STATE TAXABILITY

Use this subtask to designate various choices regarding how a deduction should be treated for each state's income tax when payroll is computed. For example, a 401(k) deduction can be subtracted from wages before income tax is computed for some states, and not for others.

If a state for which an employee has been set up in the Employee Taxes screen in Costpoint Employee is not found here, the system performs the calculation based on the federal tax setup for this deduction.

Hint:  A cafeteria plan deduction is exempt from federal withholding. If you have a state that follows this same rule (i.e., a cafeteria plan is exempt from state withholding), you do not need to set it up here because, if not found, Costpoint will calculate by the federal rules.

Deduction

This non-editable field displays the deduction code and description for which you are applying the following taxability rules.

Table Window

State

After selecting the New Line button on the toolbar, enter, or use Lookup to select, the two-letter abbreviation for the state for which you want to set up taxability rules. State IDs are validated against the system's state table.

State Name

The state name is displayed automatically once the two-letter abbreviation for the state is entered.

Income Taxability

Enter one of the system-provided codes depending on the state income tax computation for this deduction.

"F" (Fully Taxable) - The deduction has no effect on calculation of income tax. An example of this would be an employee advance deduction.

"W" (Taxable, Not Subject to W/H) - The deduction is taxable when added to gross pay, but withholding is not required. An example of this would be Excess Life Insurance.

"E" (Exempt) - The deduction should be subtracted from gross pay before taxes are computed. An example of this would be a cafeteria plan deduction.

SUTA Taxability

Enter one of the system-provided codes depending on the state unemployment tax computation for this deduction. If you do not assign taxability at this level, Costpoint will assume taxability at the FUTA level.

"F" (Fully Taxable) - The deduction has no effect on calculation of state unemployment wages. An example of this would be an employee advance deduction.

"E" (Exempt) - The deduction should be subtracted from state unemployment wages before taxes are computed. An example of this would be a cafeteria plan deduction.

Table Information

Changes to this screen update the Deductions State Taxable (DED_STATE_TXBL) table.