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Purpose

This post is intended to explaining the PY-US tax module structure and it works.

Overview

To enable the tax calculation to be defined in a very comprehensive way. This means, the calculation can be differently customized for each tax authority, each tax type, each wagetype, or more, using modifiers.

Overview taxability Model 

Ties together tax authorities with earnings/deductions.

  •  The Taxability Model in SAP is used to determine the Tax Types per tax authority that are relevant for each employee during payroll processing. 
  •  The Taxability Model itself refers to three tables:
    • T5UTE
    • T5UTM
    • T5UTY
  •  These three tables reduce the number of table entries needed to determine the relevant tax types 

T5UTE 


   Each tax authority is assigned to a taxability model (TXBMD).

T5UTM 

 Each taxability model is assigned to one or more tax type combinations (TYCMB).
 For each model, different tax type combinations may be specified for different resident/work/UI tax areas, tax modifiers (TXMOD), and taxability classes (TXBCL).
 Resident/work/UI tax areas are determined from information  in Infotypes 207/208/209.
 The tax modifier is determined by the personal calculation rule UMOT.
 The taxability class is the value of Processing Class 71 in table T512W; thus it is defined at the wage type level.

T5UTY


If the Processing Class 69 value of a wage type is 1 or 2 (Taxable earning or Pre-tax deduction), the value of TXBL in T5UTY will override the value of the wage type.
If the Processing Class 69 value of a wage type is 3 (Taxable but not taxed), no override will take place. In other words, all tax types corresponding to the wage type will be taxable but not taxed, and the appropriate /Qxx wage types will be generated.