FAMLI Colorado Deduction Set-up

[HolderS]

In the state of Colorado we are required to begin doing a FAMLI deduction in January 2023 (it's a family leave program). It says that these deductions need to be reported in box 14 of the W2. I cannot seem to figure out how to set this up so it will report in this box. I currently have it set up as A Tax Deduction under Local Tax. I tried other deduction but it only gave me an option of Box 12. I am using PC Online. Thanks.
Sheilah

[NeilZ]

In the state of Colorado we are required to begin doing a FAMLI deduction in January 2023 (it's a family leave program). It says that these deductions need to be reported in box 14 of the W2. I cannot seem to figure out how to set this up so it will report in this box. I currently have it set up as A Tax Deduction under Local Tax. I tried other deduction but it only gave me an option of Box 12. I am using PC Online. Thanks.
Sheilah

There was a similar requirement in Connecticut that started last year ... unfortunately, it seems every state is starting to cram stuff in Box 14, and Powerchurch already has a list, and has said that automatic entry won't happen soon. See this topic: viewtopic.php?f=3&t=17082

OK ... looking up the information about this, its a dual contribution where the employee and the employer contribute. Essentially it is a tax, and should be setup much like the way Social Security is where the total is .9% of the employees wage, and that is shared with .45% being the amount contributed by the employer, and .45% deducted from the employee.

The good news is that both salary and housing allowance (or cost of manse) is included, does make it easier. The bad news is that you're probably going to have to enter the data manually in Box 14 during the W-2 review at the end of the year.

Based on what was suggested for the CT family leave act, you're going to need to add two items descriptions, one a Other Deduction for the employee amount, and a Employer Liability for the employer amount. Both will have the percentage calculated against gross wages.

The documentation for FAMLI says this is a 'post tax deduction that does not reduce taxable wages, so the % calculation on the employee Other Deduction item should be on Gross Wages, and the Tax options set to "After tax deduction"

The Employer Liability will have the 'Non-tax item' box checked. Of course you'll use the same liability account on both items to collect these funds.

Adding the pay item is simple, just select Percent and add the .45 to the percent box on each item. That said ... if the pastor lives in a manse, you will have to add the equivalent monthly cost of the manse to the gross wages and use the AMOUNT selection on the pay item, and manually calculate the monthly deduction by multiplying that amount by .45% and entering that on the pay item.

The system will calculate (or make) the deductions ... and you can use the Payroll Item Summary Report to get the amounts deducted. At the end of the year, you'd check the Print summary by employee to get the amounts to add to Box 14.

I would check the calculations when you add the pay items to the employee's 'record' to make sure the correct amount is being deducted.

I hope this helps? As always ... do a Backup of the Accounting files using the Powerchurch backup system so you can revert to the previous state if necessary.

[HolderS]

Thanks so much Neil. Great information as always. Everything seemed to work fine until....I ran my W2's for 2022. I think I made a mistake prior to asking for help and I have no idea how to correct it. I created a Tax Type for FAMLI and chose State Tax. Did I need to do that? As you can guess, it is printing on the W2 with the FAMLI ID# and the state wages but no tax amount. I manually deleted it off of each W2 but not sure where to go from here.

Feeling like an idiot...
Sheilah

[NeilZ]

Thanks so much Neil. Great information as always. Everything seemed to work fine until....I ran my W2's for 2022. I think I made a mistake prior to asking for help and I have no idea how to correct it. I created a Tax Type for FAMLI and chose State Tax. Did I need to do that? As you can guess, it is printing on the W2 with the FAMLI ID# and the state wages but no tax amount. I manually deleted it off of each W2 but not sure where to go from here.

Feeling like an idiot...
Sheilah

No ... you did not need to create that tax type. Delete the tax type from the system since you're not using that if you followed the directions above and created the employee portion as 'other deduction', and the employer as a liability.

Since we did this, we've seen more states adding such programs, and earlier on Jan 6th, the Powerchurch techs created a page to help set this up. You can find it at the link below, essentially its what I walked you through in the original reply, but with screen captures showing the setup.

https://www.powerchurch.com/support/516 ... ical-leave

[HolderS]

Thanks Neil. So thankful for your knowledge and willingness to help others.