The Payroll CS application ships with current federal payroll tax information. From time to time you may need to update information for the current payroll year to reflect changes in the tax laws.
Choose Setup menu > System Configuration > Payroll Tax Information > Federal to update any of the following information:
- FICA and FUTA rates and wage limits
- Federal withholding allowance
- Federal minimum wage or alternate minimum wage amount
- EIC advance income limit
- Federal garnishment threshold
- Federal withholding tax tables
- EIC advance payment tables
- Federal levy categories and amounts
- Nonresident alien additional amounts
Fields & buttons
Enter the effective date for any changes that you make to the current federal tax information in this dialog (or in the Federal Tax Tables dialog), based on figures from the current Circular E. Payroll CS automatically checks this date during payroll check processing.
- If the period-end date is prior to this date, Payroll CS uses the federal tax values that were on file before your most recent changes were made.
- If the period-end date is on or after this date, Payroll CS uses the federal tax values currently on file, including your most recent changes.
Note: This field is not editable if you are viewing prior-period tax information. To view and edit current tax information, clear the Display prior period's tax information checkbox in the System tab of the Setup > User Preferences dialog.
Opens a dialog where you may maintain specify retirement plan limits and catch-up limits.
Opens a dialog where you may maintain federal withholding tables for individuals.
Wage limit. Enter the maximum dollar amount for wages on which FICA - Social Security can be withheld. When an employee reaches this amount in annual wages, the application automatically stops calculating the withholding.
Employer rate. Enter the percentage of FICA - Social Security taxable wages that are to be expensed to the employer. (For example, enter 6.2000.)
Employee rate. Enter the percentage of FICA - Social Security taxable wages that are to be withheld from the employee's paycheck. (For example, enter 6.2000.)
Wage limit. Enter the maximum dollar amount for wages on which FICA - Medicare can be withheld. When an employee reaches this amount in annual wages, the application automatically stops calculating the withholding.
Employer rate. Enter the percentage of FICA - Medicare taxable wages that are to be expensed to the employer. (For example, enter 1.4500.)
Employee rate. Enter the percentage of FICA - Medicare taxable wages that are to be withheld from the employee's paycheck. (For example, enter
1.4500.)
Wage limit. Enter the maximum dollar amount for wages on which FUTA can be charged. When an employee reaches this amount in annual wages, the application automatically stops calculating the FUTA expense.
Tax rate. Enter the net FUTA tax rate for the current year. (For example, enter 0.8000.)
The following fields are used by Payroll CS.
Withholding allowance. Enter the annualized dollar amount for the current federal withholding allowance. Payroll CS uses this amount when calculating the federal withholding amount on paychecks.
Federal minimum wage. Enter the current federal minimum wage amount. Payroll CS uses this amount to calculate tip credit when no client-specific minimum wage has been entered in the File > Client Properties dialog.
Federal alternate minimum wage. Enter the current alternate federal minimum wage amount. Payroll CS uses this amount in lieu of the federal minimum wage if the Use Alternate Minimum Wage checkbox has been selected for the employee (on the Personal > W-2 tab of the Setup > Employees window) but no client-specific minimum wage has been entered in the File > Client Properties dialog.
EIC advance income limit. Enter the annualized dollar amount for the EIC advance income limit. When the employee reaches this amount in annual wages, during payroll check entry the application prompts to verify whether the calculation should occur.
Garnishment threshold. Enter the threshold dollar amount for federal garnishment of wages as an annualized amount.
Example: If the current formula for calculating a garnishment of weekly wages is the lesser of (a) a percentage of disposable income after all taxes, or (b) the amount of weekly disposable wages over 30 x the federal minimum wage, and if the current federal minimum wage is $5.15, you would enter 8034.00 (30 x 5.15 x 52 weeks).
Payroll CS automatically calculates a federal garnishment amount based on the current formula and deducts the amount appropriate for the employee's current paycheck.
Nonresident alien additional amt. Enter the annualized dollar amount for non-resident alien status employees. This amount is used for the federal withholding calculation only and will display in the Tax Calculation Diagnostics dialog for the employees' payroll checks.
Use this grid to globally specify the federal levy categories and their amounts.
Related topics
Updating payroll tax information
Auto-update and reminder options for federal and state tax tables
Setting up federal levy deductions for an employee
If you update any payroll tax information in the current mode, be sure to update the Effective date field. When you click the Done button, Payroll CS first copies the original information to a Previous version of the tax setup dialogs and then saves the updated information in the current version of these dialogs. During payroll check entry, Payroll CS does the following:
- If the period-end date is prior to this date, the application uses the tax values that were on file before your most recent changes were made.
- If the period-end date is on or after this date, the application uses the tax values currently on file, including your most recent changes.