Statutory and Compliance Update – Fix for Pennsylvania EIT and LST going to 0
Problem: The Pennsylvania Earning Income Tax (EIT) and Local Services Tax (LST) are local employee taxes whose rates are determined by the municipalities and school districts in which the Employee lives and works. Payroll clients with any employees that living and working in PA, be it in the same or different municipalities for each location, were being provided incorrect calculation results for EIT + LST taxes.
Solution: A change has been released that will fix this issue in the following scenarios:
EIT and LST taxes will now calculate properly for the following scenarios:
Employee lives and works at the same location code with the same EST / LST tax rates
Employee lives and works in two totally different location codes with different EST / LST tax rates
Employee lives and works in two different location codes that share the same EST / LST tax rates
Unfortunately, there are still two scenarios that have not yet been addressed. EIT and LST taxes may still produce unexpected results in the following scenarios:
If an Employee earns, as it relates to their actual pay code not just employee info, in two different location codes with two different EST / LST tax rates, the result will be to tax two different rate. This is not correct as the ideal expectation is for only the higher of the two rates to be used.
If an EE earns, as it relates to their actual pay code not just employee info, in two different location codes with the same EIT and LST tax rates, the result will tax only one of the earnings per its subject wages. This will result in a lower total tax amount than expected since only one of the location’s earnings are taxed.
Pay Run Wizard (Taxes): Greenshadesonline.com > Payroll Tab > Start / Continue Pay Run > Review & Submit
Statutory and Compliance Update – New 2023 W-4s
Background: Greenshades onboarding and employee management software supports the ability for employees to electronically fill out W-4 information and send it directly into the payroll system. As new federal and state level forms are added each year, these processes must be updated to reflect the latest changes.
What’s new? All available W-4 changes from 2022 to 2023 have been posted for employee use. See the list of updated forms below:
Federal W-4 (see the states using fed listed below)
Statutory and Compliance Update – Notable Tax Changes
Background: As per the latest tax engine update, we have identified two notable tax additions / changes that are impactful beyond just a simple rate update. These changes are…
New - Colorado FAMLI tax now available
For this newly added Tax to work properly, each client will need to use a Workspace level tax parameter override. Then select tax id "08-000-0000-ER_FLI-000”. You must manually set the values for the tax parameters, most importantly "Number of Employees" and "Percentage override"
Tax will be applied whenever Colorado is set as the employee's primary work location
Tax Override Setting:
Updated - Arizona SIT Rate (require new A-4s)
Effective January 1st, 2023, the Arizona State Tax rates are changing. This change may require updated Tax Parameters for employees in AZ in order for their provided rates to properly match the new options.
The percentage for AZ SIT will now accept the following values for 2023: 0%, 0.5%, 1.0%, 1.5%, 2.0%, 2.5%, 3.0%, and 3.5%.
The rate will default to 2% if not set or if set to an invalid value. · See the Arizona state site for more information here