Alabama State Tax Routine (ALAB)

The Alabama State Tax Special Routine Processing utilizes the following steps:

Line 1

 

Multiply the employee’s gross wages for the current payroll period by the number of payroll periods in a year to obtain their Annualized Gross Income (GI).

Line 2

 

Determine the employee’s deductions:

  1. Standard Deduction*

  2. Employee’s Annual Federal Tax Withholding Amount

  3. Personal Exemption**

  4. Dependents***

Line 3

 

Add the amounts from Lines 2A, 2B, 2C, and 2D.

Line 4

 

Determine the Taxable Amount by subtracting Line 3 from Line 1.

Line 5

 

Using the Marginal Tax Rates (DEDX) entries for the Alabama State Tax deduction, compute tax on the Taxable Amount (Line 4).

Line 6

 

Divide the amount on Line 5 by the number of payroll periods in a year to determine the employee’s Alabama Withholding Tax for the pay period.

*Determine the Standard Deduction Amount

  1. Determine the employee's Gross Income (GI) (this is calculated in Step 1 of the Alabama State Tax Special Routine Process).

  2. Using the Tax Parameters State (TAXPS) entries for the Alabama State Tax deduction, determine which bracket the employee falls in by selecting the highest bracket that the employee's GI includes without going over.

  3. Once the employee's bracket ist determined, use the Standard Deduction specified for that entry as the Standard Deduction amount in the Alabama State Tax Special Routine Process.

**Determine the Personal Exemption Amount

  1. Take the Annual Exemption Amount on the Tax Parameters (TAXP) entry for the employee’s Alabama State Tax deduction and Marital Status * the number of State Tax Allowances on the employee’s Employee Tax Parameter (TAX). If the employee’s State Tax Allowance count is greater than 1, use 1 instead.

***Determine the Dependents Amount

The Alabama State Tax Routine uses the following fields on TAXP to determine the Dependents Amount: Standard Deduction, Minimum Deduction Amount, Maximum Deduction Amount, Minimum Gross Salary, and Maximum Gross Salary.

  1. If the employee’s GI is equal to or less than the Minimum Gross Salary, multiply the Additional State Tax Allowance value from the employee’s TAX enrollment by the Maximum Deduction Amount.

  2. If the employee’s GI is equal to or greater than the Maximum Gross Salary, multiply the Additional State Tax Allowance value from the employee’s TAX enrollment by the Minimum Deduction Amount.

  3. If the employee’s GI falls between the Minimum Gross Salary and Maximum Gross Salary, multiply the following: (Maximum Deduction Amount * Standard Deduction Amount) * Additional State Tax Allowance value from the employee’s TAX enrollment.

  4. Use the resulting amount as the Dependents Amount in the Alabama State Tax Special Routine Process.

Data Setup Considerations

Sites will need to ensure they have implemented the following Business Process/Data Setup changes at their site prior to using the Alabama State Tax Routine.

  1. Tax Parameters (TAXP) Setup for Alabama State Tax Deductions:

  1. The Annual Exemption Amount field is the Personal Exemption Amount for the specified Marital Status.

  2. The Maximum Standard Deduction Amount is the amount used in the Dependents calculation when the employee’s Gross Income is greater than the Maximum Annual Gross Amount.

  3. The Minimum Standard Deduction Amount is the amount used in the Dependents calculation when the Gross Income is less than or equal to the Minimum Annual Gross Amount.

  4. The Standard Deduction Rate is the percentage that the Minimum Standard Deduction Amount is multiplied by to determine the amount used in the Dependents calculation when the Gross Income is greater than the Minimum Annual Gross Amount and less than or equal to the Maximum Annual Gross Amount. For example, if the Minimum Standard Deduction Amount is $1000 and the Standard Deduction Rate is 0.5, the amount used by the Dependents calculation would be $500.

  5. The Maximum Annual Gross Amount is the higher Gross Income amount used in the Dependents calculation.

  6. The Minimum Annual Gross Amount is the lower Gross Income amount used in the Dependents calculation.

  1. Tax Parameters State (TAXPS) Setup for Alabama State Tax Deductions.

  1. The Adjusted Gross Income field is the lower number of each Standard Deduction bracket for the specified Marital Status.

  2. The Standard Deduction field is the Standard Deduction amount for a given Standard Deduction bracket.

  3. Employee Tax Parameter (TAX) enrollment (Note: this only applies to employees enrolled in a Tax Class (TAXC) that includes an Alabama State Tax Deduction).

  4. The State Tax Allowance field is the State Personal Exemption count.

  5. The Additional State Tax Allowance field is the number of Dependents claimed.

Site Map|User Guides in PDF
 © CGI Technologies and Solutions Inc.