That’s a great question! The process of determining the components of taxable wages, wage type /601 in this case, is important since it affects regulatory reporting and employee taxes.

SAP US Payroll uses three configuration tables to determine how to tax a wage type. The three tables — T5UTE, T5UTM, and T5UTY — are collectively called the tax model. Report RPUTMDU0, or transaction S_AHR_61018777, is a user-friendly report of that data, as shown in Figure 1. Although the structure of the tax model tables has changed from one release to another, RPUTMDU0 looks the same, and the process for determining wage type taxation has not changed.

Figure 1

Report RPUTMDU0, executed with report type = A and tax authority = OH

A few columns of this report are critical to determining wage type taxation. The R/W/U column indicates taxation per resident, work, or unemployment location. Some taxes are only taken against a work or resident location.

Unemployment taxes often have different wages bases and rules for assigning the employee to a tax authority, so the tax model lets you specify taxation for each of these cases.

The other notable column is Txb.Cl., which means taxability class. This is a one-digit character that links a wage type to the tax model. The taxability class is stored in processing class 71 on each taxable wage type and can be seen in view v_512w_o.

For example, Figure 1 shows that every wage type whose processing class 71 equals the letter I will be added to the taxable wage base for OH tax type 01, which is withholding tax. Wage types with a processing class 71 value of 1 will add to the OH tax type 10, which is employer unemployment tax. Report RPDLGA20, or transaction PC00_M99_DLGA20, is a good tool for seeing which wage types have certain values for a given processing class.

The final piece of this puzzle is associating the tax types listed in this report to the wage type. The tax type makes up the last two characters of the tax wage type. If the tax type is 01, then the corresponding taxable wage types are /301 (taxable gross), /601 (taxable), and /701 (reportable). For example, wage types with processing class 71 equal to I are added to the /301, /601, and /701 wage types.

Steve Bogner

Steve Bogner is a managing partner at Insight Consulting Partners and has been working with SAP HR since 1993. He has consulted for various public, private, domestic, and global companies on their SAP HR/Payroll implementations; presented at the SAP user's group ASUG; and been featured on the Sky Radio Network program regarding SAP HR.

Steve will be presenting at the upcoming HR Payroll Seminar November 7-8 in Chicago and November 27-28 in Orlando. For information on the event, click here.

You may contact the author at sbogner@insightcp.com.

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