Oracle Fusion Payroll - US Payroll Reconciliation Guide

 🧩 1. Key US Payroll Balances You Must Reconcile

Federal Income Tax (FIT)

• FIT Subject Wages

• FIT Taxable Wages

• FIT Withheld

• FIT Supplemental Withheld (if applicable)

FICA (Social Security & Medicare)

• Social Security Subject Wages

• Social Security Taxable Wages

• Social Security Withheld

• Medicare Subject Wages

• Medicare Taxable Wages

• Medicare Withheld

• Additional Medicare Withheld

  
  

Unemployment Taxes

FUTA

• FUTA Taxable Wages

• FUTA Subject Wages

• FUTA Tax Withheld

State Unemployment (SUI)

• SUI Subject Wages

• SUI Taxable Wages

• SUI Employer Tax

State / Local Income Tax

• SIT Taxable Wages

• SIT Withheld

• Local Taxable Wages

• Local Tax Withheld

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🧱 2. Core Fusion Objects Involved

Oracle Object	Purpose
Elements (Earnings, Taxes, Deductions)	Feed US tax + wage balances
Wage Basis Rules	Determine taxable/subject wages
Balances	Store accumulated wages/taxes
Balance Dimensions	YTD/QTD/MTD/Run/Tax Year
Formulas (Fast Formulas)	Calculate taxes and taxable wages
Payroll Definitions	Control run types & dates
Vertex (if enabled)	US taxation engine

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🔍 3. US Payroll Reconciliation Checklist

Here is a practical checklist to identify root causes.

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Step 1 — Validate Taxable Wages (Most Common Issue)

Check:

Are balances such as FIT Taxable Wages or Social Security Taxable Wages correct?

Recon Tools:

• Payroll Activity Report

• Employee Balance Report

• Payroll Tax Register

US-Specific Causes:

Issue	Reason
Wrong element fed taxable wages	Wrong Wage Basis Rule setup
Pre-tax elements not excluded	401k, Section 125, HSA not exempt
Post-tax deductions incorrectly excluded	Should not reduce taxable wages
Supplemental earnings taxed incorrectly	Supplemental vs Regular tax mix
Incorrect calculation cards	Federal/State withholding overrides

Fix:

• Correct Wage Basis Rule configuration

• Fix element classification (pre-tax or post-tax)

• Adjust balance feeds

• Correct calculation card values

• Recalculate payroll relationship balances

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Step 2 — Validate Taxes Withheld

Check:

Does the amount withheld match taxable wages * correct tax rates?

FIT Example:

Incorrect FIT due to:

• Supplemental payments not using the supplemental method

• FIT fed incorrectly from previous assignments

• Overrides in calculation cards

• Incorrect federal filing status

FICA/MED Example:

Incorrect Social Security or Medicare because:

• Subject wages > taxable wages (should be equal except for pre-tax adjustments)

• Wrong treatment of 125 plan or 401k contributions

• Wrong tax rates due to configuration issues

Fix:

• Validate element classification

• Review tax cards

• Verify Vertex configuration (if applicable)

• Recalculate payroll relationship balances

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💼 4. Reconciliation by Tax Category

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🇺🇸 A. Federal Income Tax (FIT) Reconciliation

Balances to check:

• FIT Subject Wages

• FIT Taxable Wages

• FIT Withheld

Common FIT Issues:

1. Pre-tax deductions (401k, Section 125) not excluded

2. Incorrect Wage Basis Rule

3. Incorrect filing status (Single/Married)

4. Incorrect “Additional Withholding” amount

5. Supplemental earnings not using supplemental tax method

How to Reconcile:

1. Confirm taxable wages = earnings – pre-tax exclusions

2. Validate employee’s calculation card

3. Check Wage Basis Rule "FIT Taxable" definition

4. Recalculate payroll relationship balances

5. Reprocess payroll if necessary

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🇺🇸 B. Social Security & Medicare (FICA) Reconciliation

Balances to check:

• Social Security Subject Wages

• Social Security Taxable Wages

• Social Security Withheld

• Medicare Subject & Taxable Wages

• Additional Medicare Withheld

Common FICA Issues:

1. SS Wage Base exceeded incorrectly

2. Incorrect pre-tax exclusion (401k does NOT reduce FICA)

3. Incorrect treatment of GTLI, imputed income

4. Retro pay pushing employees over wage base incorrectly

5. Multiple assignments not consolidated correctly

How to Reconcile:

1. Validate subject vs taxable wages

2. Compare against IRS Social Security annual limit

3. Identify elements incorrectly reducing FICA

4. Validate dynamic formulas like FF_US_AMT_FICA

5. Recalculate payroll relationship balances

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🇺🇸 C. FUTA Reconciliation

Balances to check:

• FUTA Taxable Wages

• FUTA Subject Wages

• FUTA Employer Taxes

Common Issues:

1. FUTA wage cap not respected

2. Wrong state SUI credit configuration

3. Migrated balances wrong

4. Employer tax element not feeding balances

How to Reconcile:

1. Validate wage basis rule (FUTA Subject)

2. Validate FUTA wage base for the year

3. Check employer tax elements

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🇺🇸 D. State Unemployment (SUI) Reconciliation

Balances to check:

• SUI Subject Wages

• SUI Taxable Wages

• SUI Employer Contributions

Common SUI Issues:

1. Wrong SUI wage base for state

2. Incorrect SUI rate on calculation card

3. Element not feeding SUI taxable wage balance

4. Incorrect multi-state work location setup

5. Retro entries creating negative subject wages

How to Reconcile:

1. Check SUI wage base from state rules

2. Validate subject vs taxable wages

3. Confirm employer SUI rate on tax card

4. Recalculate balances

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🏙 Local Tax Reconciliation

Common Issues:

• Incorrect city/county code

• Elements not feeding local taxable wages

• Local overrides incorrectly applied on tax card

• Incorrect reciprocity setup

Fix:

Check work/city rules → validate LOC subject/taxable wages → recalc balances.

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🛠 5. Tools for US Payroll Reconciliation

1. Payroll Activity Report (Primary)

• Shows earnings, taxes, balances

• Best report for identifying discrepancies

2. Employee Balance Report

• Displays all balance dimensions (YTD, QTD, etc.)

3. US Tax Balance Report

• Used for FIT, FICA, FUTA, SUI revenue reporting

4. Recalculate Payroll Relationship Balances

Use when:

• Wage Basis Rules change

• Balance feeds change
• Retro pay impacts taxable wages

🧬 6. Best Practice Reconciliation Approach (US)

Daily / Per Pay Run

• Verify payroll activity report

• Compare FIT/FICA/SIT taxable wages vs expected

Annually

• W-2 Reconciliation

• Compare Federal & State totals vs payroll balances

• Fix discrepancies before year-end finalization