How Tax Withholdings are Determined in One-Time Payments

Tax Method

Pay Runs that are scheduled either daily or per pay period use the 'Aggregation' tax method for determining the tax rate for the Employee. 

One-Time Payments allow the User creating the One-Time Payment to choose the tax method used to calculate the tax rate.  

Aggregation: Uses an Employee's current or previous payroll payment and tax withholding configurations to determine a tax rate. For more information, refer to the current IRS Publication 15 Circular E. 

Flat Rate: Uses the current flat tax rate of 22% for wages under the annual $1,000,000 limit and 37% for the excess amount. For more information, refer to the current IRS Publication 15 Circular E. 

Optimized: Automatically chooses the tax method that results in the lowest tax rate. To establish this tax rate, R365 calculates both the Aggregation rate and the Flat rate and automatically selects the lowest rate.  

Taxes do not apply to the Payment Type of Reimbursement 

Employee Tax Withholding Configuration

The Federal, State, and Municipal tax withholdings for an Employee can be reviewed and updated on the Taxes tab of their Employee Record.