Taxable Pay does not accumulate correctly for Taxable Pay Items when the Withhold Federal Tax box is not checked
When the following two conditions are present in your employee record, the taxable pay will not accumulate correctly:
- Withhold Federal Tax is not checked
- The employee has a Pay Item coded as Taxable
When the Withhold Federal Tax is not checked, the wages will not populate the PayrollWages table. The Taxable wage reports pull the value from the PayrollWages table so those reports will be incorrect.
This normally happens to Clergy when, for some reason, Taxable was used instead of Clergy on a Pay Item, or if a non-clergy claims exempt.
The following steps offer the best solution to get the wages to accumulate correctly and still have no taxes taken:
This only works if done prior to any payroll being run for the employee with these caveats. If you update the settings after you have already processed payroll for this individual, you will need to update the information on the W2 at the end of the year. Changes to the employee record will not change reporting for checks that were processed prior to the change.
- Go to the employee's Tax Data tab.
- Mark the Withhold Federal Tax box (and State and Local if those accumulations are needed).
- Put 0.00 in the override field.
- Click Submit.