recording taxable benefit wages for gp...

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Recording Taxable Benefit Wages for Dynamics GP

CONTENTS

Recording Taxable Benefit Wages for Dynamics GP ................................................................................................. 1

OVERVIEW ........................................................................................................................................................................ 1

TYPES OF TAXABLE BENEFITS ..................................................................................................................................... 2

PAYROLL BENEFIT CODES ............................................................................................................................................ 2

HR MODULE ..................................................................................................................................................................... 2

GL POSTING ..................................................................................................................................................................... 2

TAXABLE BENEFIT EXAMPLE 1 .................................................................................................................................... 3



SETTING UP TAXABLE BENEFIT CODES ..................................................................................................................... 5

RECORDING A TRANSACTION .................................................................................................................................. 11

OVERVIEW

The purpose of these instructions is to provide examples of types of taxable benefits that may need to be

recorded in GP, where this needs to be recorded in GP in both the payroll and HR modules, if applicable, as

well as information on payroll posting set up. Two examples of taxable benefits are provided, as well as step by

step instructions on setting up taxable benefit codes and recording a transaction.

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TYPES OF TAXABLE BENEFITS

Taxable benefits include items such as 457 contributions, life Insurance premiums for over $50,000 and auto

allowance.

PAYROLL BENEFIT CODES

If employer needs to record taxable income to the employee (but not give the employee the money in their net

pay) we would set this up a payroll Benefit code.

HR MODULE

If the client is using HR also, please set this up as a HR Miscellaneous type of code, with just an employer share.

GL POSTING

Usually, the payroll posting accounts for these codes would be a DR and CR to the same account so no effect

on GL. Find the code to set posting accounts for in >Administration >Setup >Posting >Payroll Accounts, Type

= Taxable Benefit Expense (DR) and Taxable Benefit Payable (CR).

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TAXABLE BENEFIT EXAMPLE 1

DESCRIPTION

Employer is providing the 457 contribution on behalf of the employee, and they want employee to

pay the employee’s share of FICA.

KEY STEPS

1. Set the code up as a Benefit code in >HR & Payroll >Setup >Payroll >Benefits (or if using HR,

start in >Setup >Human Resources >Benefits & Deductions >Miscellaneous, and mark to

include the employer side, and unmark the employee side.

2. On the payroll Benefit Setup window:

a. Mark the appropriate subject to tax boxes

b. Fill in the W2 Box # and label, if appropriate

c. If it is basically used as a one-time entry per year type of code, set it as “Transaction

Required”

3. Assign the code to the employee.

4. In Payroll transaction entry window, set up a new batch and key a record for the Benefit and

amount.

5. Include the benefit transaction batch when building checks for the next payroll. (Do this on the

last payroll of the year or any time prior to the last payroll of the year.) This will deduct the

employee’s share of FICA, and other appropriate taxes from the net pay on the employee’s

check.

� See notes in screenshot steps below.

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DESCRIPTION

Employer provides a vehicle to the employee, the value is taxable income to the employee and the

employer would like to pay for the employee’s share of FICA. Again, the employer isn’t giving

money to the employee, so we don’t want to add this to the net check. We are just recording that the

employer has provided value that needs to be included in taxable wages, AND the employer wants to

pay for the employee’s share of FICA. Technically, the amount of taxable wages should be a “Grossed

Up” dollar amount, to record that the employer also provided the value of the taxes in addition to the

vehicle allowance value.

KEY STEPS

1. Set this up as a benefit code, and complete steps as in Example 1.

2. Instead of running a transaction through the payroll transaction entry and including on a payroll

check, record this as a manual check transaction.

o Use Manual Check, Beginning Balance type, so that it doesn’t hit Bank Rec.

o Be sure to hit all the appropriate taxable wage fields. For every tax that the code is

SUBJECT to, enter a transaction for that tax type and enter the Taxable Wages

amount, even if the Amount field (for tax withholding) is $0.00. This is the #1 thing

missed on manual checks.

o NOTE: You typically need to enter transactions for taxable wages for Federal Tax,

State Tax, FICAMED, and FICASS. On the FICASS and FICAMED, be sure to

complete both the employee and employer share of the tax amount.

o The beginning balance type of manual check does not create a GL Journal entry.

You need to make the GL Entry manually in GL. Generally the entry looks

something like this:

o DR Payroll Tax Expense (employer Share FICASS & FICAMED)

o DR Payroll Tax Expense (employee Share FICASS & FICAMED)

o CR Payroll Taxes Payable (Employee + Employer share of

FICASS/FICAMED)

o See notes in screenshot steps below.

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DESCRIPTION

Employer needs to record taxable benefit wages for the employee, but the employee has already been

terminated and/or has already received their last payroll check for this year.

KEY STEPS

1. Decide whether employer will cover the employee’s share of FICA.

a. If yes, use Example 2 instructions.

b. If no, the instructions are very similar to Example 2, with one small change. When

recording the Manual Check-Beginning Balance Adjustment, the transactions for FICAS

and FICAM should use the “Uncollected” options to record the employee’s share of

FICASS and FICAM due. (Add transactions for these in addition to the regular FICASS

and FICAM transactions.) See notes in screenshot steps.

SETTING UP TAXABLE BENEFIT CODES

NAMING THE CODE

A hint about helping clients set up Taxable Benefit codes – name the code with maybe a beginning

letter like ‘X’, so there is a visual indicator that this is a taxable benefit code, and it doesn’t mix in with all

their other Benefit Codes alphabetically, where it might be accidentally used.

STEP BY STEP

1. Set up the Benefit Code (HR & Payroll Navigation >Setup >Human Resources >Benefits and

Deductions >Miscellaneous Benefits)

2. Unmark Employee side

3. Enter $.01 in Benefit Tier Single Amount, to trigger this to save to Payroll.

4. Click Save.

5. Choose Yes to integrate to Payroll.

6. On Payroll > Benefit Setup window, mark the appropriate tax boxes.

7. Complete the W2 box number and label, if required.

8. Click Save. You will return to the HR Miscellaneous Benefits Setup window, which you can close

now.

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9. Assign the code to the employee. >HR & Payroll >Cards >Human Resources >Employee –

Benefits >Miscellaneous. Click save.

10. Choose yes to integrate to payroll.

11. Choose default, to get correct tax settings from setup level.

12. Mark the transaction required checkbox.

13. Click save on the Employee Benefit Maintenance window. Then you are back to the HR

Miscellaneous Enrollment window, which you can close now.

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STEPS 1 - 4

STEP 5

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STEPS 6-8

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STEP 9

STEP 10

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STEP 11

STEPS 12 - 13

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RECORDING A TRANSACTION

STEP BY STEP

1. If the employee will pay the employee share of FICASS & FICAMED, enter a transaction in

the payroll transaction entry window.

2. In the build checks window, be sure to select to include this batch with the next check run.

� Note- employees subject to the taxable wages need to be included in the check run

� If the employer will pay the employee share of FICASS & FICAMED, enter a

transaction in the payroll manual check window.

3. Enter a transaction for Federal Taxable Wages and save the transaction.

4. Enter a transaction for FICASS and save the transaction.

5. Enter a transaction for FICAMED and save the transaction.

6. Enter a transaction for state. Use the state assigned to the employee. The net amount is a

negative number, for the amount of FICASS + FICAMED employee share. Save and close this

window.

7. Back on the payroll manual check adjustment window, save the adjustment.

8. Then print an edit list. On the far right side, verify you see taxable wages for all taxes the

code is subject to. Be sure posting date is for the correct YEAR. If the edit list looks ok, post

the batch. >Transactions >Payroll >Batches. This batch will NOT post to General Ledger or

Bank Rec.

9. Enter a manual GL journal entry.

STEP 1 – IF EMPLOYEE IS PAYING THEIR OWN SHARE OF FICA TAXES, DO THIS

STEP ONLY, then include this batch when Building/Calculating the payrun.

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STEP 1 – IF EMPLOYER IS COVERING THE EMPLOYEE’S FICA TAXES, OR IF LAST

CHECK OF THE YEAR HAS ALREADY BEEN PROCESSED FOR THE EMPLOYEE. DO

STEPS 1-9.

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STEP 2

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STEP 3

IMPORTANT Note 1: If employee has been termed and employer is not covering employee’s share of

FICA, Amount on this transaction should be $0.00, but fill in the Taxable Wage and EFIC Amount for

employer share. Add an additional transaction for Uncollected FICA Soc Sec Tax.

IMPORTANT Note 2: If employee is over the FICASS max for this year, skip this step completely.

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STEP 4

IMPORTANT Note 1: If employee has been termed and employer is not covering employee’s share of

FICA, Amount on this transaction should be $0.00, but fill in the Taxable Wage and EFIC Amount for

employer share. Add an additional transaction for Uncollected FICA Medicare Tax.

IMPORTANT Note 2: If employee is over $200,000 FICAM wages for this year, use the adjusted tax

amount for this step.

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STEP 5

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STEP 6

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STEP 7

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STEP 8

STEP 9

A Beginning Balance type of Manual Check does not create a journal entry. Record a journal

entry in the General Ledger to account for the Employer and Employee tax liability, and

Employer Tax expense.

recording taxable benefit wages for gp...

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