Manually Added Taxes for US Employees

You can manually add taxes for specific employees, allowing you to correct omissions of the application’s tax locator functionality, for example, if Dayforce doesn’t entirely recognize an address and can’t locate the appropriate local or county taxes. In these situations, you can manually add the appropriate county tax.

Before You Begin: This functionality is only available for US employees and legal entities.

You manually add taxes using the Add New Taxes dialog box in the Payroll > Tax Definitions screen of the People feature.

Using a base tax type, you can filter to locate the specific tax type to add to an employee. For example, say you must add a village tax to an employee in Ohio. By selecting the Withholding Tax - Employee Tax - 001 in the Tax Type drop-down list and entering Ohio in the Description field, and then clicking Apply Filter, you can locate the Ohio City Village tax, as shown in the following screenshot:

When you apply the filter, the application displays the Employee Address drop-down list that contains the address or addresses of the employee (click Details, then click the Address tab). You must select an address in this drop-down list.

Manually added taxes are tied to an address so that the application knows if the tax should still apply. If the employee’s address changes or the selected address is no longer effective, the application automatically stops applying the tax to the employee’s pay.

Note that when you manually add taxes in People, the system uses Resident as the default resident code. If you are manually adding a local tax that needs a resident code of Non-Resident or Live/Work, you must change this in the Resident Code drop-down list.

When you manually add taxes to a legal entity in Org Setup > Org Payroll Setup > Legal Entity, the default resident code is Non-Resident, and these taxes might be applied automatically to employees if they are assigned to that legal entity. It might be necessary for you to change the resident code for the added tax, depending on the type of tax and whether the employee only lives in or both lives in and works in the location/jurisdiction of the manually added tax. you can make these changes to the resident code for that particular employee in People in the Employee Payroll Tax section of the Payroll > Tax Definitions screen.

Manually Add New Taxes to Employees

To manually add a new tax to an employee:

1. Go to People, open the employee profile, and click Payroll > Tax Definitions.
2. In the Employee Payroll Tax section, click Add New Taxes to open the Add New Taxes dialog box.
3. Select the type of the tax you want to add in the Tax Type drop-down list.
4. Add a filtering option using either the Authority Title drop-down list or entering part of the tax name in the Description field, or both, then click Apply Filter to load a list of associated taxes.
5. In the list of available taxes, select a tax.
6. Select an address in the Employee Address drop-down list.
7. If the employee is assigned to multiple legal entities, you need to select a legal entity for this new tax.
8. Click Add Selected Tax.

The application adds the tax to the Employee Payroll Tax section with the Manually Added Tax checkbox selected.

Manually Set Certificates of Non-Residency for Employee Taxes

Payroll administrators can set a tax definition of 1-Certificate of Non-Residency on File for affected employees to ensure that the correct taxation parameters are applied to those employees.

There are local tax authorities in some states that file certificate forms, forms that affect the taxation between live-in and work-in jurisdictions (for example, Michigan LOCALS). To ensure that taxation calculation and filing is correct, you can set a tax definition of 1 - Certificate of Non-Residency on File for the employee.

To set a certificate of non-residency:

1. Go to People, open the employee profile, and click Payroll > Tax Definitions.
2. In the Employee Payroll Tax section, expand the local entry (for example, City under the Tax Type column).
3. In the expanded entry, click Add and enter the appropriate information.
4. In the Override Parameters section, in the Certificate Code drop-down list, select 1 - Certificate of Non-Residency on File.
5. Click Save.

Make Manually Added Taxes Inactive

These type of taxes can be made inactive when they are no longer used in Dayforce. A tax is considered inactive when any of the following configurations are applied to the tax item in the Employee Payroll Tax section:

• Enter an effective end date in the tax item.
• Remove the employee address in Address. The following screenshot highlights the location of the Address field within the tax item.
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• For taxes other than federal or state taxes, such as county or city taxes, the Inactivate Tax checkbox is displayed in the tax item. Select the checkbox to make the tax inactive. The following screenshot highlights the location of the Inactivate Tax checkbox within the tax item.
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To hide inactive taxes from the active list in the Employee Payroll Tax section, you must remove the address in Address. Inactive taxes that are hidden from the list of active taxes are still accessible when you click All in the Active/All button. Taxes with an end date or a selected Inactivate Tax checkbox are still displayed in the active list if there is an address in Address. However, these taxes won't be used in the tax calculations.