Legislative Changes Affect Payroll within Sage MIP Fund Accounting social security rate and/or maximum subject earnings have normally been delivered as part of a software update. However as of version 10.2.10 this has changed. Going forward rates will still be updated as part of the regular update process, but users will now have the ability to override these values to make changes prior to installing the update. Additionally, with the recent alignment of Oregon’s income tax to the Federal income tax anything that might be affected has corrected in version 10.2.10.
It’s important to note that if you ran 2011 payrolls in versions prior to 10.2.8 your social security tax was over withheld and you have until March 31st, 2011 to return this over withholding to the employee. After installing 10.2.10 the amount of over withholding will automatically be refunded to the employee on their next paycheck.
New Options in Sage MIP Fund Accounting 10.2.10
Social Security Tax Calculation Options
Sage MIP Fund Accounting version 10.2.10 has two new tabs under Maintain>Federal Taxes: Employee FICA Taxes, and Employer FICA Taxes. This screen will automatically default to the values that were current as of the most recent update. However if there is a need to change them between updates you will now have the ability to do so by clicking on the “Override Official Values” box in the upper left hand corner of the screen which will make the fields editable.
There are two calculation methods for calculating Social Security Taxes: Current and Year to Date. The current method calculates social security taxes by taking the current earnings only and multiplying it by the percent of wages. You would choose this method if you only want to account for current earnings. Year to Date calculates social security by looking at both the current check and the annual subject earnings and annual tax withheld so far. This option is helpful when taxes change either going up or down, or if an employee’s wage changes, as it will automatically correct any errors in taxes upon calculation.
In addition to the ability to adjust social security rates, 10.2.10 also enhanced the tax history report to record these amounts. If you go to Reports>History>Taxes, there are a number of new fields available to provide a more complete reporting picture. These include:
- Employee Maximum Subject Earnings
- Employer Maximum Subject Earnings
- Employee Rate
- Employer Rate
- Employee Calc Method
- Employer Calc Method
Note 1: Due to the nature of the YTD calculation, the amount of taxes calculated for a payroll does not equal the Subject Earnings x Tax Rate.
Note 2: Calculation method columns will not be populated payrolls prior to 10.2.10.
Common Questions and Answers:
How do I fix over withholding from the old version?
Version 10.2.8 will automatically take care of over withholding by setting the tax rate to the proper 4.2% and the calculation method to YTD, and will trigger a refund for the employee.
I manually adjusted the tax values using the old version, what will happen when I install the updated version?
The system will calculate the YTD values at the correct rate and should automatically note that no refunds are necessary.
My employees do not pay social security; do I still need to install this update?
Yes. You will still need the updated version in order to stay current with any applicable state taxes.
What should I do if/when the tax rates change next year?
The next update will include any further tax rate changes, however if you are unable to install it you can make the changes manually as described above.
How can I get the system to print a refund check for a terminated employee?
Switch the employee status to active long enough to process a supplemental payroll. The only earning code on the timesheet would be a bonus, the calculation method would be AT for Amount on Timesheet, and the amount would be one cent. There should be no Benefit codes or Deduction codes on the timesheet. That way the employee will get a one cent paycheck plus the refund of any over withheld 2011 social security. After processing the check you can change the status of the employee back to ‘D’ for terminated.
If you have any further questions or concerns, please don’t hesitate to give us a call.