US -- arrear taxation

[Former Member]

Hi experts,

I have a query regarding how arrears get taxed in US payroll? for eg. take two emps of similar data. for one emp payroll ran for 1,2,3,4 PayPeriods. and for the other emp directly on 4th PP without running payroll for first three months. Will the state and federal withholding tax YTD amount for both emp will be same or not?

If yes/not , why so?

Thanks ,

Vinoli Jacob

[former_member182083 · Accepted solution]

Hello,

As per the origin principle, it will be taxed on when paid principle, since you have mentioned it is in different tax slab, it will be taxed based on the slab when it is paid.

With regards,

S.Karthik

[Former Member]

Hi,

If we use wage bracket method or percentage method, 500 falls in one tax slab and 2000 falls in another. Hence the tax YTD on 4th PP is different.

It is as per my testing in my SAP with BSI9.0

i am not sure any configuration is missing??

Thanks,

Vinoli

[former_member182083]

HelloVinoli,

The amount which is not run for the period will be cummulated into current period and tax is calculated on that. Say example employee is paid 500$ every pay period, since you haven't run for the 1st 3 period and you are directly running the 4th pay period, this amount will be cummulated based on the Origin principle(500[1st period]500[2nd period]500[3rd period]+500[current period])==> 2000$, tax will be calculated on this amount and deducted correspondingly. It should be same unless there is any difference in Authority, override, allowance, dependents, benefits, martial status etc.

With Regards,

S.Karthik