Tax Calculations

lsanchez_gutierrez · Post by **lsanchez_gutierrez** » Fri Jan 05, 2007 5:42 pm

I recently setup timetrex with a diferent income tax table than that in the US or Canada. For example if you are tax exempt until $908 a month, from $908.01 to $1,362 a month you pay 10% and above $1,362.01 you pay 15% of income tax. TimeTrex calculates your salary annualy, so those numbers were multiplied by 12 while creating the taxes. If an employee earns $1,658.7 a month, he would have to pay taxes for the 10% range and 15% range Those taxes are cumulative, your first $908 dont pay taxes, then your salary from $908.01 to $1,362 pays 10% and the amount above $1,362.01 you pay 15%. For the employees salary of $1,658.7 he would pay $44.36 a month (($1,658.7 - $1,362.01) x 15%). But for the 10% range, TimeTrex does not calculate ir correctly. It should be ($1,362 - $908.01) x 10%, which would be $45.5, but Timetrex calculates $75.08.

The only explanation to $75.08 is when $908 (Annual Exempt Amount divided by 12) is subtracted from the monthly salary. $1,658.7, this gives $750.8, from that amount you get 10% and it would be $75.08. It seem the Wage Base set for the 10% tax is not being used.

Is there some way to fix that or are the taxes setup incorrectly.

Post by **mikeb** » Fri Jan 05, 2007 9:13 pm

I assume you are trying to do this with the Advanced Calculation Tax / Deduction? What do you have the percent, annual wage base, and annual exempt amount set to for each of the deductions in question?

As well, what country are you in?

I think what might be throwing you off is the fact that Annual Wage Base only comes into play once the employee has actually earned that amount of money. TimeTrex won't amortize the deduction over the entire year, instead it just stops applying the deduction once the wage base limit has been reached for the year.

The Advanced Percent calculation wasn't designed for complex tax tiers like this, but rather simple deductions like 401K plans etc... It wouldn't take much to add a second calculation that does exactly what you are after though, I will add it to our TODO list.

lsanchez_gutierrez · Post by **lsanchez_gutierrez** » Tue Jan 09, 2007 1:35 pm

I am trying to calculate both tax deductions with the Advanced Calculation Tax / Deduction. The percentage is set to 10% for the $16,344 annual wage base and $10,896 for the annual exempt amount. I also have another tax deduction, for the second tier, this would be 15% for the annual exempt ammount of $16,345 and no annual wage base. Both are applied to a couple of employees.

That is the income tax table for Costa Rica. Everyone pays income tax, except if you earn less than $10,896 a year, the tricky part is that for every tier of income you pay taxes, this means you are exempt from the 1st tier, but not the second tier, if your income falls into the third tier. This means you can pay 10% income tax over part of your income and 15% over another part.

What would you recommend? TimeTrex does calculate the 15% tier correctly for an employee that falls into both tiers, but for the 10% it does not calculate it correctly. The trial version I am running only has a couple of pay periods, so we haven't met his annual wage base.
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Luis Sanchez

Post by **mikeb** » Tue Jan 09, 2007 2:30 pm

Unfortunately I don't think there is a proper solution at this time short of doing some custom development. Fortunately I don't think it would take much work to correct.

We do offer custom development services if you wish to have us do this for you, or you could wait until we add a feature that will work for you, or of course you could do the development yourself. Its up to you.

lsanchez_gutierrez · Post by **lsanchez_gutierrez** » Wed Jan 10, 2007 1:50 pm

I understand the proper solution seems to be custom development. I saw that there are tax presets set for Canada and USA, is there some way that I could use that method to add the Costa Rican Income Tax Table. Which would be the best/cleanest way to integrate the new calculations and where.

Could you give me a brief description of how and where the existing U.S. taxes are integrated into the code, I would have to create new file(s) where the new code would be placed, create new class(es) if any and new function(s)?

Post by **mikeb** » Wed Jan 10, 2007 2:43 pm

I have posted an overview in the developers forum: http://forums.timetrex.com/viewtopic.php?t=140

lohdeepak · Post by **lohdeepak** » Wed Apr 16, 2008 9:02 am

In India, tax for the whole year is amortized throughout the year. Please let me know, how can I include this feature.

Further, in India, financial year starts on April 1 and ends on Mar 31 next year. How can I include this information in Timetrex?

Looking for your cooperation. Thanks

Post by **mikeb** » Wed Apr 16, 2008 9:30 am

Tax is amortized in the US and Canada as well, or another way people refer to it is "pay as you go" taxes. Its all handled in the Tax/Deduction engine of TimeTrex.

As for the financial year starting on April 1st, what does this really affect?

You will need to include many more details before we can answer your question.

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