US Payroll in SAP

US Payroll in SAP.

This may not be giving the complete information on US Payroll in SAP, but i will try to provide the maximum information, so that the reader can get a good understanding on US Payroll in SAP system.

Taxation In USA
In USA there are different tax types.

1) Federal with holding Tax - This is common across any State.
2) Then there is taxation at State level,City Level,  County Level, School and District Levy etc.

The above two are part of the Withholding tax. (tax type 01)

Apart from these, there are also (some of the important ones)

3) Employee Social Security tax - Tax type 03
4) Employee Medicare tax - Tax type 05

Employee Residence Tax Infotype - IT 0207

Fig 1 - Residence Tax Infotype

In figure 1, the Employee is from City Chanbersburg, which is in the state of Pennsylvania. So from the employee salary the following taxes are withheld.

1) Federal tax
2) Pennslvania State withholding tax
3)Chambersburg Borough City Tax
4)Chambersburg ASD School and district tax.



In the below figure you can see the various taxes withheld in the SAP system.

And the tax rates (except Federal) are different for all these tax types and are dependent on the State.
In SAP, all these taxes are not calculated by the SAP system, instead these are calculated by BSI tax factory.
From SAP all the data is sent to BSI, and in BSI the taxes are calculated and are returned back to SAP.


The Important infotypes with respect to taxation are
1) IT0207 - Residence Tax Area
2) IT0208 - Work Tax Area
3) IT0209 - Unemployment Tax Area