Issue/Symptom/Question

What do the withholding operations do on the Local Tax Code setup?

Applies To

Local Tax Withholding Calculations

Resolution/Fix/Answer

Operation # (Withholding Operations)

The Operation # tells PENTA how to calculate local withholding tax. PENTA executes each operation assigned to a Local Taxing Authority in sequence by Order #.

Assign one or more of the following withholding Operation numbers according to requirements of the taxing authority:

• 7 (Exempt Dep Related Amount) – Use this operation when the taxing authority allows exemptions from gross earnings based on dependents.
• 11 (Calc W/H-Percent of Gross) – Use this operation for calculations based on percent of gross for employees living or working in the locality. This operation supports Self-Adjusting and is the only operation assignable to a Local Taxing Authority record with the Self-Adjust W/H Amt flag set to Yes.
• 16 (Maximum W/H) – Use this operation in conjunction with other operations (such as #11) when the taxing authority sets a limit on the withholding amount allowed per paycheck.
• 23 (Percent of State W/H) – Use this operation when the local jurisdiction uses a tax table to determine withholding. In this case, the State Code on the Master tab defines which tax table to use.
  E.g., State Code = NYC (New York City).
• 27 (Amount Per Hour) – Use this operation when the local authority assesses tax based on an amount per hour worked.

For each Operation #, you can define the rates and other amounts in the Withholding Operation Information pop-up window.

Description (Withholding Operations)

In the Description field, PENTA displays the Operation # you entered for the withholding record.

You cannot edit this field; it is for display only.

Note: The following Withholding Operation Information pop-up windows vary according to the calculation operation of the record for which you open it.

Exempt Amount Per Dependent From Gross Earnings (Operation #7)

Payroll > Setup > Taxes > Local Taxing Authorities > Calculation tab > Withholding Operations block > Operation # 7

When you open the Withholding Operation Information window for an Operation #7 record, PENTA displays the Exempt Amount Per Dependent From Gross Earnings format of this pop-up window. Use it for viewing and entering the exempt amount for the Operation #7 calculation assigned to the Local Taxing Authority.

Amount Per Dependent

The value in the Amount Per Dependent field tells PENTA how much to exclude from the tax calculation for each dependent defined for an employee in the Employee Payroll Information window. This amount must be greater than zero up to 999999999.99.

Entry is required. No default.

Locality Withholding Percents (Operation #11)

Payroll > Setup > Taxes > Local Taxing Authorities > Calculation tab > Withholding Operations block > Operation #11

When you open the Withholding Operation Information window for an Operation #11 record, PENTA displays the Locality Withholding Percents format of this pop-up window. Use it for viewing and entering rate and earnings information for the Operation 11 calculation assigned to the Local Taxing Authority.

Resident Percent

The value in the Resident Percent field tells PENTA which rate to use when calculating this authority’s tax for an employee residing in the locality. Entered percents contain four decimal values and can be up to 999.9999.

PENTA applies the Resident Percent to payroll transactions assigned this Locality Code as the resident Local Taxing Authority. The amount withheld depends on the rate, reciprocity, and employee withholding parameters.

You must enter a Resident Percent, Work Percent, or both.

Entry is optional. No default.

Min Res Percent After Recip

The value in the Min Res Percent After Recip field tells PENTA the rate to use when calculating the withholding amount for local tax authorities with a “Work Location 100%, Residence Location Excess” reciprocity agreement and specifies the minimum amount that must be withheld when the calculated residence location excess is less than this.

Use this field in conjunction with Reciprocity Rules such as local Reciprocity Rule # 1 (Residence Amt – Excess Over Work), local Reciprocity Rule #13 (W 100, R xtra, if W>R R earn=0), and state/local Reciprocity Rule #10.

This rate must be less than the value in the Resident Percent field. You can only access this field when the Resident Percent field contains a value.

Entry is optional. No default.

Work Percent

The value in the Work Percent field tells PENTA the rate to use when calculating this authority’s tax for an employee working in the locality. Entered percents contain four decimal values and can be up to 999.9999.

PENTA applies the Work Percent to payroll transactions assigned this Locality Code as the work Local Taxing Authority. The amount withheld depends on the rate, reciprocity, and employee withholding parameters.

You must enter a Resident Percent, Work Percent, or both.

Entry is optional. No default.

Min Work Percent After Recip

The value in the Min Work Percent After Recip field tells PENTA the rate to use when calculating the withholding amount for local tax authorities with a “Residence Location 100%, Work Location Excess” reciprocity agreement and specify the minimum amount that must be withheld when the calculated work location excess is less than this.

This rate must be less than the value in the Work Percent field. You can only access this field when the Work Percent field contains a value.

Use this field in conjunction with Reciprocity Rules such as state/local Reciprocity Rule #11.

Entry is optional. No default.

Excluded Earnings

The value in the Excluded Earnings field tells PENTA the amount upon which it should not calculate the locality tax. For example, a county might impose an occupational license fee that is 1% of all earnings excluding the first $5,000.

Entry is optional. No default.

For Gross >

The value in the For Gross > field tells PENTA which earnings the tax calculation parameters apply to. Entries in this field must be greater than or equal to zero and gross for each withholding record assigned to Operation 11 for the locality must be unique. E.g., one record could apply to gross greater than 0.00 and another could apply to gross greater than 24,999.99.

The Use Annualized Amounts setting affects how PENTA determines gross for this calculation. When Use Annualized Amounts is Y, PENTA uses annualized gross when applying this calculation. When Use Annualized Amounts is N, PENTA uses YTD gross for the calculation

Entry is required. No default.

Maximum Withholding Per Period (Operation #16)

Payroll > Setup > Taxes > Local Taxing Authorities > Calculation tab > Withholding Operations block > Operation #16

When you open the Withholding Operation Information window for an Operation #16 record, PENTA displays the Maximum Withholding Per Check format of this pop-up window. Use it for viewing and entering information for the Operation 16 calculation assigned to the Local Taxing Authority.

When the Use Annualized Amts (Y/N) flag in the upper block of the Tax Information tab is Y, PENTA displays the Annualized Amount field. When the Use Annualized Amts (Y/N) flag is N, PENTA displays the Maximum Amount field.

Annualized Amount

The Annualized Amount provides the value determining the maximum amount to withhold per check when the Use Annualized Amts flag on the Tax Information tab is set to Y. PENTA divides the amount entered here by the number of pay periods for an employee to calculate the maximum amount to withhold on each payroll check. If the calculated tax amount of other withholding operations for this local taxing authority exceeds the maximum amount determined by Operation #16, PENTA limits the withholding for this jurisdiction to the maximum amount.

Entry is required. No default.

Maximum Amount

The MaximumAmount provides the value determining the greatest amount to withhold per check when the Use Annualized Amts flag on the Tax Information tab is set to N. If the calculated tax amount of other withholding operations for this tax jurisdiction exceeds the amount entered here, PENTA limits the withholding for the jurisdiction to the amount entered in this field.

Entry is required. No default.

Percent of State Withholding (Operation #23)

Payroll > Setup > Taxes > Local Taxing Authorities > Calculation tab > Withholding Operations block > Operation #23

When you open the Withholding Operation Information window for Operation #23 record, PENTA displays the Percent of State Withholding format of this pop-up window. Use it for viewing and entering information for the Operation 23 calculation assigned to the Local Taxing Authority.

Percent

The value in this field tells PENTA the Percent to use in calculations for Local Taxing Authorities set up to calculate local tax using a tax table. To determine the local tax amount, PENTA applies the percent to the tax table defined for the state entered in the State Code field of the Local Taxing Authorities window’s Master Information tab.

Entry is required. No default.

Amount Per Hour Worked (Operation #27)

Payroll > Setup > Taxes > Local Taxing Authorities > Calculation tab > Withholding Operations block > Operation #27

When you open the Withholding Operation Information pop-up window for an Operation #27 record, PENTA displays the Amount Per Hour Worked format of this pop-up window. Use it for viewing and entering information for the Operation 27 calculation assigned to the Local Taxing Authority.

PENTA does not process Operation #27 withholding for Local Taxing Authorities linked to a taxing authority via the Other Localities in Jurisdiction block on the Master Information tab. PENTA only processes Operation #27 withholding for Local Taxing Authorities directly on timecards.

Amount

The value in the Amount field tells PENTA how much to withhold for every hour on timecards processed with this Local Taxing Authority.

Entry is required. No default.

Pennsylvania Local Services Tax (Operation #33)

Payroll > Setup > Taxes > Local Taxing Authorities > Calculation tab > Withholding Operations block > Operation #33

When you open the Withholding Operation Information pop-up window for an Operation #33 record, PENTA displays the Pennsylvania Local Services Tax format of this pop-up window. Use it for viewing and entering information for the Operation 33 calculation assigned to the Local Taxing Authority.

Use this pop-up window to associate an Annual Amount with the Locality Code and Effective Date. Per Pennsylvania requirements, PENTA withholds an annual amount of $10.00 as a lump sum, and prorates amounts greater than $10.00 over the number of payroll periods in the calendar year for employees. For example, an Annual Amount of $52.00 calculated for an employee paid weekly results in $1.00 per week withheld.