The system assigns a level to each:
- Earning and Deduction
- Income tax
- Federal and State tax
- Local and Other tax
Earnings/Deduction Levels
In the calculation base of an earning/deduction, you can include the amounts calculated for earnings/deductions assigned lower levels. For example, the calculation base of a Percentage of Base method earning assigned a level of 15 can include the amounts calculated for earnings/deductions assigned levels between 1 and 14.
Earnings/deductions with the calculation methods Flat, Fixed, Hourly Rate, Piece Rate Table, and Sales Table do not use other earnings/deductions or taxes in their calculation bases so their levels can be low. The system calculates these earnings/deductions using either a specific dollar amount, a number of hours, or a table you set up to define piece rates or sales commissions. These earnings/deductions may be part of the calculation base of another earning/deduction with a higher level.
Earnings/deductions that are assigned the Amount Per Hour, Hours Per Hour Worked, Percentage Of Base, and Wage Bracket Table calculation methods do use other earnings, deductions, and taxes in their calculation bases so their levels need to be higher.
When you set up an accrual, earning, or benefit that uses any of the calculation methods, the accrual, earning, or benefit must have a level lower than the levels of the taxes to which it is subject (the taxes entered in the Subject To The Following Taxes field).
In the same way, when you set up a pre-tax deduction with any calculation method, the deduction must have a level lower than the levels of the taxes it precedes in the calculation (the taxes you enter in the Take Deduction Before field).
Because most earnings are subject to tax and most deductions are taken after taxes, the system defaults a level of 10 for all earnings/deductions and a level of 20 for all taxes. You may need to edit the levels of particular earnings/deductions to create your earning/deduction calculation bases.
Tax Levels
The system assigns to each tax a level, which dictates whether the tax can include a particular earning/deduction in its calculation base. You can include in the calculation base of a tax the amounts calculated for earnings/deductions assigned lower levels. For example, the calculation base of a tax assigned a level of 20 can include the amounts calculated for any earning/deduction assigned a level between 1 and 19.
The level also dictates which taxes an accrual, earning, or benefit may be subject to and which taxes can be taken after a pre-tax deduction is taken.
Taxes must have levels higher than the levels of the accruals, earnings, and benefits that are subject to them and higher than pre-tax deductions you set up.
Because most accruals, earnings, and benefits are subject to tax and most deductions are taken after taxes, the system defaults a level of 20 for all taxes and a level of 10 for all earnings/deductions. You may need to edit the levels of particular taxes to accommodate your needs.