Handling Standard Deductions for Federal Withholding

With the redesign of the W4 form in 2020, a new facet of the Federal Withholding tax calculation was introduced. The documentation referenced below is from Publication 15-T from the IRS for tax year 2022.

On Worksheet 1A. Employer's Withholding Worksheet for Percentage Method Tables for Automated Payroll Systems (page 8 in the 2022 publication) step 1g shows the following:

This section of the worksheet applies specifically to an employee who has submitted a W4 form for 2020 or later and has not checked the box in Step 2 on that form. For the calculation in PowerChurch to be correct, this "standard deduction" amount would need to be manually entered onto the employee's Federal Withholding pay item.

To do this, go to Accounting > Payroll > Maintain List of Employees. Use the Locate button to bring up the employee in question, then click on the Pay Items tab. Double click on their Federal Withholding item and enter the appropriate amount in the "W4 Box 4b Deductions" field. If the employee already has an amount in that field, add this amount to it.

For 2022, if the employee is "Married Filing Jointly" the correct amount is $12,900. Otherwise, it is $8,600.