To include in last Payroll of the year

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 not included in Payroll but before running W2s

If the 'Non-cash Taxable Benefit' pay type was not used during payroll processing, the Taxable Benefits (NC3) payment amount must be entered under the CORE/ADJUSTMENT JOURNAL using the Taxable Benefits Type in order for the Taxable Benefits (NC3) amount to show correctly on the W2 form.  This amount would only be entered under the 001 Federal Payroll Item. This will update the total and taxable gross totals on the Federal, State, City (If applicable) OSDI and Medicare records during W2 Report. No manual adjustments are needed for the Gross and Taxable Gross amounts. 

1. Go to Core>Adjustments.
2. Click Create.
3. Enter the Employee, Payroll item 001, Type of Taxable Benefits, a Transaction Date, Amount equaling the Taxable Benefit and a Description for future reference.
4. Click Save

Effects on Quarter Report: None

If Medicare Paid by Employee and Board, the Medicare withholding must be paid.  Create adjustments for the Medicare payroll item(s). (Board will need to pay for both Employee and Employer portion of Medicare.  If the district chooses, the employee can reimburse the district.)

• If the employee is responsible for paying their portion of Medicare, the following adjustments will need to be created:
  • Go to Core>Adjustments.  
  • Click Create.
  • Enter the Employee, Payroll Item 692, Type of Amount Withheld, a Transaction Date, Amount equaling the calculated Medicare amount, and a Description for future reference.
  • Click Save.
  • Click Create.
  • Enter the Employee, Payroll Item 692, Type of Board's Amount of payroll item, a Transaction Date, Amount equaling the calculated Medicare amount, and a Description for future reference.
  • Click Save.

Example:

Taxable Benefit cost is $100.00.  Medicare Amount would calculate as $100.00 x .0145 = $1.45.  Adjustments would need to be posted as follows:

• $1.45 Amount Withheld for 692
• $1.45 Board's Amount of payroll item for 692

This amount will affect the Quarter report:

• Deductions Items Summary, 692-Employee Contruction *TD Totals for Employee portion only x 1
• Form 941 QTD Employees' Medicare Contributions x 1 and Employers' Medicare Contributions x 1
• Form 941 Line 13) Federal Withholding Deposits x 2

5.  If the Medicare is fully board paid (referred to as Medicare Pickup), adjustments will need to be created.  (Board will need to pay for both Employee and Employer portion of Medicare.) 

• Go to Core>Adjustments.  
• Click Create.
• Enter the Employee, Payroll Item 692, Type of Board's Pickup Amount of Payroll Item, a Transaction Date, Enter the Amount of the board pickup, and a Description for future reference.
• Click Save.
• Click Create.
• Enter the Employee, Payroll Item 692, Type of Applicable Gross, a Transaction Date, Enter the Amount of the Taxable Benefit, and a Description for future reference.
• Click Create.
• Click Save.
• Enter the Employee, Payroll Item 692, Type of Board's Amount of payroll item, a Transaction Date, Amount equaling the calculated Medicare amount, and a Description for future reference.
• Click Save.

Taxable Benefit cost is $100.00.

$100.00 cost/ 98.55% = $101.47 Applicable Gross

$101.47 x .029 (.0145 x 2) = $2.94 Medicare Pickup Amounts

$1.47 for each the Employee (being paid by the board as pickup) and Employer amount. 

$101.47 - $100.00 = $1.47 Applicable Gross Adjustment

$1.47 Is the amount of the Board Pickup Amount of the Payroll Item.  This will update both Medicare Pickup for $1.47 and Medicare for $1.47 on the Employee's W2.

$1.47 Is the amount of Board's Amount of payroll item.  This will update the 941 Quarter report 'QTD Employer's Medicare Contribution.' 

$1.47 Is the amount of Applicable Gross. This will update the employee's W2 Taxable Gross for Medicare.

Adjustment records that need to be created:

 This amount will only affect these lines on the Quarter Report:

• Deductions Items Summary 692-Employee Contribution *TD Taxable x 1
• Deductions Items Summary 692-Employer Pickup *TD Totals x 1
• Form 941 Line 2) QTD Taxable Wages x 1
• Form 941 QTD Employees' Medicare Contributions x 1
• Form 941 QTD Employer's Medicare Contributions x 1
• Form 941 'Includes board paid Medicare/FICA' and 'Picked up by board' amount x 1
• Form 941 Line 13) Federal Withholding Deposits x 2