The number by which you multiply a frequency to arrive at an annual equivalent.
Frequency x Annualization Factor = Annual Equivalent
Weekly x 52 = Annual Equivalent
Hurly x 2080 = Annual Equivalent
Tuesday, September 27, 2011
Understanding Online Updates and Final Calculation
PeopleSoft’s final calculation functionality enables you to access the database 7 days a week, 24 hours a day, without interrupting payroll processing. This means that you can confirm a payroll while people continue to modify employee pay data, even though a final calculation or confirmation is underway. If you want your last minute online changes to be included in a payroll for which the final calculation process has already been run (but not confirmed), you can rerun the final calculation process before confirming.
Behind the Scenes Indicators
PeopleSoft Payroll for North America uses the following behind-the-scenes indicators to mark paysheets with the final calculation status and with the status of any online changes to employee data:
| Locked for Confirm Indicator | The final calculation process sets this invisible indicator on the paysheets at the beginning of a final calc. The preliminary calculation process clears this indicator. |
| Paysheet Recalculation Indicator | This indicator, which is also not visible on the paysheet, is set when online changes are made to employee pay data. Relevant values are: Available for Update: Indicates online updates made when the Locked for Confirm indicator is set (final calc has been run) at the time the update is made. Needs Update: Indicates online updates made when the Locked for Confirm indicator is not set (final calc has not been run) at the time the update is made. |
When you make modifications to employee pay data, PeopleCode on the employee data pages reads the paysheet to see if the Locked for Confirm indicator is set. If it is, the system enables you to confirm the payroll without recalculation. If you rerun the final calc selecting either the Only Calculate Where Needed or (Re)Calculate All Checks option on the Pay Calculation run control page, the system applies all appropriate changes to the paysheets and ignores the Locked for Confirm indicator.
The Locked for Confirm indicator is set at the beginning of the final calculation process for on-cycle payroll runs. Employee pay data changes made after the indicator is set will not be included in the pay calculation unless final calculation is rerun.
The Confirmation process clears the Locked for Confirm indicator.
Example
Here’s an example to show how these indicators work together:
1. You run final calculation.
The Locked for Confirm indicator is set on the paysheets at the beginning of the final calc run.
2. You make online changes to employee pay data.
You get a message that tells you that the changes will not be picked up until the next payroll calculation (for this pay run or the next).
The Paysheet Recalculation indicator is set to Available for Update.
3. You either confirm the payroll or recalculate the payroll.
· If you confirm the payroll, the online changes are not included.
The confirmation process also clears the Locked for Confirm indicator and the Paysheet Recalculation indicator.
· If you rerun the final calculation, the changes are included.
The changes are included whether you select Only Calculate Where Needed or (Re)Calculate All Checks on the Pay Calculation run control page.
Tuesday, September 6, 2011
What's the Difference Between Payroll Taxes and Employment Taxes?
Tax websites and books toss around these two terms - payroll taxes and employment taxes - as if they were equal, but they are not. Yes, they are close enough in meaning to cause confusion, but they are different things.
For the purpose of the "Crash Course on Payroll and Payroll Taxes," the term "payroll taxes" is used generically to describe all taxes paid through an employer's payroll system.
For the purpose of the "Crash Course on Payroll and Payroll Taxes," the term "payroll taxes" is used generically to describe all taxes paid through an employer's payroll system.
What are Employment Taxes?
The IRS uses the term "employment taxes" to refer to those taxes reported on Form 941. That is, income tax withholding for employees and FICA taxes (Social Security and Medicare) withheld from employees, matched by employers, and paid by employers. But, just to confuse the issue, the IRS also lists other taxes when it is discussing "employment taxes." Look in this IRS article on "employment taxes," and you will see they also refer to self-employment taxes (Social Security/Medicare paid by business owners) and federal unemployment taxes as "employment taxes."
The IRS uses the term "employment taxes" to refer to those taxes reported on Form 941. That is, income tax withholding for employees and FICA taxes (Social Security and Medicare) withheld from employees, matched by employers, and paid by employers. But, just to confuse the issue, the IRS also lists other taxes when it is discussing "employment taxes." Look in this IRS article on "employment taxes," and you will see they also refer to self-employment taxes (Social Security/Medicare paid by business owners) and federal unemployment taxes as "employment taxes."
What are Payroll Taxes?
For this term, the IRS is more specific. By "payroll taxes" the IRS means only Social Security and Medicare taxes withheld from employee pay and matched by employers. In its terminology, federal income tax withholding, while submitted on the 941 form, is not part of payroll taxes.
For this term, the IRS is more specific. By "payroll taxes" the IRS means only Social Security and Medicare taxes withheld from employee pay and matched by employers. In its terminology, federal income tax withholding, while submitted on the 941 form, is not part of payroll taxes.
U.S. federal payroll taxes are:
- Taxes withheld from employee pay for federal income taxes(FIT) owed by the employees. The amount of FIT is determined by information employees provide on Form W-4 at hire. This form can be changed by the employee at any time and as often as the employee wishes.
- Taxes paid for social security and Medicare. Employees and employers share these taxes, with the employer deducting the employee share (one-half the total due) from employee wages/salaries, and the employer paying the other half.
IMPORTANT NOTE
For 2011, the employee portion of social security tax has been reduced 2%, to 4.2%. Be sure to adjust your withholding calculation to take this change into account. This change does not change the employer portion of the social security tax.
For 2011, the employee portion of social security tax has been reduced 2%, to 4.2%. Be sure to adjust your withholding calculation to take this change into account. This change does not change the employer portion of the social security tax.
The employee tax rate for social security is 6.2% (amount withheld). The employer tax rate for social security is also 6.2% (12.4% total). The Social Security portion of the tax is capped each year. The employee tax rate for Medicare is 1.45% (amount withheld). The employer tax rate for Medicare tax is also 1.45% (2.9% total). There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax.
Which Form Should I Use to Report Income - A W-2 or a 1099-MISC?
To report income for employees of your company, use a Form W-2. This form reports total income, Social Security and Medicare Income, and it shows how much has been withheld from employee pay for federal, state and local taxes. W-2s are due to the employee no later than January 31. After you have completed and sent the W-2s, you must then collect all of the W-2s for your employees and send those, along with a compilation called a W-3, to the IRS by February 28.
To report income for independent contractors, use a Form 1099-MISC. Independent contractors are those individuals who do work for your company but who are not employees. You don't report withholding or Social Security/Medicare wages because you don't withhold income taxes for independent contractors and you don't deduct Social Security and Medicare from their payments. In the same manner as the W-3, you collect all 1099-MISC forms and send them to the IRS with a 1096 compilation form.
What is the Difference Between a W-2, W-3 and W-4 Form?
From a W-4 Form to a Form W-3 and even a W-2, there are many
different IRS forms that relate to payroll processing and payroll tax
filing for small and mid-size business owners. Employers and most
employees easily recognize and know the basics of what a W-2 and W-4
form are used for. But there are probably a good number of employees
that have no idea what a Form W-5 is… and whether it applies to them.
We’ll go through some of the most common payroll IRS tax forms and
provide a definition and an explanation as to how they are used by
employees and employers.
Form W-2
A W-2 Form, also known as a Wage and Tax Statement, is a tax form
that employers are required to prepare and send to each employee and
the IRS at the end of the year. A W-2 reports, among other things, the
total amount of an employee’s gross earnings as well as the amount of
Federal and State taxes withheld in a calendar year. W-2 forms also
provide details on deductions an employee makes to a retirement plan and contributions to a qualified pre-tax health spending account.
These are deductions that must be reported to the Internal Revenue
Service. Employers are required to provide a copy of Form W-2 to every
employee on or before January 31.
Form W-3
A Form W-3, also known as a Transmittal of Income and Tax Statement, is an IRS payroll tax
form which an employer must file with the Social Security
Administration (SSA) along with Copy A of each W-2. A W-3 form is a
summary of all the various individual W-2 forms your company is
submitting to the Federal government. It tells the Internal Revenue
Service how many employees your company has and whether your W-2 forms
are accurate. Form W-3 also provides a formal reconciliation of the
quarterly tax payments made throughout the year on Form 941 for your
business. This payroll tax form must be signed by the employer and
filed with the IRS by the last day in February… or by the last day in
March if you are filing electronically.
Form W-4
A W-4 Form, also known as an Employee’s Withholding Allowance
Certificate, is an Internal Revenue Service tax form which all new
employees must fill out. This Federal tax form is used by an employer
so they can calculate the amount of tax to withhold from an employee’s
paycheck during payroll processing.
The Form W-4 indicates an employee’s social security number as well as
the number of personal exemptions that an employee is claiming. An
employee can fill out a new W-4 form anytime their tax situation
changes… like a change in marital status or number of dependents. At
that time, an employee can choose to have more or less tax withheld
from their paycheck.
Form W-5
A Form W-5, also known as an Earned Income Credit Advance Payment
Certificate, must be filled out by eligible employees that want to
receive part of the earned income credit (EIC) in advance, along with
their pay. The Earned Income Credit (EIC) is sometimes referred to as
the Earned Income Tax Credit (EITC). The EIC or EITC is a credit for
certain employees and was designed to supplement wages for low income
workers. Many workers may now be considered low income because within
the last year they lost their job, took a significant pay cut or worked
fewer hours. The earned income credit reduces the tax an employee
owes. It may also give an employee a refund even if they do not owe any
taxes. For the tax year 2009, the maximum earned income credit an
employer is allowed to provide an employee is $1,826, in addition to
their regular pay. To receive the rest of any EIC an employee is
entitled to, they must first file their annual personal tax return and
claim the earned income credit.
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