Setup Considerations: Multi-Jurisdiction Taxation (USA)
You can use this topic to help make decisions when planning your configuration and use of multi-jurisdiction taxation. It explains:
- Why to set it up.
- How it fits into the rest of Workday.
- Downstream impacts and cross-product interactions.
- Security requirements and business process configurations.
- Questions and limitations to consider before implementation.
Refer to detailed task instructions for full configuration details.
What It Is
Multi-jurisdiction tax allocation is a group of solutions that you can use separately or in combination. These solutions give you the ability to configure taxes for mobile workers and reduce manual entries of tax jurisdictions. The solutions are:
- Ongoing Multiple Work Jurisdictions (OMWJ)
- Tax Location Mapping (TLM)
- Payroll Input with worktags
When you configure any of these solutions, Workday withholds applicable state, county, city, and local other taxes accordingly.
Workday Solution | Description |
|---|---|
Ongoing Multiple Work Jurisdictions (OMWJ)
| Enables you to define tax allocations at the worker level. This solution is for workers with a set schedule and location assignments in differing tax jurisdictions. |
Tax Location Mapping (TLM)
| Enables you to define rules at a company level to allocate taxes based on time entry and payroll input with tax authority worktags. |
Payroll Input with Worktags
| Enables you to define tax allocations for one-off assignments based on payroll tax authority worktags you associate with payroll input. |
Business Benefits
You can streamline the payroll process using any combination of these tax allocation solutions, which:
- Helps ensure compliance by automatically taxing wages based on where they’re earned.
- Increases the accuracy of worker tax calculations.
- Reduces the amount of manual effort required to assign tax authority worktags to payroll input.
- Reduces the number of manual adjustments to taxes.
- Reduces the number of amendments to tax reports due to adjustments.
Use Cases
Solution | Use Cases |
|---|---|
OMWJ | Salaried workers with a set schedule, assigned to multiple states.
Example: A pharmaceutical representative assigned to a tri-state area. |
TLM | Worker with unpredictable percentages of work performed in various tax jurisdictions.
Example: A technical support representative who travels only when technical issues arise. Workday withholds taxes for all time entry or payroll input transactions with payroll tax location worktags. Tax allocations include payroll tax authorities mapped to the location. |
Payroll Input with worktags | Workers with infrequent one-off assignments in different tax jurisdictions.
Example: A worker who, on rare occasions, works out of an office in a different tax jurisdiction. |
Questions to Consider
Before deciding to use OMWJ, TLM, payroll input with worktags, or any combination, consider:
Question | Considerations |
|---|---|
Does the worker work in multiple tax jurisdictions for unpredictable percentages of time? | You can set up TLM so that Workday splits wages according to the location worktag entered on earnings. Workday withholds taxes for all Time Tracking entries or payroll input transactions with payroll tax location worktags.
If you have pretax deduction calculations enabled, Workday applies the percentages to taxable earnings, imputed income, and pretax deductions. |
Do your workers have different tax rates for supplemental earnings? | Workday allocates supplemental earnings and pretax deductions according to the specified percentage splits (OMWJ) or payroll tax location worktags (TLM) before applying the supplemental tax rates. |
Do workers enter their time in Workday Time Tracking? | These considerations apply with or without Time Tracking:
|
Recommendations
Analyze your requirements and select the solution, or solutions, that require the least manual intervention.
Requirements
Understand how Workday calculates and withholds taxes when you:
- Set up OMWJ. See Concept: Tax Allocations for Ongoing Multiple Work Jurisdictions (USA).
- Set up TLM.
- Use payroll input with tax location worktags. See Add Payroll Input for Workers.
Limitations
Regardless of how you set up tax allocations, Workday doesn't apply percentage splits to State Unemployment Insurance (SUI) taxable and subject wages. Workday always applies SUI and other taxes based on SUI to the primary work state.
Workday doesn't support OMWJ elections for workers who have an international assignment position in the U.S.
Examples:
Workday:
- Doesn’t support OMWJ elections for a worker with a regular position in Canada and an international assignment position in the U.S.
- Does support OMWJ elections for a worker with a regular primary position in the U.S. and an international assignment position in Canada.
Tenant Setup
No impact.
Security
Users with security enabled for these domains can view and set up taxes and worker tax elections:
- Set Up: Payroll - Company Specific (Taxes) - USA
- Worker Data: Payroll (Company Specific) - USA
Business Processes
No impact.
Reporting
Reports | Considerations |
|---|---|
Company US Tax Reporting
| Displays company-level tax setup. |
Payroll Tax Mapping Inactivation on Worker
| Use to view or inactivate TLM for workers. |
Payroll Tax Mappings on Location
| Displays Tax Location Mappings. |
Worker US Tax Elections
| Displays worker tax elections. |
Integrations
Web Service | Description |
|---|---|
Get Payroll USA State and Local Tax Elections
Put Payroll USA State and Local Tax Election | Use these web services to load and retrieve state tax elections. |
Get Payroll Payee Tax Location Mappings
Put Payroll Payee Tax Location Mapping | Use these web services to update tax location configurations for workers. |
Get Payroll Payee Ongoing Work Jurisdiction Tax Election
Put Payroll Payee Ongoing Work Jurisdiction Tax Election | Use these web services to load and retrieve ongoing work jurisdiction tax election data. |
Connections and Touchpoints
Features | Considerations |
|---|---|
Time Tracking | Workday uses payroll location worktags and time entry codes set up in Time Tracking to allocate tax allocations. |
Workday offers a Touchpoints Kit with resources to help you understand configuration relationships across your tenant. Learn more about the Workday Touchpoints Kit on Workday Community.
Other Impacts
No impact.