What is tax type in SAP PY-US - USA?

SAP Term: tax type

• Component: PY-US

• Component Name: USA

• Description: Distinct category of tax levied upon an employee or employer by a tax authority. These categories represent calculation formulas that are used by the BSI tax calculation engine, which calculates taxes for the US Payroll component of the SAP HR System. Examples include Employee Medicare Tax and Withholding Tax.

Smart SAP Assistant

• Key Concepts: 
  Tax type is a field in the SAP system that is used to identify the type of tax that is being applied to a particular transaction. In the PY-US USA component, tax types are used to identify the type of taxes that are applicable in the United States. 
  
  How to use it: 
  When entering a transaction in the PY-US USA component, users must select the appropriate tax type from a drop-down list. This list contains all of the applicable tax types for the United States. Once selected, the system will automatically calculate and apply the correct amount of taxes to the transaction. 
  
  Tips & Tricks: 
  It is important to select the correct tax type when entering a transaction in order to ensure that the correct amount of taxes is applied. If an incorrect tax type is selected, it may result in an incorrect amount of taxes being applied or even an audit from the IRS. 
  
  Related Information: 
  For more information on tax types and how they are used in SAP, please refer to SAP Help documentation or contact your local SAP support team.