Domestic Gross-up - Employee Salary Tab

The Employee Salary Tab is where tax return and salary information can be entered for the transferee. A separate record must be created for every year that expenses are incurred. The information entered here can play a part in the taxes calculated for the employee.

This screen will list all salary records that have been created for the employee by tax year.

This link is located to the left of each existing salary record. Selecting this link will open the salary record for viewing and modification purposes.

This link will begin a new salary record for the employee.

This field will assign a Tax Year to the salary record being created. This drop down list includes a list of tax years.

The selection made here will inform the system as to how this new salary record will be created. This drop down list includes two options, Define New Tax Year and Copy an Existing Tax Year.

Define New Tax Year – This selection should be used if the salary record

created is not to be copied from an existing record.

Copy an Existing Tax Year – This selection should be used when the salary record is being copied from an existing record (i.e. copying tax information from one year to the next).

A value should only be selected in this field when the Copy an Existing Tax Year is selected in the Create New Record By field. The tax information for the tax year selected in this field will be copied to the new salary record being created.

Note: When using the salary copy functionality only the tax information for the assignment will be copied over (i.e. Filing Status, Dependents, Qualified Children, etc. any information in the Wages/Salary section will not be copied over)

This button will launch the Wages and Salary portion of the Employee Salary tab.

This button will cancel the new salary record being created and return to the Employee History Screen.

This column displays all tax authorities that have been assigned to the Assignment/Relocation on the Tax Authority Input tab.

This column is where the Annual Salary information for each authority can be entered.

This column is where the YTD (year-to-date) wages for each authority can be entered.

This is the date that the wage entered is effective.

This field is used for certain states (DC, MA, NJ and VA) to prorate deductions and/or exemptions in the tax calculations as a result of the tax rules for these states. While the system will allow the entry of Months for all tax authorities, the tax calculation will only use the value of the Months field for the applicable states listed above.

This field will assign a filing status to the employee. This drop down list includes the following:

This field holds the number of dependents for the employee. The system uses the value in this field along with the value associated with the filing status to calculate the number of total exemptions.

This field is used for the calculation of the Child Tax Credit. Enter the number of children who are under the age of 17 as of December 31st of the Tax Year. This is a sub-set of the number of dependents entered above. For example, if someone has 2 dependents and one of them is under the age of 17, then 2 should be entered in the Dependents field and 1 should be entered in the Qualified Children field.

The amount entered here, if any, should be the amount of any bonuses received by the employee. The amount entered here will be added to federal and state income in the tax calculation unless the Wage Policy is set to use YTD Wages.

This field allows for the entry of any supplemental wages that are in addition to relocation moving expenses that have been entered into the system. The amount entered into this field may impact the withholding calculation depending on the Tax Policy in use. For Tax Policies utilizing the supplemental methodology, the system will consider amounts in this field to determine the appropriate supplemental rate to use. The American Jobs Creation Act of 2004 stipulates that supplemental wages in excess of $1 million should be withheld at the highest marginal rate. This field provides the ability to adhere to that legislation.

The amount entered here, if any, should be any other non wage income for the employee, such as investment income or rental income. The amount entered in the Other Non Wage Income field is added to federal and state income in the tax calculation, unless the Wage Policy is set to use YTD Wages.

The amount entered here, if any, should be any other wage income for the employee, such as income from another employer. The amount entered in the Other Wage Income field is added to federal and state income in the tax calculation, unless the Wage Policy is set to use YTD Wages. (If Annual Salary is selected for the Wage Policy, then the amount entered in this field is also added into OASDI and Medicare wages).

The amount entered here, if any, should be the amount of income earned by the employee’s spouse. If the Filing Status is set to Married Filing Joint, then the Spousal Earnings amount is added to federal and state income in the tax calculation, unless the Wage Policy is set to use YTD Wages.

The amount entered here, if any, should be the amount of wages earned from prior employment. The amount entered in the Prior Employment Earnings field is added to federal and state income in the tax calculation unless the Wage Policy is set to use YTD Wages. (If Annual Salary is selected for the Wage Policy, then the amount entered in this field is also added into OASDI and Medicare wages).

The system uses Deduction Options to determine whether to use standard or itemized deductions during tax calculations. This selection is used by the Statute and Marginal tax assistance calculation methods. One of the following three options can be selected.

Best of Item & Stand – This option allows the system to compare the results of both the standard deduction and the itemize options and then use the higher of the two (which generally results in the least amount of tax assistance). When Best of Item & Stand is selected, the system will enable both the Itemized Deduction Base and the AMT Other (Non-Income) Taxes sections, and will require the selection of options from these sections.

Note: Companies that wish to use the “Standard-switch-to-Itemized” methodology will select the Best of Item & Stand option, and enter $0.00 in the Amount field discussed below.

Itemized Deductions – When selected this option indicates to the system to use the itemized deductions method when calculating taxes for this Assignment and Tax Year. When Itemized Deductions is selected, the system will enable both the Itemized Deductions Base and the AMT Other (Non-Income) Taxes sections, and will require the selection of options from these sections.

Notes:

Standard Deduction – When this option is selected, the system will use the IRS’s standard deduction when calculating the deduction amount. In this case, the system will not itemize deductions, and it will not include phase-outs. When Standard Deduction is selected, the system will disable both the Itemized Deduction Base and the AMT Other (Non-Income) Taxes sections.

Note: If this option is selected, the system will use the standard deduction on both the “with” and “without the move” sets of tax calculations. The system will therefore treat points and other deductible expenses as taxable, and together with the fact that low deductions (like the standard deduction) mean higher tax assistance anyway, this will tend to overcompensate the transferees. Companies may wish to try one of the Itemized or Best options instead to avoid unrealistic levels of tax assistance.

This section specifies how the system should determine the itemized deduction base, or starting point, for the tax calculations. If the Standard Deduction option is selected in the Deduction Options field above, this section will be disabled. If the Best of Item & Stand or Itemized Deductions is selected in the Deduction Options field, this section will be enabled.

Standard – When this option is selected, the system will use the IRS’s standard deduction as the base deduction amount, before adding in state or local income taxes and other deductible items, such as points, into the calculation.

Amount – If this option is selected, this field will allow the specification of a fixed amount when calculating the itemized deduction base, rather than pulling an amount off of a table. The amount entered should exclude any state or local income taxes, as these amounts will be calculated and added in automatically.

Table – If this option is selected, a drop down will activate and allow the selection of one of two tables that are both derived from data published by the IRS. The IRS Average table is an admixture of both itemizers and non-itemizers, and contains an average of itemized deductions based upon various levels of income. The IRS Itemizer Average table contains IRS data on itemizers only. The data in both tables excludes state and local taxes because the system will calculate the state and local taxes automatically.

Note: The same table that is selected in this section will automatically default in the next section, AMT Other (Non-Income) Taxes.

Itemized Deduction Base (before moving expenses)

+ State and local taxes on base income

+ Deductible moving expenses

+ Change in state and local taxes (after move / always deductible)

= Itemized deductions prior to phase out

- Phase out of Itemized Deductions

= Itemized Deductions

This section allows you to specify how you want the system to determine AMT Other (Non-Income) Taxes for purposes of the alternative minimum tax calculations. AMT Other (Non-Income) Taxes are taxes that are deductible of the federal tax return, and are primarily taxes on real estate and personal property. AMT Other (Non-Income) Taxes can be pulled off of a table, or can be entered as an amount or as a percentage of the itemized deductions base that you selected in the previous section. This amount will only be used if the tax policy calls for statutory tax calculations, other methods such as marginal, supplemental, or State No AMT will ignore this section.

Percent – If this option is selected, the system will calculate AMT Other (Non-Income) Taxes from the percentage of the itemized deduction base that is entered. The system default is set to 10%.

Amount – This option is only available for selection if Amount has been selected in the Itemized Deduction Base section. If this option is selected, this field will allow the specification of a fixed amount to use for AMT Other (Non-Income) Taxes, rather than using a percentage or pulling an amount off of a table.

Table – This option is only available if Table has been selected in the Itemized Deduction Base section. The system will automatically use the table that has been selected in the Itemized Deduction Base section.

AGI – Itemized deductions

+ State and local taxes income

+ AMT Other (Non-Income) Taxes

- Phase out on Itemized Deductions

= AMT Taxable Income

Alternative Minimum Tax (compare with federal taxes calculated in the ordinary fashion, and take the higher of the two)

Income

- Deductions (Standard, or Itemized less phase out)

- Exemptions (less phase out)

= Taxable Income

Tax

- Child Tax Credit (qualified children x child tax credit amount, less phase out)

= Total Tax

This button will save all entered and selected data.

This button will close the Wages/Salary screen and return to the Employee Salary History screen.

The Year End Salary Copy screen can be accessed at the company level, and is used to copy the salary details and tax information for relocations (i.e. Filing Status, Dependents, Qualified Children, etc.).

The Year End Salary Batch can be used to create new Salary Year Records, or update existing ones.

If using the Year End Salary Batch to update an EXISTING Salary Year Record and:

If using the Year End Salary Batch to create a NEW Salary Year Record and: