++New Updates++
July 15th -
The following SAP Note has been released:
2946959 -
TAX: FFCRA Wages Subject to Social Security Tax
July 6th -
The following SAP Note has been released:
2926221 -
TR: Form 941 (FED) and Form 941 Schedule B (FED) update for Q2/2020
2937439 -
TAX: Social Security Deferral not Considering Social Security Exempt Indicator
June 22nd -
The following SAP Note has been released:
2939028 -
BEN: Health Flexible Spending Account Carryover amount and Grace Period Changes for 2020
June 19th -
The following SAP Note has been released:
2932996 -
BEN: COBRA Administration Outbreak Period 2020
June 1st -
The following SAP Note has been released:
2930118 –
TAX: Social Security Deferral not Considering Social Security Year-to-Date Amounts
May 18th -
The following SAP Note has been released:
2924659 -
BEN: COBRA General Notice and Election Notice Forms for Year 2020
May 12th – The following SAP Note has been released:
2922945 - COVID-19 US Wage Garnishment Student Loan: Mass Change Between Active and Pending Statuses
We are all living a very critical moment during this COVID-19 outbreak, and unfortunately, this is also affecting many employees and businesses in the USA. In these unprecedented times, employers have to absorb information quickly and make decisions impacting their business and human resources. The business landscape is evolving rapidly as federal, state, and local authorities announce action plans.
This blog was designed to provide general guidance in the SAP system changes related to the COVID-19 and the tax implications on the CARES and FFCRA legal changes.
In this blog post, we will discuss the following topics:
- New Tax Types for Families First Coronavirus Response Act (FFCRA)
- New Tax Types for Coronavirus Aid, Relief, and Economic Security (CARES) Act - Employer Tax Credits and Deferrals
- How to use the new tax types in payroll
- Changes in SAP system.
- SAP Notes that must be implemented.
For additional reading, see this
blog with centralized Announcements for country/local versions.
New Tax Types for Families First Coronavirus Response Act (FFCRA)
- 200 ER Individual PSL Credit
- 201 ER Family PSL Credit
- 202 ER Extended PFML Credit
- 571 ER Medicare Leave Cred - Ind. Leave
- 572 ER Medicare Leave Cred - Fam. Leave
- 573 ER Medicare Leave Credit -Exp. PFML
- 574 ER Social Sec Leave Cred -Ind Leave
- 575 ER Social Sec Leave Cred -Fam Leave
- 576 ER Social Sec Leave Cred -Exp. PFML
New Tax Types for Coronavirus Aid, Relief, and Economic Security (CARES) - Act - Employer Tax Credits and Deferrals
- 204 ER Employee Retention Credit
- 004 Employer Social Security Tax (already available in the standard delivery but required to be used in combination)
- 577 ER SocSecTax Pmt Deferral-SocSecTax
- 057 Employer Railroad Rtmt Tier1 Soc S (already available in the standard delivery but required to be used in combination)
- 578 ER SocSecTax Pmt Deferral-RailRtmt1
- 058 Employer Railroad Rtmt Tier2 Soc S (already available in the standard delivery but required to be used in combination)
- 579 ER SocSecTax Pmt Deferral-RailRtmt2
How to use the new tax types in payroll
Eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the government.
Some of the payroll taxes that are available for retention include Federal Withholding taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.
Therefore, the new tax types are not to be taxed as regular wages, but are refundable tax credits or tax that can be deferred for the cost of providing the required paid and medical leave to employees.
Changes in SAP system
To use these new tax types, you’ll need them to your taxability model.
Calculation of the
COVID19 Families First Coronavirus Response Act: Employee Paid Leave Rights and Employer Credits:
1- For the wage types related to the paid leave of the first 10 days of an employee with own COVID-19 condition, assign the following Tax Types to its tax model:
- 200 Employer Individual PSL Credit
- 571 ER Medicare Leave Cred - Ind. Leave
- 574 ER Social Sec Leave Cred -Ind Leave
These tax types
ceilings are USD 5,110.00
2- For the wage types related the paid leave of the first 10 days of an employee with dependent COVID-19 condition or who had care for a child with a school/daycare COVID-19 closure, assign the following tax types to its tax model:
- 201 Employer Family PSL Credit
- 572 ER Medicare Leave Cred - Fam. Leave
- 575 ER Social Sec Leave Cred -Fam Leave
These tax types
ceilings are USD 2,000.00
3- For the wage types related to the paid leave over 10 days for employees who had to care for a child with a school/daycare COVID-19 closure, assign the following Tax Types to its tax model:
- 202 Employer Expanded PFML Credit
- 573 ER Medicare Leave Credit -Exp. PFML
- 576 ER Social Sec Leave Cred -Exp. PFML
These tax types
ceilings are USD 10,000.00
Calculation of the
Coronavirus Aid, Relief, and Economic Security (CARES) Act provides Employer Tax Credits:
1- For the wage types related to any wage that is subject of the Employee Retention Credit for eligible employers, assign the following Tax Type to its tax model:
- 204 Employer Employee Retention credit
This tax type
ceiling is USD 10,000.00
2- For the wage types corresponding to any wage that is subject of Employer Social Security Tax Payment Deferral, assign the following Tax Type to its tax model:
- 577 ER SocSecTax Pmt Deferral-SocSecTax
This tax type
ceiling is USD 137,700.00
3- For the wage types corresponding to any wage that is subject of Employer Social Security Tax Deferral Railroad Tier 1, assign the following Tax Type to its tax model:
- 578 ER SocSecTax Pmt Deferral-RailRtmt1
This tax type
ceiling is USD 137,700.00
4- For the wage types corresponding to any wage that is subject of Employer Social Security Tax Deferral Railroad Tier 2, assign the following Tax Type to its tax model:
- 579 ER SocSecTax Pmt Deferral-RailRtmt2
This tax type
ceiling is USD 102,300.00
SAP Notes that must be implemented
2917910 - BSI: FFCRA and CARES act (tax types 200 - 206)
2922945 - COVID-19 US Wage Garnishment Student Loan: Mass Change Between Active and Pending Statuses
2924659 -
BEN: COBRA General Notice and Election Notice Forms for Year 2020
2930118 –
TAX: Social Security Deferral not Considering Social Security Year-to-Date Amounts
2932996 -
BEN: COBRA Administration Outbreak Period 2020
2939028 -
BEN: Health Flexible Spending Account Carryover amount and Grace Period Changes for 2020
2926221 -
TR: Form 941 (FED) and Form 941 Schedule B (FED) update for Q2/2020
2937439 -
TAX: Social Security Deferral not Considering Social Security Exempt Indicator
2946959 -
TAX: FFCRA Wages Subject to Social Security Tax
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Stay safe and happy reading!
Virginia
User Assistance Developer
