium due is computed by using the Experience Modifier in the State/City Tax Code File, which is a percentage assigned to the employer by the insuring institution based on the employer's claims experience in the past (initially this should be 100.00%).

Multiple Workers’ Compensation codes may be assigned to each employee by using the Employee Tax Code File Maintenance application.