Wrong Federal Withholding Deducts

[kwcc]

Hello!

I have updated my tax withholding charts for 2013 but when I process payroll way too much money is being taken out for Fed Withholding- what did I miss? ALl the other tax amounts are fine.

[NeilZ]

Hello!

I have updated my tax withholding charts for 2013 but when I process payroll way too much money is being taken out for Fed Withholding- what did I miss? ALl the other tax amounts are fine.

Did you use the ANNUAL chart when entering the data?? Here's the tutorial so you can be sure you set it up properly: https://www.powerchurch.com/support/kb. ... 140&type=1

[Ruby B]

I'm having the same challenge. I entered the update for Federal Withholding on January 2 or 3 whenever they had the new tables out following the instructions given. Today, one of my employees asked why her pay was like $60 less when she got a 2% increase. The only thing I can see is that FIT is more than double what the tables show. Income is 550.80, FIT is 99.+

Thanks for your assistance.

[NeilZ]

I'm having the same challenge. I entered the update for Federal Withholding on January 2 or 3 whenever they had the new tables out following the instructions given. Today, one of my employees asked why her pay was like $60 less when she got a 2% increase. The only thing I can see is that FIT is more than double what the tables show. Income is 550.80, FIT is 99.+

Thanks for your assistance.

Again, check to make sure that you have the correct data in the table. I'd review the data, and also the tutorial as linked to in the message above.

Remember also, the medicare employee rate went back up to 6.2%.

We've found most of these types of errors are due to a 'fat finger' when entering the tax table data.

[CMUMC001]

THIS WAS VERY STRANGE. I can only describe what happened.
Earlier today I started to process the first payroll since upgrading to PC 11.5. It was for our daycare which has it's own set of FICA and MEDICARE item numbers in the payroll item descriptions list because it processes in a separate fund from the general fund. The item numbers between the two funds link to the same tax tables. They just process to the appropriate fund accounts when used.
IN THE BEGINNING:On a payroll of $480 the calculations for the individual deductions for FICA and MEDICARE were correct as I loaded in the tax tables, 6.2% for FICA ($29.76) and 1.45% for MEDICARE ($6.96). HOWEVER, the calculations for the Employer expense part which is supposed to be the same was 6.51% FICA ($31.25) and 1.52% MEDICARE ($7.31). I had similar differences when I processed a pay for $516. I did not finish the daycare payroll.
I went to the Salaried payroll which processes to the general fund and those calculations were correct for both the employee deductions and the employer expense.
I nothiced there was an update that I had to install so I installed it and went back to check each payroll. The daycare payroll still had the same errors. After that I went back and reviewed every tax table and every item description and the accounts they link to to make sure there were no inconsistent associations. I made no corrections, just plugged in the original information as I found it. Then I went back to the payrolls and both were now correct!
I cannot explain it.

[CMUMC001]

UPDATE TO MY UPDATE:!!!
I went to process the daycare and staff payroll and when I changed the hours for either group to something different from the last time I processed the payroll the calculations for the employer liability were wrong. Nothing has been corrected with the update or the table review.
The difference between the two groups was artificial because, normally, staff is salaried. I have one that is hourly and when I changed that one the calculations were in error for that staff position, just like the daycare payroll. Now I do not know what will correct this.

[NeilZ]

FWIW .. since the return to the same percentage deduction for both the employee and medicare portions of the withholding, you CAN just point to the same tax table. There is no need to use separate tax tables for the employee pay item, or the employer pay item. Just point them both to the one table with the proper percentages:

From IRS Pub 15:

"Tax rates and the social security wage base limit. Social security and Medicare taxes have different rates
and only the social security tax has a wage base limit. The wage base limit is the maximum wage subject to the tax for the year. Determine the amount of withholding for social security and Medicare taxes by multiplying each payment by the employee tax rate. There are no withholding allowances for social security and Medicare taxes.

The employee tax rate for social security is 6.2% for 2013. The employer tax rate for social security remains
unchanged at 6.2%. The social security wage base limit is $113,700. The 2013 employee tax rate for Medicare is 1.45% (amount withheld) each for the employee and employer (2.9% total). There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax.

[CMUMC001]

As was indicated, since all percentages are the same then only one tax table for each, FICA and MEDICARE, needs to be created. That is what I have done.
The problem is you need two accounts, one for employee deduction which is funded by the employee and one for employer liability which is funded by the employer.
The employee deposit is processed from the employee's wages which reduces the check to be issued and becomes a liability to the government.
The employer liability is processed based on the employee's wages but does not reduce the wages and gets recorded as an expense to the church and a liability to the government.
These are two different steps that use the same tax tables.
My problem is when the employer expense and liability are processed using the tax table, the percentage calculated is incorrect.
I did not make any changes to the way the tables were set up when I upgraded to PC 11.5 from PC 9. It must be a defect in the PC 11.5. How can I get this noticed by Power Church?

[NeilZ]

As was indicated, since all percentages are the same then only one tax table for each, FICA and MEDICARE, needs to be created. That is what I have done.
The problem is you need two accounts, one for employee deduction which is funded by the employee and one for employer liability which is funded by the employer.
The employee deposit is processed from the employee's wages which reduces the check to be issued and becomes a liability to the government.
The employer liability is processed based on the employee's wages but does not reduce the wages and gets recorded as an expense to the church and a liability to the government.
These are two different steps that use the same tax tables.
My problem is when the employer expense and liability are processed using the tax table, the percentage calculated is incorrect.
I did not make any changes to the way the tables were set up when I upgraded to PC 11.5 from PC 9. It must be a defect in the PC 11.5. How can I get this noticed by Power Church?

I would definitely check the tables once again, and also the setup for the pay items. There are literally thousands of Powerchurch 11.1 and 11.5 users who are NOT seeing this issue.

The pay items for Medicare and FICA will ask you for the accounts. These should be already setup in your Chart of Accounts. That said, these accounts do not have anything to do with the way the system calculates the deductions, they are only locations where the calculated amount is placed.

If you didn't change the tables from version 9 to version 11.5, I would definitely take another look to see if that setup is correct, with the proper payroll cap data (this year its something like $113,700) for Social Security and NO cap on Medicare and that you have the 'round tax' checkbox checked to either round or not on both items.

[Zaina]

There are a few things that come to mind. First, make sure you re-check the tables. The information that was originally posted on the irs.gov web site changed a couple of times that first few days. Please make sure that you do have the latest released figures.

The other thing that comes to mind, are you sure your items are actually using the tables? It is possible that the items on the employees pay items tab under Maintain List of Employees is set to use a manual amount instead of the tax table. In which case, it doesn't matter if your tables are correct or not, they aren't being used.

[CMUMC001]

I checked the Maintain List of Employee pay items tab and Zaina was correct. When the payroll was converted from V 9 to V 11.5 it set the second reference to the FICA and MEDICARE tables to "amount" instead of "percent" AND it would not let me change this during the "process payroll" function.
This change to "percent" must be set through the pay items tab so that it will work when processing a payroll and you need to change the gross pay value by changing the number of hours worked. This solved the problem I was having. Thank you for the incite.

[Jeff]

If the only options you have for the item are "Amount" and "Percent" it did not convert over as a tax item and is an other deduction item and it will not show correctly on the year end W2. If you leave it as is, your 941 reports and W2s will not come out correctly.

To fix this:

go to Payroll -> Setup -> Maintain Item Descriptions
Navigate to the pay item in question
There will be a button that says "Options" click the down arrow
Select the option that says "Convert to tax item"
You will get a prompt to select what type of tax item it is

You will then need to go to each employee and update this item and select the tax table to use to calculate the tax.

[Ruby B]

What I found after posting my two cents: I checked all my payroll items and found that, to the best of my knowledge, the one employee had not had any pay in the previous payroll so was opted out and re-included in this payperiod. All the other employees deductions appear to be correct. When I checked this employee's "Item Descriptions" I found that the Federal Tax withholding and the State Tax Withholding both had "Additional" monies withheld. I had not touched these "Item Descriptions" until attempting to find out what happened to cause this increase in withholding.

I just completed an audit of my church's finances with an "outside" auditor and happened to mention this challenge. The auditor indicated she had another client using PowerChurch 11.5 that called for help with the Federal Withholding Deductions this year as well and that she had spent some time with the client determining what was wrong. She did not indicate what they found or I'm so wiped out that I don't remember.

Hope this may help someone else solve their challenges.

Maybe a glitch somewhere????

[NeilZ]

[quote="Ruby B"

Maybe a glitch somewhere????[/quote]

As I mentioned above .. if there was a bug in the system, there would be a lot more posts on the forum

[CMUMC001]

If the only options you have for the item are "Amount" and "Percent" it did not convert over as a tax item and is an other deduction item and it will not show correctly on the year end W2. If you leave it as is, your 941 reports and W2s will not come out correctly.
To fix this:
go to Payroll -> Setup -> Maintain Item Descriptions
Navigate to the pay item in question
There will be a button that says "Options" click the down arrow
Select the option that says "Convert to tax item"
You will get a prompt to select what type of tax item it is
You will then need to go to each employee and update this item and select the tax table to use to calculate the tax.

Jeff, These items are identified as "Employer Liability" and do not provide the "Options" button, are not deducting from the employee's pay and are not listed as other deductions. The reports for payroll item summary are capturing the amounts correctly.
I did notice that they had the "non-tax item" checked. When I remove the check and make them a tax item I have the option to select what tax type. When I do that and I go back to the employee pay items I no longer have the options of "amount or percent" and must select a tax table.
Again, I do not know why, during payroll conversion, these things were either changed or not converted correctly.
Also, if you try using the 941 report generator it will not be correct because it is doing the social security liability at 10.4% instead of 12.4%. Thanks.