Using the PAYROLL/PAYROLL PAYMENTS - CURRENT or PAYROLL/PAYMENTS-FUTURE program, the amount should be entered using a pay type of Non-Cash Taxable Benefits Pay Type (NC3). This pay type represents one kind of non-cash earnings for the employee. This amount is taxed and is included as taxable wages but does not increase the employee's check in any fashion.
Federal, Ohio, or OSDI tax amounts will be calculated. All of these will be treated according to the federal rules. The software provides the ability to withhold city tax on non-cash earnings. This can be activated by checking the "Tax Non Cash Earn" field on the city tax record in the CORE/PAYROLL ITEM CONFIGURATION program.
Complete the payroll.
The non-cash earnings amount will not be included in the gross pay amount, nor in the gross totals found on Pay Report or REPORTS/PAY AMOUNT SUMMARY REPORT OPTIONS. The Pay Report will provide a total figure of all non-cash earnings in the Pay Type Totals section. This extra total will help in balancing purposes.
If the Non-Cash Taxable Benefit Pay Type was NOT USED prior to the last pay of the calendar year, the Taxable Benefits (NC3) payment amount must be entered under the CORE/ADJUSTMENT JOURNAL in order for the Non-Cash Taxable Benefit amount to show correctly on the W2 form and to ensure that the Quarter balances. The W2 Report and Submissions will automatically adjust the Federal, State, City (If applicable), Medicare and OSDI gross and taxable gross amounts. The software provides the ability to withhold city tax on non-cash earnings. This can be activated by checking the "Tax Non Cash Earn" field on the city tax record in the CORE/PAYROLL ITEM CONFIGURATION program.
Medicare Total and Taxable Amounts will automatically be increased by the Taxable Benefit Amount so Medicare tax will need to be recorded and paid. If the Medicare withholding is paid by the employee (1.45%) and employer (1.45%), adjustments must be made to the Amount Withheld and Board Amount of Payroll Item. If Medicare is fully board paid (Pickup), then an Adjustment of (1.45%) should be made to the 'Board Pickup Amount of Payroll Item'. This will update BOTH Medicare pickup and Medicare on the Employee's W2.