When using Excel for payroll calculations EA Form has to be generated manually. A good understanding of payroll tax calculations is needed to get the EA Form and E form correct. Following is an example using multiple allowances taking into account special tax deductions.
Note especially handling of Traveling Allowance and Children relief. Many employees lose thousands in taxes due to mistakes in these 2 items in EA Form.
Above is a sample 12 month Year to Date Total. Based on the above data, following is the EA Form that will be generated. This article will look into each item generated for the EA Form
B 1. EMPLOYMENT INCOME
(a) Gross salary / wages. – Gross Basic Salary – No pay leave = 100,000 – 600 = 99,400
(b) Commission – 5,000
(c) Gross Tips – Taxable Achievement Allowance and Traveling Allowance
*Note : Mileage Claim is not income.
Total Achievement Allowance = 3,000
Total Traveling Allowance = 8,000
*Note : Petrol card, petrol allowance, travelling allowance or toll payment or any of its combination for official duties. Not all Traveling allowance is tax deductible.
PCB exemption for Traveling / Petrol allowance = 6,000
Taxable Traveling Allowance= 8,000 – 6,000 = 2,000
PCB exemption for Achievement / Service Award = 2,000
Taxable Achievement Allowance= 3,000 – 2,000 = 1,000
(c) Total Taxable Gross Tips = 2,000 + 1,000 = 3,000
TOTAL Taxable Income = 99,400 + 5,000 + 3,000 = 107,400
*Note : Total Gross income is 111,400.00
Tax exempt income is entered in Section F.
F TOTAL TAX EXEMPT ALLOWANCES
Exempt Achievement + Traveling Allowance = 6,000 + 2,000 = 8,000
D TOTAL DEDUCTION
- Monthly Tax deductions – 4,164
- CP38 Deductions – 500
- Zakat – 2,000
Item 6. Total qualifying child relief – 12,000
(a) Under 18 years – 2 Children = 2,000 x 2 = 4,000
(c) Child 18+ Diploma or Degree – 1 Child =8,000
Total Child relief = 4,000 + 8,000 = 12,000
