We’ve all been there, how do we setup and maintain tax data for employees that live or work in Pennsylvania in our PeopleSoft systems? Even after logging into the Pennsylvania Munstats web site and retrieving the resident and work tax codes, how do we represent that data in Tax Data? How is Act 32 different? Which tax codes should be linked and when is PSD 88000 used?
Here’s a quick cheat sheet for basic Pennsylvania tax rules.
• Pennsylvania PSD 880000 is a system generated code in PeopleSoft. You don’t need to manually add this into an employee’s Local Tax Data.
• If an employee lives AND works in the same PSD code, the LST tax must be linked to the corresponding PSD work locality code with the resident flag checked for Both localities.
• If an employee lives and works in two different PSD codes, you enter the work locality PSD code (marked as non-resident) and add the corresponding work LST code in the Other Work Locality field. Add another row, do not mark the resident checkbox, enter the work LST value in the locality field. Add another row, mark is as resident, and enter the locality PSD code for the resident value, leaving the Other Work Locality field blank.
• Philadelphia is an Exception to the rest of the Pennsylvania rules. The City of Philadelphia Wage Tax is exempt from, supersedes, and overrides the provisions and requirements of Pennsylvania Act 32. Since a Philadelphia resident may work in an Act 32 jurisdiction or is a resident of Act 32 jurisdiction but may work in Philadelphia, you should assign the PSD code of 510101 to the employee for purposes of identifying Philadelphia as the employee’s residence or work location. You can enter where the employee lives and works accurately, PeopleSoft logic will automatically take Philadelphia. All Philadelphia residents owe the City Wage Tax, regardless of where they work. Non-residents who work in Philadelphia must also pay the Wage Tax.
• The City of Pittsburgh also has an employer-paid payroll [61000ER] tax which may NOT be deducted from the employee’s wages. This tax only applies if the employee works in Pittsburgh. If the employee is also a resident of Pittsburgh, the resident checkbox would be checked for all three taxes (PSD, LST, ER). Employer-paid taxes should always be the last tax code in a chain of linked work locality taxes in Tax Data.
We’re really just scratching the surface here but what if you wanted to automate all this? You CAN with SmartTax W-4 and WorkSync from PS WebSolution. These solutions completely automate your resident and work tax configuration and maintenance in PeopleSoft. Including online withholding forms at the Federal, State and Local level and compliance audit and reporting; thus letting you spend more time helping your customers by getting them paid and not spending days validating employee tax data. Click or call today for a quick demonstration of SmartTax W-4 and WorkSync for PeopleSoft.
By Barbra Branyan, SHRM-SCP, SPHR
Director, Implementation Services