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OHAUTX00386 - Activate foreign earned income exclusion

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In this Customizing activity, you activate the system processes for exempting the part of the employee's income that is earned outside of the Unites States from federal withholding tax.

The first time an employee in your company claims foreign earned income exclusion as described in IRS Publication 54, you must activate the system processes as described in this activity. Once the processes are activated, you can use them for any further employees.

By activating the processes in this activity, you ensure the system performs the following steps:

1. Reads the checkbox Foreign Earned Income (HRPAYUS_FEI_EXEMPTION) in the employee's Withholding Info W4/W5 US (0210) infotype.

Note that for each employee who claims foreign earned income exclusion the checkbox in the employee's infotype must have been selected.

1. Compares the employee's foreign earned income to the exclusion limit (the amount in excess of that limit is taxable; you can display the limit in Customizing activity Display foreign earned income exclusion limit).
2. Sends the required information to BSI TaxFactory and generates the necessary wage types.

In the standard system, the processes for exempting the employee's foreign earned income from federal withholding tax are deactivated.

Execute this Customizing activity and define the value of the TAX: Foreign Earned Income (USFEI) configuration option by making the corresponding entry in table view Customer Values for Configuration Options(V_T5F99K2) according to the needs of your company. The possible values are as follows:

• 'On': Activates the system processes for exempting the employee's income earned overseas from federal withholding tax.

• 'Off': Deactivates the system processes, that is, the employee's income earned overseas is always taxed.

Note

In the standard system, this entry does not exist in table view V_T5F99K2, therefore, you must create it. When the entry does not exist, the system behavior is the same as the value 'Off' described above.

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