northside wrote:I was told by the retirement company that it an "Employee non-match Tax Shelter". I entered it as a "retirement deduction" so only Social security and Medicare are deducted. On the paycheck it is deducted from the salary and the taxes are correct on that. On my reports that retirement amount is showing up in the income which makes my reporting incorrect. What did I do wrong?
This sounds like either a 403(b) or ROTH account. This is a 'before income tax' deduction, it appears that you selected INCOME as the Item Description, or you selected an INCOME account instead of a Liability account which is incorrect.
I hope you did not process payroll with that Pay Item as you have to either delete or adjust it. This is a deduction from the Employee's Salary PRE-TAX so you need to verify that the pay item you have is setup like this, or create a new one and delete the old one.
1. From the Accounting -> Payroll menu, select
Maintain Item Descriptions
2. From the screen that appears, click on the
ADD button.
3. Select the radio button for
Other Deduction and click the OK button.
4. The next screen will ask for an ITEM No:, Description and Liability Account (which you should have already created), if not click on the PLUS button there to create one.
5. Under
Tax Options select
MORE OPTIONS from the list. You'll then see a list of all the Federal, State and Local taxes. You should UNCHECK them all, then CHECK Federal Withholding. I would also see what your state or local tax policy is for such 403(b) accounts. If your State does not tax such contributions, select those boxes also. You'll also see a check box for
Report on W2. Check that box, then select either Code
E if a regular 403(b) or
BB if a Roth contribution to a 403(b).
6. You should have a Vendor setup for this retirement contribution, and you should select that under
AP vendor.
This should now work the way you want.