9.2 Taxable Benefits & PrePay

Purpose: Use this document for adjusting Federal Withholding Taxable Gross for employees on PrePay in ctcLink.

Audience: Payroll Administrators, Benefits Administrators.

IMPORTANT! No action is needed, if the employee is to continue to receive payments on other jobs (employee records) during this time as the Taxable Benefits would continue to be applied.

Employer contributions toward payment for health care are taxable to the employee, if they are made for an individual who is a dependent that does not qualify as a dependent for tax purposes.

Employees would see a taxable benefit on their paycheck, if they are enrolled in Medical and/or Dental plans with coverages for either of the below:

  • Employee + Domestic Partner (coverage code 12)
  • Employee + NonQual Children DP (coverage code 13)
  • Family (with Domestic Partner) (coverage code 14)
  • Employee, DP, Non-Qualified and Qualified Children (coverage code 15)

The example below is for an employee enrolled in Uniform Classic medical plan and Uniform Dental.

  • Review Paycheck, Paycheck Deductions will display Taxable Benefit deductions
  • Review Paycheck, Paycheck Taxes:

 Federal Witholding Taxable Gross = Gross Pay - Before Tax Deductions + Taxable Benefits

Paycheck Deductions tab and page
Paycheck Taxes tab and page

When such an employee is setup for PrePay and will have a zero paycheck created, they need to be taxed at a higher rate.

For setting up employees on Prepay refer to : http://ctclinkreferencecenter.ctclink.us/m/79727/l/1014223-9-2-prepay-deduction-setup

When the Payroll is processed for the PrePay, i.e. when the lump sum deduction of the PrePay is taken, after the paysheets are created, enter a One Time Deduction Override at the Payline to account for the zero pay periods.

  • Flat/Addl Amount = Regular Taxable Benefit Deduction as seen on previous paychecks +

(Regular Taxable Benefit Deduction * Number of pay periods the employee will have a $0 paycheck )

Follow the below steps to update the paylines. 

Taxable Benefits & PrePay

Navigation: NavBar > Navigator > Payroll for North America > Payroll Processing USA > Update Paysheets > By Payline Security

  1. The By Payline Security search page displays.
  2. Enter or select the Company.
  3. Enter Pay Period End Date.
  4. Enter the Empl ID.
  5. Select the Search button.
Find an Existing Value tab
  1. The Payline Details page displays.
  2. At the Payline where the Ok to Pay Checkbox is selected, navigate to One-Time Deductions tab.
  3. Enter a One Time Deduction Override for both the Medical and Dental deduction and Save.
  4. Deduction Class = T : Taxable
  5. One-Time Code = Override
  6. Flat/Addl Amount = Regular Taxable Benefit Deduction as seen on previous paychecks +. (Regular Taxable Benefit Deduction * Number of pay periods the employee will have a $0 paycheck ).

 

The example below is for entering One Time Deduction Override for the Taxable Medical Deduction when the lump sum deduction of the PrePay is taken.

Payline Details page
  1. Upon Payroll Calculation, the Federal Witholding Taxable Gross would change thereby making the Tax Amount appropriate.
  2. Process complete.

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