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Administrator Guide
Last Updated: 2024-04-05
Concept: Tax Allocations for Ongoing Multiple Work Jurisdictions (USA)

Concept: Tax Allocations for Ongoing Multiple Work Jurisdictions (USA)

Some employees regularly work in the same tax jurisdictions every pay period. You can set up ongoing multiple work jurisdictions (OMWJ). Workday then calculates and withholds taxes for each jurisdiction based on percentages you specify. If you don't specify percentage allocations, Workday resolves pay components in full for each tax authority.
Example: Every pay period, Dennis performs 30% of his work in California and 70% in Arizona. You configure percentage allocations. When you process payroll, Workday calculates and withholds taxes accordingly.
When to Override Tax Allocation Percentage Splits
Don't apply a percentage split on pay components used as related calculations if they've already been split. To override the split:
  1. Navigate to the
    Related Calculations
     grid of the earning or deduction.
  2. Select the
    Do Not Apply Percentage Splits
     option.
How Workday Calculates Taxes for OMWJ
When calculating payroll for an employee with OMWJ, Workday:
  1. Checks that you enabled tax allocation for ongoing work jurisdictions for the company.
  2. Refers to the tax allocations as of the period or subperiod end date.
  3. Calculates the full amount of each taxable earning and pretax deduction, and assigns a tax jurisdiction worktag to each amount.
  4. Splits the amounts according to the percentages defined for the employee.
  5. Calculates taxes for each jurisdiction, applying multistate withholding rules when the work state differs from the resident state.
Payslips and Payroll Results
When Workday withholds taxes for multiple jurisdictions, payslips report the tax allocated to each jurisdiction separately. Payroll results display the work tax authority worktag that Workday uses to calculate each taxable earning, imputed earning, and taxable deduction on the
Tax Elections
 tab. Results also display the tax calculated for each jurisdiction.
Off-cycle Payments and Payroll Input
Workday uses the percentages defined on the
Add Worker US Tax Elections
 task to split automatically:
  • Pay components listed on the
    Off Cycle (On Demand Additional, Manual)
     tab on the
    Create Run Category
     task.
  • Payroll input and off-cycle payments.
100% Allocation to 1 Jurisdiction
Workday doesn't recommend setting up a worker's allocation as 100% to 1 jurisdiction because this set up can cause incorrect calculation results for workers. Workday recommends that you adjust a worker's location if all of the costs for a worker must be allocated to a different jurisdiction.
However, you might need to set up 100% allocation for tax compliance. Example: A worker is working outside of a state where you want to collect SUI for them, and you need to set up 100% allocation to comply with New York's convenience of employer rule. Workday recommends testing thoroughly when you set up a worker's allocation at 100% for 1 jurisdiction.
Retroactive Payments
The
Run Retro Pay Calculation
 task uses the tax allocations that were in effect for a worker during the recalculated period. Workday doesn't support retroactive changes to worker tax allocations.
When you add a new OMWJ allocation for a worker with an existing OMWJ allocation, you should avoid multiple retro runs to the prior OMWJ allocation. To prevent incorrect payments; Workday recommends that you set the NRPPT date to the start date of the pay period the new OMWJ allocation is effective, after completing the pay period. For any subsequent periods before the NRPPT date; Workday doesn't consider the unprocessed retro events and requires you to calculate and adjust the retro differences manually.
FLSA
When you run pay calculation for FLSA bonuses using prior period coverage dates, Workday applies the tax allocations that were in effect for a worker during period the bonus was paid.
Supplemental Earnings
Some states and cities have different tax rates for supplemental earnings. Workday allocates supplemental earnings and pretax deductions according to the specified percentage splits before applying the supplemental tax rates.
Reciprocity
Workday applies state tax reciprocity rules to determine the taxable wages for the resident state.
Temporarily Suspend OMWJ
You can temporarily suspend a percentage split. Use the
Add Payroll Input by Worker
 task to enter payroll input. Enter the tax authority worktag in the
Payroll Worktags
 field.