Some employer and employee taxes have additional settings that can (or must) be configured so that the taxes are calculated correctly. These settings are configured in the Tax Setting section for a selected tax in the Tax Authorities tab in Org Setup > Org Payroll Setup > Legal Entity. In addition to the Tax Setting section, some tax authorities also have a Tax Qualifier section.
Tax authority settings can be available for taxes in Canada, the United Kingdom, and the United States. However, not all tax authorities have tax settings or tax qualifiers available. These sections are available for those taxes where the federal, state, provincial, territorial, county, local, or other tax authorities have legislated additional tax settings or configurations for the calculation or collection of taxes.
| Column | Description |
|---|---|
| Start Date | Start date for the tax setting. Required. |
| End Date | End date for the tax setting. Optional. |
| Exempt Tax Only, Update Wages | Checkbox that you can select to apply an exemption to a tax but track the taxable wages for information purposes. You must select this checkbox for both FICA EE and FICA ER tax types when you’re setting up tax authorities for a Medicare-only legal entity. More information is available in Medicare-Only Legal Entities and Filers. |
| Exempt Tax and Taxable Wages | Select Yes to apply a tax exemption for legal entities exempt from both Federal Medicare and Social Security Taxes. You must select this checkbox for the following four tax types: Fed MWT EE, Fed MWT ER, FICA EE, and FICA ER. More information is available in Medicare-Only Legal Entities and Filers. |
The options or parameters that Dayforce shows in the Tax Setting section depend on which tax authority you select in the Tax Authorities list.
Not all tax authority types have configurable tax settings or the same tax setting options. The following table lists some of the options and parameters that Dayforce shows for a tax authority when you select it:
| Option | Description |
|---|---|
| Alternate Calculation Code |
Drop-down list for selecting an alternate calculation method for:
|
| Alternate Higher Wages |
Indicates Dayforce uses alternate higher wages for state unemployment tax for the following US states:
|
| Block ER Wage Reporting |
This option overrides employer wage reporting for Illinois and Pennsylvania, if you have employees in Illinois or Pennsylvania who work in another state and your organization does not have physical work locations in Illinois or Pennsylvania. This option ensures that wages that the employee earns outside of their state of residence are reported for the employee's state of residence on their Form W-2, per the specific state rules. This option is available only for the Illinois State Withholding tax and the Pennsylvania State Withholding tax and only when there is no Company Tax ID Number entry for the specific tax. By default, this checkbox is cleared. |
| Enable Tax Payment Deferral | Indicates the tax payment due on the Canadian provincial tax is deferred. Generally, payment deferrals are part of a provincial tax deferral program. |
| Exemption Allocation |
Specifies if the Canadian employer qualifies for a tax exemption or not. The exemption applies only to the Newfoundland & Labrador Health and Post Secondary Education Tax (HAPSET) and Ontario Employer Health Tax (EHT). You can select from the following exemption types:
|
| Exemption Amount |
The employer's exemption amount claimed when you select the partial tax exemption option in Exemption Allocation. The exemption amount applies only to the following Canadian taxes:
When the field is left blank, no exemption amount is applied and taxes are calculated using the latest payroll tax rates. |
| Experience Rate |
Field where you can enter the unemployment tax contribution rate in a decimal format to override the default system rate in Dayforce. For example, enter 3.5% as 0.035. This option is available with regular and voluntary employer/employee plans where the rate is different from the standard state rate assigned by the agency. Normally, the state agency assigns an experience rate if you have a different rate from the standard rate. |
| Gross Annual Payroll | Field to enter the amount of payroll that the organization pays all of its employees (before taxes) from January 1 to December 31. |
| Quarterly Formula | Indicates that you want to use the formula for paying taxes quarterly over the year. Applies to US State Employer Unemployment Tax only. Often, this checkbox is selected by default and can’t be cleared. |
| Reciprocity | Indicates that the state in which the employee resides has a reciprocal tax agreement with the state in which the employee works. Often, this checkbox is selected by default and can’t be cleared. |
| Rpt Full Subject Wages | When selected, indicates the tax wage and the full subject wage amounts are reported as the same in the Dayforce Tax Service (DTS) file even though the wage limit has been exceeded. Used by reimbursable employers in all US states, except North Dakota, Oklahoma, and Wyoming. |
| Self Adjust Code | Checkbox that, when selected, instructs Dayforce to attempt to make up any shortfalls if too little tax is withheld for the current pay period. Often, this checkbox is selected by default and can’t be cleared. |
| Self Insured Flag | Indicates that the organization is self-insured and acts as its own issuer to pay for worker's compensation claims directly out of the organization's own pocket, instead of paying a traditional third-party insurer. Applies to US State Employer Unemployment Tax. |
| Supplemental Tax Method |
Drop-down list with several options to set the supplemental tax method to be applied to the tax type:
|
| Use Zero Rate | Checkbox that you can select to override the default rate of certain taxes and instead use a rate of zero in the tax calculations. |
The jurisdiction for which the tax was legislated determines the specific settings or qualifiers for tax authorities. Some examples that are documented here are: