Use this subtask to make various choices regarding how a pay type should be treated for each locality's income tax when payroll is computed. Assume a pay type is exempt from federal withholding. If you have a pay type for a locality that follows this same rule, you will not need to set it up here because, if the pay type is not found, the system will calculate by the federal rules.
This non-editable field displays the pay type code and description for which you are applying the following taxability rules.
After selecting the New Line button on the toolbar, enter, or use Lookup to select, the abbreviation for the locality for which you want to set up taxability rules. Locality IDs are validated against the Locality table. You must first set up localities in the Local Taxes screen before you can enter the code here.
The locality name is displayed automatically once you have entered the abbreviation for the locality.
Enter one of the system-provided codes, depending on the locality income tax computation for this deduction.
"F" (Fully Taxable) - This pay type has no effect on the calculation of local income tax.
"W" (Taxable, Not Subject to W/H) - This pay type is taxable when added to gross pay, but withholding is not required.
"E" (Exempt) - This pay type is subtracted from gross pay before taxes are computed.