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Administrator Guide
Last Updated: 2025-07-11
Set Up Company Federal Taxes (USA)

Set Up Company Federal Taxes (USA)

You can enter company-specific data to calculate and report on federal payroll taxes.
  1. Access the
    Edit Company Federal US Tax Reporting
     task.
  2. As you complete the
    Company Tax Reporting
     grid, consider:
    Option Description
    Start Date
    Enter a date that is on or after the start date reported for the federal tax authority on the
    View Payroll Tax Authority
     report.
    Supplemental Tax Method - Regular Check
    Select a tax method for supplemental payments added to regular paychecks. When you select:
    • Flat Rate
      : Workday calculates taxes based on a federally mandated percentage rate.
    • Standard Withholding
      : Workday calculates taxes based on federally mandated percentages for income brackets.
    Supplemental Tax Method - Separate Check
    Select a tax method for supplemental payments paid separately from regular pay. When you select:
    • Flat Rate
      : Workday calculates taxes based on a federally mandated percentage rate.
    • Aggregate - Standard
      : Workday aggregates the supplemental wages with the regular wages from the last completed regular pay period. To calculate the amount of tax to withhold from supplemental wage payments, Workday calculates federal tax based on the standard withholding formula and subtracts the amount of regular federal tax withheld from the last regular pay period.
    Example: A worker claiming single and no dependents receives a regular weekly wage of 1,000 USD and the federal tax withholding is 81.85 USD. The worker is paid a bonus of 500 USD on a separate pay result with a nonregular run category. Workday calculates the:
    • Aggregate tax of 173.10 USD on 1500 USD.
    • Withholding on the bonus as 91.25 USD, which is the difference between the aggregate tax and regular tax withholding.
    Exempt from FUI
    Select the check box when all employees of the company are exempt from Federal Unemployment Insurance.
    Third Party Provides W-2 for Sick Pay
    Select the check box when a third-party prepares the W-2s for sick pay payments, and you're liable for employer taxes. When you process third-party sick pay payments, Workday excludes the amount from the employee W-2 and includes the amount in the
    Third Party Sick Pay Recap Form Data
     report.
    Clear the check box when you provide W-2s for third-party sick pay and are liable for employer taxes. Workday includes amounts from a third-party sick pay payment on the employee W-2s.
    Changing this setting midyear might cause unexpected W-2 and tax filing results.
    Kind of Employer
    Applies to box b of form W-3 for tax years 2011 and after. Workday includes the value that you select in the quarterly and annual tax data that you send to your tax filing provider.
    Company Provides Dependent Benefits
    This check box is only specific for companies that provide dependent medical insurance benefits for the state of New York (specifically Form NYS-45) to meet the meet quarterly tax filing requirements. This information is only returned with the
    Get Quarterly Worker Tax Filing Data
     web service.
    Allow Pre-Tax Deduction Allocation
    Select the check box to calculate pretax deductions from work tax authority worktags. For more information, see Concept: Multi-Jurisdiction Tax Allocations (USA).
    Allow Ongoing Work Jurisdiction Tax Allocation
    When you select the check box, Workday displays a
    Tax Allocation
     tab on the
    Add Worker US Tax Elections
     task.
    Select the check box to enable Workday to allocate wages to taxing jurisdictions when employees work in multiple jurisdictions on an ongoing basis.
    When employees work in multiple tax jurisdictions that change from 1 pay period to the next, use tax location mapping instead.
    Clear the check box when employees work in the jurisdiction for 100% of the time.
    To include Workday Time Tracking time blocks in tax calculations, select both this check box and the
    Enable Ongoing Work Jurisdiction Tax Allocation with Time Tracking
     check box.
    Example: Each pay period, a sales representative spends 30% of their time in Virginia, 25% in Maryland, and 45% in Pennsylvania. The company payroll sets up the allocation percentages for the worker's tax elections, and Workday uses the allocations to calculate taxes.
    Enable Ongoing Work Jurisdiction Tax Allocation with Time Tracking
    Select when:
    • Employees work in multiple tax jurisdictions on an ongoing basis.
    • You want to calculate taxes based on percentages worked in each jurisdiction.
    • Employees use Workday Time Tracking to enter hours or project time.
    The check box displays when you select
    Allow Ongoing Work Jurisdiction Tax Allocation
    .
    When you don't select this check box, the tax allocation splits only earnings and pretax deductions from:
    • Workday Compensation.
    • Payroll input.
    Enable Tax Location Mapping
    Select the check box when an employee works in more than 1 tax jurisdiction and the locations and percentage of time are unpredictable.
    Select the check box before you create and approve time blocks in Workday Time Tracking to ensure that Workday links a time entry with a reported location to the relevant tax authority codes. When you select the check box after you approve time, you must update, resubmit, and approve the time blocks for payroll to split among different tax authorities.
    When you select the Elections task, Workday displays the
    Tax Location Mappings
     tab on the
    Add Worker US Tax Elections
    .
    Example: A sales consultant has multiple customers in different states. In month 1, the consultant works 2 weeks in New York, 1 week in New Jersey, and 1 week in Connecticut. In Month 2, they work 2 weeks in Connecticut and 2 weeks in New Jersey. Using tax location mapping, payroll ensures that Workday calculates all applicable state, city, and local taxes.
    Exclude 1042-S Taxes from Tax Filing
    Select to exclude 1042-S taxes and Income Code 15 taxes from these reports and web services:
    • Tax Filing Periodic Data by Company
       report
    • Get Periodic Company Tax Filing Data
       web service
    • Tax Filing Periodic Data by Common Pay Agent
       report
    • Tax Filing Periodic Data for Event
       report
    • Tax Filing Periodic Data for Workers
       report
    • Get Periodic Worker Tax Filing Data
       web service
    • Tax Filing Quarterly Data for Workers
       report
    • Get Quarterly Worker Tax Filing Data
       web service
    • Tax Filing Quarterly Data by Company
       report
    • Tax Filing Quarterly Data by Common Pay Agent
       report
    Enable Convenience of Employer Rule
    When you select the check box, Workday displays a
    Convenience of Employer Rule
     tab on the
    Add Worker US Tax Elections
     task.
    Select the check box when you have employees that work remotely for a business in one state while residing in another and the state their work is directed from has a convenience of the employer rule.
    Company Name Override for Year End Forms
    Select the check box to override the company name on W-2 and W-2C forms, audits, and reports.
    When you change company name, you can use the override to display the new name on W-2 and W-2C forms, audits, and reports for a previous year.
    Company Name Override for Year End Forms Line 2
    Enter the additional company name in this field when you need to list the company name on the first line and an additional company name on the second line when reporting on federal payroll taxes. Workday displays the company name as the second line of the company name on these reports and forms:
    • Company US Territory Year End Form Audit
    • Company US Territory Year End Form Corrections Audit
    • Company W-2 Audit
    • Company W-2C Audit
    • View Third Party Sick Pay Correction Recap Form Data
    • View Third Party Sick Pay Recap Form Data
    • View US Territory Year End Form Data
    • View US Territory Year End Form Corrections Data
    • View W-2 Form Data
    • View W-2C Form Data
    • W-2C Preview
    • W-2
       PDF form
    • W-2C
       PDF form
    • W-2PR
       PDF form
    • W-2GU
       PDF form
    • W-2VI
       PDF form
    Workday displays a hyphen before the second company name on these tasks and this report:
    • Create W-2 Data
       task
    • Create W-2C Data
       task
    • W-2 Preview
       report
    Companies in a common pay agent already print the common pay agent company name and the related company name on the W-2. Entries in this field may make the company name and address box data not fit properly on the form.
    Display Default Disclaimer
    Select the check box to display the default disclaimer when workers add federal withholding elections. The check box doesn't display when you use a custom disclaimer.
    Custom Disclaimer
    The custom disclaimer displays even when you select the
    Display Default Disclaimer
     check box.
    For workers in Guam, Puerto Rico, and the U.S. Virgin Islands who previously had federal taxes withheld while working in another state and the self-adjusting taxes are based on wages, Workday:
    • Recognizes previous balances or values when calculating self-adjusting taxes, such as the Additional Medicare tax, for the current tax year.
    • Applies previous values across deductions.
    • Recognizes taxes already withheld and avoids overwithholding.
    • Respects and supports wage balances across company relationships.
Access the:
  • Company Federal US Tax Reporting
     report to view a summary of company federal elections, including a history of inactive elections.
  • Company US Tax Reporting
     report to view federal, state, and local tax elections for the company.
Set up the company:
  • State taxes.
  • Third-party personal tax reporting.