Withholding Income Tax

This chapter provides an overview of income tax withholding and discusses how to:

Prepare for income tax withholding.
Meet withholding tax reporting requirements.
View delivered income tax deductions.

Understanding Income Tax Withholding

Global Payroll for Japan provides rules to calculate and deduct estimated income tax from both salary and bonus. It also enables you to calculate income tax for employees with multiple jobs.

Income Tax on Salary

The rules for the KOU type income tax include the following:

Data input pages and elements to calculate the adjusted number of dependents and the dependents deduction.
Elements to calculate net salary pay.
Determination of the tax amount using the computerized calculation formula (IN FM SAL MAC KO) or the monthly income tax table lookup formula (IN FM SAL TBL KO) as specified for each salary payer.

The rules for the OTSU type income tax include the following:

Elements to calculate net salary pay.
Determination of tax amount by monthly income tax table lookup formula (IN FM SAL TBL OT).

Income Tax on Bonus

The rules for income tax on bonuses accomplish the following:

Determine whether to use the previous month's salary or an adjusted previous month's salary.
Calculate adjusted salary pay of the previous month, if required.
Calculate adjusted number of dependents for the KOU type.
Determine the tax on the bonus from the KOU type or the OTSU type bonus income tax rate table.

Income Tax for Multiple Jobs

The rules for calculating income tax for employees with multiple jobs include the following:

The user must create income tax data for each employment record.
Income tax is calculated by each employment record based on the corresponding income tax data.
More than one employment record cannot have tax type KOU at the same time. However, multiple employment records can use OTSU and designated rate.
An employee cannot claim a deduction for the same dependent on multiple jobs at the same time.

Each dependent can be claimed only once per employee.

Prerequisite

Set up salary payer reference numbers, and specify the calculation method for KOU type income tax on the Tax Establishment page.

Preparing for Income Tax Withholding

This section provides overviews of income tax withholding preparation and dependent deductions and discusses how to:

Enter employee income tax data.
Enter dependent income tax data.

Understanding Income Tax Withholding Preparation

Enter the following data into the system before processing income tax withholding:

Enter income tax data for each employee on the Income Tax Data page.
Enter dependent data.
- Enter dependent identification, relationship to employee, and birth date on the Dependent Data pages in PeopleSoft Enterprise Human Resources.
- Enter spouse or dependent type and disability information on the Dependent Tax Data page.

Understanding Dependent Deductions

Global Payroll for Japan recognizes three types of employees from the standpoint of withholding tax. The employee's type is determined by which Dependent Deduction report the employee submits to the organization.

The following table defines each employee type and discusses how to set up data on the Income Tax Data and Dependent Tax Data pages:

Type of Dependent Deduction Report Submitted	Income Tax Data Page: Income Tax Type field	Dependent Tax Page
Dependent Deduction report for primary salary.	Select KOU.	Enter the dependent data as submitted on the Dependent Deduction report.
Dependent Deduction report for secondary salary.	Select OTSU.	Enter the dependent data as submitted on the Dependent Deduction report.
No Dependent Deduction report submitted.	Select OTSU.	Do not enter any dependent tax information.

Note. The system processes dependent deductions based on the combinations in the preceding table. If you select OTSU as the tax type and define dependent deductions on the Dependent Tax Data page, the system assumes that the deductions are for a secondary salary and calculates deductions accordingly. Do not enter dependent deduction information if you did not receive a Dependent Deduction report from the payee.

Pages Used to Set Up Income Tax Withholding

Page Name	Object Name	Navigation	Usage
Income Tax Data	GPJP_IT_PYE_TAX	Global Payroll & Absence Mgmt, Payee Data, Taxes, Maintain Income Tax Data JPN, Income Tax Data	Enter employee income tax data, such as salary payer number, employee type, and disability information.
Dependent Tax Data	GPJP_IT_DEP_TAX	Global Payroll & Absence Mgmt, Payee Data, Taxes, Maintain Dep Tax Data JPN, Dependent Tax Data	Enter spouse or dependent income tax data, such as spouse or dependent type and disability information.

Entering Additional Data in Human Resources Records

Entering Employee Income Tax Data

Access the Income Tax Data page.

Income Tax Type

Select from the following values: Designated Rate, KOU, and OTSU.

For employees with multiple jobs, KOU can be selected only once for all employment records. Otherwise, the system generates an error message. As the system doesn't allow multiple employment records with tax type KOU at the same time, you have to updated the current KOU record to a non-KOU value and then update the non-KOU record to KOU.

If the employee type is not KOU, the employee can't update this dependent data on the self-service pages.

Tax Rate

Enter a value here only if you select Designated Rate for the income tax type. For example, enter 0.2 if the designated tax rate is 20 percent.

Relationship to HOH (relationship to head of household)

Select the relationship of the employee to the head of the household. If the employee is the head of household, select Self.

HOH Name (head of household’s name)

If the employee is not the head of the household, enter the name of the person who is.

Disability Information

Enter or edit disability information that is provided by employees on the Dependent Deduction report.

See Also

Entering Deduction Data for YEA

Entering Dependent Income Tax Data

Access the Dependent Tax Data page.

If the employee type is not KOU, the employee can't update this dependent data on the self-service pages.

Dependent Detail Information

You must link the dependent tax data with an employment record number. If the employee has multiple jobs, the employment record number that is linked to the tax type KOU on the Income Tax Data page is defaulted to the Empl Rcd Nbr field. If no employment record number is linked to tax type KOU, zero is defaulted.

Disability Description

Enter or edit disability information that is provided by employees on the Dependent Deduction report.

Change of Dependent Deduction Qualification

When a dependent is no longer subject to income tax deduction because of death or other reason, insert a new row with the effective date of the dependent's change, and set both the Spouse or Dependent Type and Disability Type fields to N/A.

Deleting Dependent Tax Data

If dependent tax data exists on this page, it will be orphaned if the dependent data is deleted from the Dependent Information page, unless application message DEPBEN_SYNC is enabled.

See Also

Entering Deduction Data for YEA

Meeting Withholding Tax Reporting Requirements

This section provides an overview of the Withholding Tax Register and discusses how to run the report.

Understanding the Withholding Tax Register

A PeopleSoft Application Engine process loads the results of Global Payroll calculations into the Withholding Tax Register data table (GPJP_IT_WH_REG) and the Detail Withholding Tax Register table (GPJP_IT_WH_REG2).

An SQR process selects data from the Withholding Tax Register records and from static Human Resources and Global Payroll records and prints the data.

Print a Withholding Tax Register report for an employment record, an employee, or for all employees for a specified salary payer. Run this report after year-end adjustment or at any time during the year.

Note. To include the year-end values on the Withholding Tax Register, you must run the Load YEA Table Application Engine process (GPJP_YEALOAD) before you run this report.

Page Used to Run the Withholding Tax Register Report

Page Name	Object Name	Navigation	Usage
Inc Tax Withholding Register	GPJP_RC_IT_WHRG	Global Payroll & Absence Mgmt, Taxes, Inc Tax Withhold Reg Rpt JPN, Inc Tax Withholding Register	Run the Withholding Tax Register Report (GPJPIT01), which prints payroll data in the following categories: employee identification data, salary data, bonus data, PTO data, former employment data, total amounts data, year-end adjustment data, and retirement allowance.

Viewing Delivered Income Tax Deductions

Global Payroll for Japan delivers the following deductions to process income tax:

Deductions	Description
IN TAX SAL	Income tax (salary)
IN TAX BON	Income tax (bonus)

The PeopleSoft system delivers a query that you can run to view the names of all delivered elements designed for Japan. Instructions for running the query are provided in the PeopleSoft Enterprise Global Payroll 8.9 PeopleBook.

Income Tax Type	Select from the following values: Designated Rate, KOU, and OTSU. For employees with multiple jobs, KOU can be selected only once for all employment records. Otherwise, the system generates an error message. As the system doesn't allow multiple employment records with tax type KOU at the same time, you have to updated the current KOU record to a non-KOU value and then update the non-KOU record to KOU. If the employee type is not KOU, the employee can't update this dependent data on the self-service pages.
Tax Rate	Enter a value here only if you select Designated Rate for the income tax type. For example, enter 0.2 if the designated tax rate is 20 percent.
Relationship to HOH (relationship to head of household)	Select the relationship of the employee to the head of the household. If the employee is the head of household, select Self.
HOH Name (head of household’s name)	If the employee is not the head of the household, enter the name of the person who is.