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Administrator Guide
Last Updated: 2023-06-23
Set Up Company Local Taxes (USA)

Set Up Company Local Taxes (USA)

Security:
Set Up: Payroll - Company Specific (Taxes) - USA
 domain in USA Payroll functional area.
Workday maintains local tax data for payroll tax processing so that these tax authorities are available in Workday for you to set up for the company:
  • Counties.
  • Cities.
  • Local school districts.
Add them to the company so employees can make tax elections for them.
The payroll administrator receives a notification to add a tax authority when:
  • You set up self-service for withholding elections that includes an approval step on the business process.
  • The employee selects a tax authority that you haven't set up. In this case, manually enter the employee's tax elections and approve them.
  1. Access the
    Edit Company State and Local US Tax Reporting
     task.
  2. Select the
    Local
     tab. The
    Local
     tab is populated only if there's local data relevant to the state and company combination.
  3. If you're entering a tax for the first time:
    • Enter the
      Start Date
      .
    • If you're changing tax information, Workday recommends that you enter an
      End Date
       and add a row with a new
      Start Date
      . When you add a row, Workday copies information from the previous row. Enter the
      Start Date
       and the changes in the new row.
  4. For each tax, enter 1 or more tax authorities.
    Example: An employee works in 3 Pennsylvania locations (Philadelphia City, Abington Township, and Lower Merion Township). You can enter
    Local City Withholding (Work) [USA]
     once and select all 3 townships for that tax.
  5. As you complete this tab, consider this location-specific information:
    Kentucky
    In the
    City Withholding
     section for Louisville, select
    Local City Withholding (Work) [USA]
     and make these
    Tax Authority
    selections:
    • Louisville Non-Resident + TARC (Kentucky: Jefferson)
    • Louisville Resident + TARC (Kentucky: Jefferson)
    In the
    School District Withholding
     section for Louisville, select
    Local School District Withholding (Resident) [USA]
    . For the
    Tax Authority
     , select
    Jefferson County School Board Tax (Kentucky: Jefferson)
    .
    Ohio
    State tax election requires the employee's school district.
    Pennsylvania
    Select
    Local City (PENN) Local Service Tax [LST] (USA)
     in the
    City Withholding Tax
     field for each company in Pennsylvania. Then enter the amount in the
    Previous Employer Deducted Amount
     field of
    Worker Tax Elections
    .
    Workday uses this calculation logic to return the higher of 2 taxes:
    Tax
    Primary Work = PA and Primary Resident = PA
    Primary Work = PA and Primary Resident < > PA
    Primary Work < > PA and Primary-Resident = PA
    City Withholding (Work)
    Higher of:
    • City Work Tax Rate
    • City-Resident Tax Rate + School District Tax Rate
    City Work Tax Rate
    Doesn’t resolve.
    City Withholding (Resident)
    Resolves to zero.
    Doesn’t resolve.
    City Resident Tax Rate + School District Tax Rate
    School District Withholding (Resident)
    Resolves to zero.
    Doesn’t resolve.
    Resolves to zero.
  6. To file to a single tax collector for Pennsylvania local taxes, complete the
    Tax Collection District
     (TCD) tab.
    Enter the
    Tax Collection District Code
     for the tax collection agency that you want to send Pennsylvania local taxes. Workday recommends that you make sure this code is accurate by checking the code on the government agency website.
    You can only have 1 active TCD code per federal tax ID (FEIN).
    When changing the
    Tax Collection District Code
    , Workday recommends that you:
    1. End Date
       the previous row.
    2. Create a new row with a new
      Start Date
      .
    When you create the W-2, Workday reports the code that's active at the end of the relevant tax year.
    When you modify, add, or delete the TCD code after you create W-2s, Workday creates a W-2C for all workers with a Pennsylvania local tax.
Review the
Company US Tax Reporting
 report for a summary of company elections, Including a history of elections that have ended.
For the
Active As of Date
 field, Workday only returns the tax authorities as of the date you selected. Example: If you input 1/1/2021, you can only review company tax data that are in effect on the specified date or later.