Compute Payroll Calculations
If the employee has multiple withholding states, the Compute Payroll application:
- Calculates the gross amounts per withholding state (takes the reciprocal state information into account)
- Calculates the percentage of gross for each state
- Multiplies the deduction amount by the percentage for each state
- Checks the exempt status for each deduction/state. If the deduction is exempt, it deducts the exempt amount from the state’s total deduction amount and displays the prorated exemption deduction amount in exempt wages for that state.
If taxes must be withheld for a state that is not set up on the Manage Employee Taxes screen for an employee, Costpoint taxes the taxable amount for the state and multiplies it by the default withholding rate to get the state tax amount.
Example:
The Total Deduction is $2,500, including a Medical Exempt amount of 500. Maryland allows only Medical to be exempt from taxes.
| Gross Amount by State | Prorate | Deductions | Deduction per State | Exempt Amount | |
|---|---|---|---|---|---|
| MD | $500 | $500/2250 = 22.22% | $2,000 | 444.40 | 111.10 (500 x 22.22) |
| ME | $750 | $750/2250 = 33.33% | $2,500 | 833, 25 | |
| CA | $1,000 | $1000/2250 = 44.44% | $2,500 | 1,111.00 | |
| Total | $2,250 | 2,388.65 | |||
If any Pay Type computed in payroll is exempt, the Pay Type is deducted for the withholding state with which it is associated.
Example:
| Earnings | Pay Type | Pay Type Exemption | Taxable Wages | |
|---|---|---|---|---|
| MD | $500 | 11 | $500 | $0 |
| ME | $750 | R | $0 | $750 |
| CA | $1,000 | 11 | $1,000 | $0 |
| Total | $2,250 | $1,500 | $750 | |