Federal Tax Withheld amounts are incorrect

[manolasak]

I just converted from PC9Plus to PC11. The payroll changes are extensive. I've worked my way through most of them but I keep getting incorrect values for Federal income tax withheld on members paychecks.
I've verified the tax tables for Single and Married are correct. I've set the withholding allowance to $3650 for 2010 and set the standard deductions to $12,400 for Married and $5700 for Single (although I don't know why we need those).

When calculating paychecks,the withholding amount is different than it was with PC(. Here are some examples:

Taxable pay Status Exemptions PC11 Tax PC9 Tax (correct amount)
1855.00 S 0 178 267
2120.00 M 0 87 210
1500.00 M 2 1 71
910.00 M 0 0 34

I use another program to verify PC's tax calculations so I know the PC9 numbers have been right for Years.

I can manually put in the correct numbers for PC11 staff positions.

But with hourly workers, PC 11 will continue to calculate incorrect numbers.

Can you help me with this problem? What am I overlooking?

Ted

[Jeff]

The federal tax table does not have a standard deduction amount. If you have a prompt to enter a standard deduction amount, the tax table was not set to federal withholding during the payroll conversion assistant. (you have to scroll up to get to the federal tax tables from the generic tax table.) At this point you will need to delete the tax table and then add the federal tax table back in again.

[manolasak]

Thanks for that information.

I was able to recreate the tax tables (the standard deduction is gone) but the numbers still didn't come out right. And I double checked the values and percentages from the 2010 Pub 15.

Single w/1 pay 1855 shows 236 when it should be 276
Married w/2 pay 1500 shows 56 when it should be 71
Married w/0 pay 2120 shows 165 when it should be 210
Married w/0 pay 975 shows 34 when it should be 40

Anthing else?


Thanks,
Ted

[NeilZ]

Thanks for that information.

I was able to recreate the tax tables (the standard deduction is gone) but the numbers still didn't come out right. And I double checked the values and percentages from the 2010 Pub 15.

Single w/1 pay 1855 shows 236 when it should be 276
Married w/2 pay 1500 shows 56 when it should be 71
Married w/0 pay 2120 shows 165 when it should be 210
Married w/0 pay 975 shows 34 when it should be 40

Anthing else?


Thanks,
Ted

Just a quick check, you are using the ANNUAL tax tables from Pub 15, right ??
Your setups should look like this:
Both the Married and Single Fed Tax should have the same standard deduction:

taxtable1.jpg

The married table should look like this:

taxtable2.jpg

And the single table like this:

taxtable3.jpg

[manolasak]

I don't know if it is too late to come back to my original question. But I think I found out the answer.

The difference in tax withheld calculations comes only on employees who have retirement plans.

I think the reason is that all of our employees, except one, have elected Roth 403b plans versus the traditional 403b. With the Roth, there is no reduction in the taxable amount, while with the traditional there is a reduction in taxable amount. Even though I have all the retirement deductions coded as Roth (BB) versus Traditional (E) there is no difference in the deduction.

I think there is a programming error that doesn't take into account the non deductibility of the Roth 403B.

Can someone check this out or should I send it directly to the programmers?

Thanks,
Ted Manolas

[NeilZ]

The programmers will read it here so there's really no need to send anything else.

That said, it does appear that setting up the Roth IRA (BB) code as a Type of Other Deduction and a Tax Option of Retirement Deduction is being treated as a pre-tax deduction.

I just tested and added a Roth IRA deduction of $25 to my test employee's payroll. The income tax withholding dropped by about $10 or so.

Here's how its setup:

deduction.jpg

However, setting it up using the Tax Option of <more options displays a list of all the taxes that any deduction can be used to reduce the taxable amount. By not selected any of the list, and leaving the Box 12 at BB, the Withholding is not changed.

deduct2.jpg

This is possibly the way you should go.

[manolasak]

Thanks Neil,

That worked great.

Ted

[NeilZ]

Thanks Neil,

That worked great.

Ted

Outstanding, glad to hear it worked !!