Federal Tax Table
The Federal Tax Table option is used to enter rates and other data from the Tables for Percentage Method of Withholding section in the Internal Revenue Service's Circular E, Employer's Tax Guide. One table must be created for each combination of federal tax status and pay frequency you use.
Once you set up a table for a status/frequency combination, you can use the Generate item to create a table for another combination, rather than enter it manually.
As federal guidelines change, you can change your Federal Tax records to match the new guidelines using the Human Resources > Reference Tables > Future Changes > Federal Tax Codes option. This option allows you to change table records without affecting live data prior to the effective date you define. For more information, refer to Future Tax Table Options.
Caution
Do not delete a Federal Tax table record that is assigned to employee records.
Menu Path: Human Resources > Reference Tables > Payroll > Federal Tax Codes
Using the Generate Item
The Federal Tax Table page's Action Bar includes a Generate item for creating tax table records for specific pay frequencies. This eliminates the need to manually enter records for each of the frequency and filing status combinations required. The information for these tables should be identical to the information found in the Circular E section entitled Percentage Method of Withholding Table 7 - Annual Payroll Period.
Before using this option, you must enter an annual tax table for each of the filing status designations used. The system uses these annual tables as base information for generating the additional tax tables. Be sure to verify that the annual tables for all tax status designations are current and that your entries are accurate. Otherwise, the tables generated could be incorrect.
You cannot use the Generate item to create the initial annual tax table since this table provides the base for the additional tables generated. Also, you cannot specify the percentage for supplemental pays when using the procedure described below. Instead, the percentage defaults to the table from the annual tax table. To adjust this information for an existing table, access the record in the Federal Tax Table page's Detail section.
Generating a Federal Tax table record
- Select Human Resources > Reference Tables > Payroll > Federal Tax Codes to display the Federal Tax Table page.
- Click Generate.
In the Generate Federal Tax Table page, complete the following fields:
Pay Frequency
Select the frequency from the field's drop-down list. For the selections that are available, refer below to the Fields section.
Filing Status
Select the tax filing status that applies to the record. The selections include Married, Single, and any user-defined status codes associated with previously-entered Federal Tax Table records.
Liability Account
Enter the account to be charged for the taxes withheld via this table.
Number of Pay Period/Year
Enter the number of pays issued annually (from 2 to 99) for the pay frequency being used. For example, a frequency of M (for monthly) would have 12 pay periods, while a frequency of B (for biweekly) would have 26 pay periods. The number you enter is used to pro-rate the annualized tax withholding information for the tax table being generated.
- Click OK to generate the table and return to the Federal Tax Table page.
- Verify that the new record is correct, either by searching for and displaying the record in the Federal Tax Table page's Federal Tax Data section or by using Print to generate the Federal Tax Table report. The report's default file name is fedtax.rpt.
System Processing
The Federal Tax Table page's Generate function uses your selection in the Filing Status field and your entry in the Number of Pay Period/Year field to determine values in the new table record's Dependent Allowance, Earnings and Tax Amount fields.
The Filing Status field determines which annual Federal Tax table to use as the basis for the record about to be generated. The system then divides the Dependent Allowance, Earnings, and Tax Amount values in the base record by your entry in the Number of Pay Period/Year field.
Note the following characteristics of the resulting data:
- Earnings field values are rounded to the nearest dollar.
- Dependent Allowance and Tax Amount values are rounded to the nearest cent.
- The system assumes that the last row in the generated table record's Earnings field is 9999999.99. If the last row in the base annual record does not have this value, the system still forces the last row in the generated record to contain 9999999.99 rather than divide the base value by Number of Pay Period/Year.
Therefore, make sure when you set up your annual records that you include a final row for the 9999999.99 Earnings value.
Note
If your account structure needs to be changed in accordance with the Every Student Succeeds Act (ESSA), refer to the PowerSchool ERP Human Resources and Payroll Every Student Succeeds Act Fiscal Year-End Checklist for details on updating Deduction, Pay Code, and Tax tables with new year information.
Fields
Federal Tax Table Page
Use the page's Federal Tax Data section to add or change a tax record.
Field | Description |
|---|---|
Pay Frequency | Setting determining how often the tax should be withheld. These codes, which correspond with those entered in employees’ Payroll pages, combine with the filing status to identify the applicable tax table to use for an employee during payroll processing. You must create a separate tax table for each combination of frequency and status required by your payroll withholdings. Select: B - Bi-weekly The codes X, Y, and Z can be used to represent pay frequencies that may be required in processing pay runs but are not specified by the other codes. |
Filing Status | Tax filing status that applies to the tax table’s rates. While you can define this field as needed, we recommend using the standard federal designations: Select: S - Single The tax status combines with the pay frequency to identify the tax table. The system determines the table to use for an employee based on the frequency and filing status entered in the Employee Tax Setup Information page. For information, refer to Employee Tax Information page. |
Liability Account | Code of the liability account where you store federal tax withholdings. |
Dependent Allowance | Amount of gross wages, in dollars and cents, that is exempt from federal tax for each dependent per pay period. Decimal/10,2 The allowance should be pro-rated based on the tax table’s pay frequency. For additional information, refer to the Circular E publication, Income Tax Withholding - Percentage Method. Example 1: A dependent allowance of $2,350 would be entered as 45.19 (2350 ÷52) if the tax table’s pay frequency is W (for weekly) or 90.38 (2350 ÷ 26) if the pay frequency is B (for biweekly). Example 2: If a biweekly tax table has a dependent allowance of $90 and the employee has three dependents, $270 (90 x 3) of the gross wages would be exempt from the tax during a biweekly pay run. |
Supplemental Tax Percent | Tax percentage to withhold on supplemental wages. Enter the percentage in decimal format (15.75% = 0.1575). Decimal/6,5 Supplemental wages are compensation paid to employees in addition to their regular earnings, for example, bonuses, commissions, and severance pay. Refer to the Supplemental Wages section in the Circular E publication for the recommended percentage for the current calendar year. During payroll processing, a timecard can be marked with a P (for supplemental tax percentage) to override the employee’s default pay frequency. In this case, the system uses the supplemental percentage to determine the additional taxes withheld, not the tax table. The total withholding is the sum of the two taxes (Total Tax Withheld = Regular + Supplemental). |
Federal Tax Data Section
When adding or changing a Federal Tax record, click Tax Detail to display the Federal Tax Data section. This section lets you define information for calculating federal tax withholdings based on earnings ranges. Your entries should be taken from the BUT NOT OVER columns for the applicable tables in the Circular E.
Field | Description | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Pay Frequency | The pay frequency for the record associated with the tax detail. Display-only. | |||||||||||||||||||||||||||||||||||||||||||||
Filing Status | The tax filing status for the record associated with the tax detail. Display-only. | |||||||||||||||||||||||||||||||||||||||||||||
Earnings | Gross earnings, in dollars and cents, based on the Circular E’s variable earnings/tax rate scale. Decimal/10,2 The entries for each line represent the maximum earnings subject to the tax rate/percentage. When an employee’s salary exceeds the maximum for one line, the system references the next line.
Example 1: If the Circular E publication lists wages of $6,200 as not subject to federal tax, the entry for the first line would be 6200, and the Tax Amount and Tax Percent fields can be left at their zero defaults. Example 2: The following type of information appears in the Circular E: Not over $50, the amount of income tax to withhold is $0.
Using this example, you would enter the following:
| |||||||||||||||||||||||||||||||||||||||||||||
Tax Amount | Base taxation amount specified in the Circular E, entered in dollars and cents. Decimal/10,2 | |||||||||||||||||||||||||||||||||||||||||||||
Tax Percent | Required tax percentage for income over the base rate amount, as specified in the Circular E. Enter the percentage in decimal format (15.75% = 0.1575). Decimal/6,5 This percentage applies when earnings reach the amount in the Earnings field on the same line. |