Steps: Set Up Supplemental State Taxes (USA)

Security:

Set Up: Payroll - Pay Group Specific
and Set Up: Payroll (Calculations - Payroll Specific)
domains in the Core Payroll functional area.

Set Up: Payroll - Company Specific (Taxes) - USA
in the USA Payroll functional area.

Workday automatically applies supplemental taxation for on-cycle payments and supports up to 2 supplemental tax rates for each state:

Standard

Alternate

You can apply a different method to supplemental payments that you issue as separate checks or combined with other payments.

Set Up Company State Taxes (USA) .

Select the supplemental tax method to use for state withholding. You can apply a different method to supplemental payments to issue them as separate checks or combine them with other payments.

Access the

Create Earning

Create Deduction

tasks to add earnings or deductions to pay component groups. See Reference: Common Pay Component Groups.

On the

Non-Effective Dated

tab in the

Groups

field, select 1 of these Workday-owned pay component groups to add the earning to:

Supplemental Earnings - Standard [USA]
applies to states with only 1 supplemental tax rate.

Supplemental Earnings - Alternate [USA]
can apply when a state has more than 1 supplemental tax rate.

If you add earnings to the Supplemental Earnings - Alternate
pay component group and a state has only 1 supplemental rate, Workday applies the standard supplemental rate.

(Optional) If you need to set up a separate nonregular run category, access the

Edit Run Category

task to select the

Non Regular Taxation

check box for the run category that uses the supplemental tax rate.

For on-demand payments, you can still apply supplemental taxation regardless of the run category setup.

See: Set Taxation and Processing Rules for Run Categories.

California taxes bonus and stock option payments at a different tax rate than other supplemental earnings, such as vacation payout.

To tax these earnings at the correct rates:

Add bonus and stock option earnings to the Supplemental Earnings - Standard
pay component group.

Add earnings for vacation payout to the Supplemental Earnings - Alternate
pay component group.

When assigning the pay component group to a run category, select the

Non Regular Taxation

option.

Workday maintains current tax rate information for all states. To view this data, access the

All Payroll Tax Data

report.

To apply supplemental taxation to on-demand payments, select the

Supplemental Taxation

option on the

Run On Demand Payment for Worker

task.