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UPB - Entering and Approving Previously Taxed Vacation Hours: Bi-weekly Hourly, Department Time Entry (UIC)

The Illinois Nurses Association (INA) and the SEIU Local 73 Technical (L-73) contracts allow for the annual payout of limited vacation benefits. Under the Internal Revenue Code, IRC Section 451(a), an item of gross income is includible in the taxable year in which it is actually or constructively received by a taxpayer. In a Letter Ruling, 9009052, the IRS held that an employee is constructively in receipt of income as soon as the right to receive cash for PTO becomes fixed. If the employee elects to receive the vacation payout at the end of the calendar year, the tax will be withheld from the payout. If the employee does not elect to receive the payout, the full or remaining balance of the eligible vacation hours will be treated as a taxable benefit. The employee will be taxed even if they did not elect to receive the payout.

When an employee uses taxed payout-eligible vacation hours the next calendar year, the Time Approver must edit the employee's submitted timesheet in the Electronic Approvals of Time Entry (PHATIME) page in Banner and replace standard vacation hours (VAC) with Vacation-TimeTaxed NotPrevPaid (VNT) hours to ensure that the employee is not double taxed. This earn code is only available to Time Approvers in the timesheet.

The Vacation-TimeTaxed NotPrevPaid earn code is configured to pay assigned hours; however, those hours will not be used to calculate state or federal taxes within the pay event.

UIC HR will provide units a report that tracks the union negotiated, payout-eligible vacation hour balances.

Open the Pending Timesheet

1. Log in to Banner.
2. Type PHATIME in the Search/Direct Navigation field.
3. Make the appropriate filter selections.
   1. Enter the COA.
   2. Enter the Organization
   3. Select Pending in the Transaction Status drop down.
   4. Enter the Year.
   5. Enter BW in the Payroll ID field.
   6. Enter the Payroll Number.
   7. Click the Go button unless you are a Proxy for the Time Approver.
      NOTE: If you are a Proxy for the Time Approver, enter the proxy's username in the Proxy For field before clicking the Go button.

Review the Timesheet

1. Review and validate the hours submitted by the employee for the pay period.
2. Correct submitted hours, if necessary.

Enter Time for Vacation-TimeTaxed NotPrevPaid

1. Click the Next Section button to navigate to the Time Entry section.
2. Click the Insert button to add a new earn code.
3. Type VNT in the Earn field.
4. Type the hours in the Hours field for each day vacation was taken during the pay period.

Reduce Submitted Vacation Hours

1. Navigate to the row displaying the VAC earn code.
2. Type 0.0 hours in the Hours field in the VAC earn code row for each day VNT was entered.
   1. If VNT was used to partially replace VAC hours, reduce the hours in VAC to the appropriate level.
      1. Example: The Department Originator submitted 7.5 hours of VAC (vacation hours). The employee has 3.75 hours of VNT hours left, thus 3.75 hours were entered for the VNT earn code on one day of the pay period. The Time Approver must modify the previously enterer 7.5 hours of VAC to 3.75 hours so that the employee receives a full day of pay.
3. If all VAC hours submitted in the timesheet are to be replaced by VNT hours, highlight the row containing the VAC hours and click the Delete button.
4. Click the Save button after all edits have been completed.

Approve the Timesheet

1. Add comments.
   1. Click the Tools button.
   2. Select View or Enter Comments from the menu.
   3. Type in the Comment memo field an explanation of the edits and corrections made to the timesheet, including the substitution of Vacation-TimeTaxed NotPrevPaid (VNT) hours for Vacation (VAC) hours.
   4. Click the Save button.
2. Approve.
   1. Click the Tools button.
   2. Select Time Entry Data from the menu to return to the timesheet.
   3. Click the Tools button.
   4. Select Approve Time from the menu.