There is no doubt about it. Workday has been a game-changer in simplifying work processes for payroll office staff.
Where once payroll/tax compliance staff relied on a plethora of different resources to manage their payroll requirements, Workday has worked wonders in centralizing the process into one tool.
After all, no wonder so many employers around the US use the software!
But while Workday has made the task of withholding tax from US citizens straightforward, managing the tax requirements of nonresident employees can still be a real headache.
The good news is that Sprintax Calculus (formerly Sprintax TDS) has been designed to tackle this specific problem.
In this guide we are going to take a look at how Calculus can work hand-in-hand with Workday and simplify your nonresident payroll requirements.
Determining employees’ residency for tax purposes
Whether or not an employee is considered a resident or nonresident alien for tax purposes can have a big impact on how much they are taxed in the US.
This can also have implications on things like FICA withholding as well as what tax forms they need to fill out and how they are completed e.g. W-4 for residents will differ from completing a W-4 for an NRA.
The best way to find out someone’s residency is by completing the Substantial Presence Test.
If you’re unsure whether an employee is a resident or nonresident for tax purposes, Sprintax Calculus can help you! In fact, all you need to do is enter some basic information about the employee into our software, and Sprintax Calculus will determine their residency status in seconds!
Tax Treaties
One of the biggest challenges in managing nonresident payroll is determining the tax treaty entitlements of each employee.
The US has signed tax treaty agreements with more than 65 countries. These treaties enable nonresidents to claim tax relief in the US – some will be entitled to pay tax at a reduced rate while others will be exempt from tax entirely. However, exactly which tax benefit can be claimed by an employee will depend on their personal circumstances.
By using Sprintax Calculus you can guarantee that the correct tax treaty reliefs are applied to each employee.
What’s more, if you need to quickly determine tax treaty benefits for a particular nonresident, you can do so within a matter of seconds by using our new tax treaty engine.
To find out whether or not there is a tax treaty available for the employee, all you need to know is the correct income code and country of residency for them.
If you need further information on the tax treaty, we will direct you to the specific passage of the treaty agreement.
You can learn more here about the Sprintax Calculus tax treaty engine here.
Sprintax Calculus can also help identify whether or not someone is exempt from paying FICA taxes on their wages.
Read more: Nonresident alien tax withholding – a comprehensive guide for US employers
Sprintax Calculus preps tax forms
One of the most stressful aspects of nonresident tax can be the preparation of tax forms.
But fear not! Sprintax Calculus can help!
Our expert software provides instant generation of any necessary tax forms in a matter of seconds.
Whether it’s a W-4, W-8BEN, W-8BEN-E, 8233, SS-5, W-7 or even 1042-S reporting – we’ve got you covered.
You can request a demo to discover how Calculus can help you with your tax forms.
Calculus handles all the relevant paperwork
Sprintax Calculus (formerly Sprintax TDS) is a new and innovative, paper-free way to manage and generate all tax-related forms – including, W4, 8823, W-8BEN, etc.
Calculus allows you to store information securely in the cloud, cutting down the need to manage traditional paperwork.
This both helps the environment and you, as it saves unnecessary paper use and allows all of the worker’s documents to be stored in one place.
Sprintax Calculus’ unique document exchange function enables you to keep and upload tax-related documents for the nonresident in a secure place that you can access when required.
How Sprintax Calculus works
Calculus has developed its own API which can be compatible with Workday Payroll, so we can pull data from and send data to your system. This makes life easier for everyone across your team when handling NRA tax withholding as well as utilizing Workday.
Essentially, our software helps you deal with the following dilemmas:
- Not sure who is a nonresident for tax? The residency test is carried out by Calculus
- Don’t know who is entitled to a tax treaty? What does that entitlement mean to them and to you as a payer? Understand if there are applicable tax treaty benefits if your users are eligible to avail of these treaty benefits and have the associated tax forms generated to apply treaty benefits such as the 8233 or W-8BEN
- 1042-S forms produced and delivered electronically to your users and 1042-S data can be filed with the IRS automatically via TXT through Calculus
- All forms required to correctly calculate nonresident payroll for individuals as well as foreign vendors are prepared by Calculus – W4, 8823, W-8BEN, W-8BEN-E SS-5, etc.
To help you better understand the process, try to think of it in the following six key steps:
Step One: the employee’s/income recipients’ record is set up on the system.
Step Two: the required information about the employee/income recipient should be answered in the questionnaire.
Step Three: is when Calculus checks the residency status and tax treaty eligibility.
Step Four: Calculus will then prepare all necessary forms.
Step Five: The forms are signed by the employee/income recipient and re-uploaded through the document exchange.
Step Six: Calculus prepares the tax withholding calculation and delivers the important information and forms back to you as the administrator.
Why use Sprintax Calculus for tax compliance?
Our software makes life that bit easier for payroll/tax compliance offices who use Workday Payroll Management System to manage their nonresidents’ taxes.
Here are some of the reasons why organizations choose us:
- Cloud-based, safe, and automated tax solution
- We will determine both Residency and Tax Treaty eligibility. This will also help calculate tax withholding rates
- Instant generation of tax forms (such as 1042-S, W-4, W8-BEN, and more)
- Personalized Reporting and Management of nonresident tax profiles
- Easy to use admin & dashboards. Advanced Reporting tools
To learn more about Sprintax Calculus, why not request a free, no-obligation demonstration today.
