Missouri Discount: timely compensation deduction

Employers that are not government agencies or political subdivisions may take a compensation deduction if their withholding tax return, Form MO-941, is filed and paid in a timely manner.

Accounting CS assumes that the employer will take advantage of this plan, and calculates the negative deduction (a discount), along with the amount of state income tax, when the liability is generated.

For live payroll checks, Accounting CS generates the liability automatically when the checks are printed.

For handwritten and historical checks, go to Actions
, then Enter Transactions
, then select General Liablilites
.

note

For clients converted from Creative Solutions Accounting (CSA), Accounting CS will not recognize the withholding from the converted earnings until liabilities are generated on the converted checks.

When an employer's state withholding exceeds certain thresholds, the Missouri Discount rate is reduced. If the state withholding has exceeded one of these thresholds and the discount is not reduced, verify that the entire year to date liabilities have been generated for live, handwritten, and converted checks.

Assign a general ledger account to Missouri timely compensation discount

You can assign a general ledger account to the Missouri timely compensation discount.

Select Setup
, then Clients
.

Select the Payroll Taxes
tab.

In the Taxes grid, go to the Missouri section

Enter the amount in the Expense column of the Missouri SIT row.

tip

You can opt out of the compensation deduction that occurs when liabilities are generated by disabling the deduction for all clients or for individual clients.

Opt out for all clients

Choose Setup
, Firm Information
, then Tax Agents
.

Select the Missouri Department of Revenue
tax agent, then Edit
.

On the Main
tab, mark the Do not calculate compensation deduction
checkbox.

note

The compensation deduction will not calculate on payroll checks but will be displayed on Form MO-941 after the payroll tax liability check has been printed. If you do not want the compensation deduction to display on the form, you will have to change the settings on a per-client basis, explained below.

Opt out for an individual client: method 1

Use Method 1 to opt out of the compensation deduction on payroll checks and
prevent the deduction from appearing on Form MO-941 for a client.

Select the appropriate client at the top of the screen.

Choose Setup
, then Vendors
.

Select Missouri Department of Revenue
from the Vendor
list, then Edit
.

On the Agent
tab, mark the Do not calculate Missouri compensation deduction
checkbox.

Select
Enter
to save your changes.

Opt out for an individual client: method 2

Use Method 2 to opt out of the compensation deduction on payroll checks but still display the deduction on Form MO-941 for the client.

Select Setup
, then Clients
.

Select the appropriate client.

Click the Payroll Taxes
tab.

Select Edit
.

Mark the Do not create tax liabilities
checkbox.

Select Enter
to save your changes.

Internal use only

When an employer's state withholding exceeds certain thresholds, the Missouri Discount rate is reduced. The discount is 2% from $0.00 to $5,000, 1% from $5,001-$10,000 and 0.5% for withholding is in excess of $10,000. For clients converted from CSA, Accounting CS will not recognize the withholding from the converted earnings until liabilities are generated on the converted checks. If a client's withholding has exceeded one of these thresholds but the discount is still calculating at 2%, have the firm generate liabilities on the converted checks in order for Accounting CS to recognize the YTD withholding.

This article applies to:

Product: Accounting CS
State: Missouri
Subject: Payroll checks,Payroll tax forms

Justly Prudent achieves 5 times the ROI with CoCounsel

AI that delivers

Speed meets confidence

Streamlined matter management

Compliance without complexity

CoCounsel Legal

CoCounsel Tax

Global Classification AI

CLEAR Investigate

Tax Quickfinder

Small firms