Pre-tax deductions for payroll

[laanra]

How do I set up a pre-tax deduction to an annuity coming out of an employees pay check? We have three employees doing this. Thanks!!

[Matt]

I'm not sure I understand your question. Can you illustrate how you're wanting a sample paycheck to be computed?

[tborgal]

How do I set up a pre-tax deduction to an annuity coming out of an employees pay check? We have three employees doing this. Thanks!!

We set up 2 new payroll item discriptions. The first as an income account with the Debit Account being that persons payroll account number and the Credit Account the checking account. The W2 information set for, #3 Social Security Wages, #5 Medicare Wages and #12 Coded as (Place an E in the box). The second as a deduction account, no tax table, Debit Account is the same checking account used in the income account, Credit Account is a Liability Account created for this purpose. If you have seperate payroll accounts budgeted for each employee you will need to set up a seperate income item description for each employee, if you pay all employees out of the same account you will only need one. Name the accounts what ever makes sense to you. The deduction account can be used for all employees. You then need to enter these items in the "Maintain Employee Pay Items" list. We then pay the annuity monthly out of the Liability Account. Be sure to subtract the amount to be pre-tax from the gross pay line so you don't overpay.

Hope this is clear enough for you to make sense out of.

[laanra]

Thanks Tom
Your info was very helpful and easy to understand but how do I do the annuity for an employee who pays FICA and Medicare? I need it to be taxed for SS purposes but not for Fed and State?

Thank you sooo much!

Lois

[tborgal]

Thanks Tom
Your info was very helpful and easy to understand but how do I do the annuity for an employee who pays FICA and Medicare? I need it to be taxed for SS purposes but not for Fed and State?

My previous post will do this.

[Dish-Man]

my music and youth minister want their tithe to our church to be deducted out of their paycheck before they get paid. Does anyone have a good example of how this is done since the money is never really "leaving" the checking account. I also want to make sure that either their gross income is reduced or that their tithe is listed as a contribution just like a check would be.

[NeilZ]

my music and youth minister want their tithe to our church to be deducted out of their paycheck before they get paid. Does anyone have a good example of how this is done since the money is never really "leaving" the checking account. I also want to make sure that either their gross income is reduced or that their tithe is listed as a contribution just like a check would be.

FWIW ... I don't believe it can come out of gross income, it must come out of net. Contributions to a church cannot be 'pre-tax'.

As far as an automatic update to contributions, there is no direct connection to the contributions module from the accounting module, so it can't be done. It may be easier to show them the after-tax deduction on the payroll stub, then create a check and put it with the Sunday offering.

[laanra]

Tom,
I followed what you posted and it worked for the minister, however, for non-ministerial staff I'm still having problems. I have set up an income account for the annuity selecting non-taxable. The W-2 info is as you posted. I also set up a deduction account, no tax table and the W-2 info is all blank. FICA and Medicare are not be calculated on the annuity income ( it should be). the Federal and State tax are correct. On the Employee Pay Items screen, the income items do not show a tax table - does the system use the W-2 info from Maintain Item Descriptions to calculate taxes? I am missing something, because it is not working. Thanks so much for your help and patience!!!

Lois

[tborgal]

Make sure that in the the "Annuity Income > Item Description >W2 Information" code 12 has a check in the box and an "E" is enterd in the box beside it.