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Enter payroll checks

Federal withholding amounts are incorrect

Federal withholding amounts can be calculated incorrectly if key areas aren't set up appropriately. Understanding the calculation steps and the key areas will help when troubleshooting these amounts.  Here is how Accounting CS calculates the Federal withholding amount:
  1. The application determines the taxable wages for a check by reviewing the taxability of each selected payroll item.
  2. It converts the taxable wages to an annualized amount by multiplying the taxable wages by the payroll frequency.
  3. The application subtracts any allowances or exemptions, found in
    Setup
    Employee
    Payroll Taxes
     tab, from the taxable wages.
  4. Using the amounts from step 3, it calculates the federal taxes based on the annualized tax tables.
  5. The application divides the annualized federal tax amount by the pay frequency to determine the amount of tax to be withheld on a check.
The key areas to review in the software are pay frequency, taxable wages, and W-4 information.

Pay frequency

By default, the transaction entry frequency for payroll check entry in Accounting CS is set to
Weekly
. When entering payroll in the
Actions
, then
Enter Transactions
 screen for an employee that has a different frequency than weekly, the application will calculate the incorrect federal withholding amount. This can be corrected by adding a payroll schedule to the employees.
  1. Select the
    Setup
    Clients
    Payroll Information
     tab.
  2. Select the ellipsis button next to the
    Payroll Schedules
     field.
  3. Create a payroll schedule with the frequency that the employees need.
  4. Select
    Enter
     to save your changes.
  5. Select
    Setup
    , then
    Employees
    .
  6. Select the employee to be modified from the Employees list in the
    Main
     tab.
  7. Select the new schedule created in step 3 from the dropdown list in the
    Payroll Schedules
     section as the
    Primary
     schedule.
  8. Select
    Enter
     to save the changes.
  9. Select
    Actions
    , then
    Enter Transaction
     to enter the payroll.

Taxable wages

"Taxable wage amount" refers to the employee's gross wages minus any pre-tax deductions with the taxable wage limit applied.  There are several areas that will help you troubleshoot the taxable wages calculation.
  1. Review the
    Payroll Journal with Taxable Wages
     for the Current year for accuracy. This report calculates the taxable wages for the federal income tax by employee check.
  2. If the taxable wages for the federal income tax are incorrect on the Payroll Journal with Taxable wages report, there are several places to review that something may have changed:
    • Verify in the
      Events
       tab of the
      Setup
      , then
      Employees
       screen to see if payroll items may have been added or edited for the employee.
    • Verify in the
      Events
       tab of the
      Setup
      Firm Information
      Firm
       screen if payroll items have been added or changed for the client that may affect the employee’s wages.
    • Verify the taxability of all payroll items. In the
      Exemptions
       tab of the
      Setup
      ,
      Payroll Items
       screen verify whether any pretax deduction items are in use and check that they are set up correctly.
  3. If the federal withholding amount is zero, there are several items that will calculate zero federal withholding amounts.
    • Verify in the
      Payroll taxes
       tab of the
      Setup
      ,
      Employees
       screen to see if the federal withholding set to
      Fixed amount 0
       or
      Fixed percentage 0.00%
      .
    • Verify in the Taxes section to see that FIT wage exempt status is selected within the screens
      Setup
      Employees
      Payroll Taxes
       tab or
      Setup
      Clients
      Payroll Taxes
       tab.

W-4 information

Review the federal withholding and Other Federal Settings for the employee. In the federal withholding section of
Setup
, then
Employees
 screen, verify the proper items have been selected. 
Internal use only
Also check to see if there are overrides on the checks for FIT - this will cause the calculation to be off as well.

This article applies to:

  • Product: Accounting CS
  • Subject: Payroll checks

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