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Administrator Guide
Last Updated: 2025-11-14
Concept: Payroll for U.S. Territories (USA)

Concept: Payroll for U.S. Territories (USA)

Workday Payroll enables you to process payroll for employees who live and work in these U.S. territories:
  • Commonwealth of Puerto Rico (starting with tax year 2016)
  • Guam (starting with tax year 2017)
  • U.S. Virgin Islands (starting with tax year 2017)
Tax Withholding
Configure the
State
 tab on the
Edit Company State and Local US Tax Reporting
 task for:
  • State tax withholding.
  • Unemployment.
  • Other taxes.
Workday automatically adjusts these corresponding territory taxes:
  • OASDI
     (EE and ER)
  • Medicare (EE and ER)
  • Additional Medicare Tax
When you pay workers who previously had federal taxes withheld while working in another state, Workday:
  • Recognizes previous balances or values when calculating the
    Additional Medicare
     tax for the current tax year.
  • Applies previous values across deductions.
  • Recognizes taxes already withheld and avoids over-withholding.
  • Respects and supports company relationships.
Use the
All Payroll Tax Data
 report to display a list of all the tax deductions available for each territory.
Puerto Rico-Specific Information
Annual Christmas Bonus
Workday delivers the
Puerto Rico Christmas Bonus
 tax calculation you can use to configure your Christmas Bonus earning.
When the Christmas Bonus Amount is
Workday Withholds
Up to $600
Zero %
Greater than $600 but less than $1500
7%
Greater than $1500
The existing effective supplemental method – standard or aggregate – depending on whether there's a regular or separate pay result.
For the
Puerto Rico Christmas Bonus
 tax calculation to withhold at these rates, you must:
  • Pay the Christmas Bonus earning by separate check.
  • Not combine the earning with any other earning.
To use the
Puerto Rico Christmas Bonus
 tax calculation, add these pay component groups to your Christmas Bonus earning:
  • Puerto Rico Christmas Bonus [USA]
  • State Withholding Taxable (Withhold Taxes) [US]
  • Supplemental Earnings - Standard [USA]
Entrepreneur Exemption
Workday supports these Commonwealth of Puerto Rico Department of the Treasury withholding forms:
  • 499-R-4 (Spanish version)
  • 499 R-4.1 (English version)
In 2017, the Puerto Rico Department of the Treasury required employees to submit a new withholding elections form. To qualify for this exemption, select
Entrepreneur Exemption
 on the new form.
Employees can use the self-service
Withholding Elections
 task. At the
Young Individuals age between 16 and 26 years
 prompt, employees select from:
  • I am choosing exemption on the first $40,000 in wages
  • I choose not to be exempt from the first $40,000 of wages
Employees can also add any additional deduction amount or percentage.
You can select the
Entrepreneur Exemption
 check box on the
Add Worker US Tax Elections
 task.
Workday:
  • Bases the tax calculation on the difference between the total wages and the withholding exemption.
  • Respects any valid exempted amounts for Puerto Rico.
  • Includes additional withholding amounts or percentages from a worker's tax elections.
When a worker claims the
Entrepreneur Exemption
, Workday resolves any additional withholding on wages after the worker reaches the exempt wage limit of 40,000.
The
View Low Income Workers with No Puerto Rico Tax Withholding
 report displays employees that might need a new withholding election. It displays workers:
  • Who live or work in Puerto Rico.
  • Whose gross wages are less than $20,000.
  • Who have had no Puerto Rico tax withheld.
  • Are wage eligible for the Entrepreneur Exemption.
Retirement Plans
Workday delivers these calculations to support retirement plan deductions:
Calculation
Calculation Type
Description
Puerto Rico 1081.01(d) + Catch-Up Limit
Arithmetic Calculation
Returns the combined value of the Puerto Rico 1081.01 annual limit plus catch-up limit.
Puerto Rico Annual Defined Contribution Plan Limit Value
Lookup Calculation
Returns the numeric value for the Puerto Rico elective deferral annual contribution limit based on the payment date year being processed. Doesn't include the value for catch-up contributions.
Puerto Rico Dual-Plan Elective Deferral Annual Limit (including catch-up if worker over 50 years of age)
Conditional Calculation
Returns the numeric value for the federal annual contribution limit (including Puerto Rico 1081.01(d) catch-up limit if applicable) based on the payment date year being processed.
Puerto Rico Dual-Plan Elective Deferral Annual Limit + Puerto Rico 1081.01(d) Catch-Up Limit
Arithmetic Calculation
Returns the combined value of the Puerto Rico dual plan annual limit plus catch-up limit.
Puerto Rico Elective Deferral Annual Catch-Up Limit under PR Code 1081.01(d)
Lookup Calculation
Returns numeric value for the Puerto Rico elective deferral annual catch-up contribution limit based on the payment date year being processed.
Puerto Rico Elective Deferral Annual Limit (including catch-up if worker over 50 years of age)
Conditional Calculation
Returns the numeric value for the Puerto Rico 1081.01(d) annual contribution limit (including catch-up limit if applicable) based on the payment date year being processed.
Puerto Rico Elective Deferral Annual Limit for Dual Plan under PR Code 1081.01(d) and Federal 401(k)
Lookup Calculation
Returns the numeric value for the Puerto Rico dual plan annual catch-up contribution limit based on the payment date year being processed.
Puerto Rico Elective Deferral Annual Limit under PR Code 1081.01(d)
Lookup Calculation
Returns the numeric value for the Puerto Rico Elective Deferral annual contribution limit based on the payment date year being processed. Doesn't include the value for catch-up contributions.
Puerto Rico Eligible Wage Limit (Section 1081.01(a))
Lookup Calculation
Returns the numeric value for the Puerto Rico annual contributions limit based on the payment date year being processed. Only looks at the specified dollar limit value; not 100% of the employee's annual compensation.