If employees work in multiple states, cities or countries on an ongoing basis and do not report hours separately for each jurisdiction, you can have Workday calculate and withhold taxes for each jurisdiction based on percentages you specify?

• A. True
• B. False
• C. Not supported
• D. Not possible

Answer: (A)

The concept being tested is that Workday can split and calculate tax withholding across multiple jurisdictions by applying user-defined allocation percentages to an employee’s wages. Even when hours aren’t tracked separately by state, city, or country, you can configure the system so a portion of earnings is attributed to each jurisdiction for tax purposes.

In practice, you set up allocation percentages for each jurisdiction involved. Workday then takes the employee’s total wages and applies those percentages to determine how much wage is taxed under each jurisdiction’s rules. The withholding for each jurisdiction is calculated using its own tax rates, and the results are combined to produce the total withholding.

For example, if an employee earns $100,000 and you allocate 60% to one jurisdiction and 40% to another, Workday will treat $60,000 with the first jurisdiction’s tax rules and $40,000 with the second jurisdiction’s rules, calculating withholding accordingly. This approach works even when hours aren’t reported separately by jurisdiction, as the percentages drive the allocation.

It’s important to ensure the percentages reflect the actual work distribution and that any jurisdictional tax rules and credits are properly configured, but the ability to allocate by percentage and withhold by each jurisdiction is supported.