Pay for 3 months

[Buz]

Hi.

I want to pay an employee for the last part of the year (Oct, Nov and Dec 2008), so that at end of year, the result will be the same as if he were paid for all 12 months. If his salary is $60K, he'd get $5K if he were paid each of 12 months. I've agreed to pay him $15K per month for the last 3 months so that the result is the same.

According to Fed tax tables, tax should be about $10K.
When I enter pay rate of $15K Fed tax is $1,335 in ZPAY; it should be about $2,500
If I use $30K for pay rate, tax is cal'd at $4,537.much closer to what it should be.
If I use $60K, tax is $12,536 which is more than it should be.

Has anybody done something similar, and if so, what's the proper approach?
Thanks,
Buz

[Paul Mayer]

Hi.

I want to pay an employee for the last part of the year (Oct, Nov and Dec 2008), so that at end of year, the result will be the same as if he were paid for all 12 months. If his salary is $60K, he'd get $5K if he were paid each of 12 months. I've agreed to pay him $15K per month for the last 3 months so that the result is the same. But when I try $15K in zPay for Oct (1/4 of $60K), it says Fed tax is $1,335. This is a little less that 1/2 what it should be. Has anybody done something similar, and if so, what's the proper approach?
Thanks,
Buz

First you need to enter in the first three quarters of pay so the program knows what the pay is so far for thresholds on FICA, SUTA, etc.

See the Tutorial at http://zpay.com/help titled "How to enter Year to Date Information" to do this.

Then since you are paying the employee for a quarter of a year in one lump, set the employee to be Quarterly in the Employee settings under the tab named "Pay" so the taxes will be calculated properly.

[Buz]

Thanks for your quick reply.
I pay taxes monthly. That's why I'm looking to pay monthly in this case. Can I still do that?

Meantime, I'll try your suggestion.

Buz

[Paul Mayer]

Thanks for your quick reply.
I pay taxes monthly. That's why I'm looking to pay monthly in this case. Can I still do that?

Meantime, I'll try your suggestion.

Buz

You can always change the pay period afterwards. But if you are paying three months pay in one payment, you want to set that setting to calculate the closest you can. In this case, a Quarter is the setting.

[Buz]

Paul,

So I define the employee as paid quarterly, then create pay records for the 1st 3 quarters. Then pay him for real in the last quarter. I guess I take the ZPAY calcs and multiply/divide so that it works out for the year (he wants 3 checks, one per month, so that the total is as if it were for 12 months). Then divide by three for my monthly tax payments. Is all this correct (a miracle if it is!).
Thanks for your help.
Buz

[Buz]

I understand creating 1st 3 quarter pay records. And it looks like that's the right approach, because the tax looks right. And I can create pay record for 4th qtr, then divide by three for his check. But I need to multiply the tax payment by three, right?

Sorry for all the trouble. :confused:

[Paul Mayer]

Paul,

So I define the employee as paid quarterly, then create pay records for the 1st 3 quarters. Then pay him for real in the last quarter. I guess I take the ZPAY calcs and multiply/divide so that it works out for the year (he wants 3 checks, one per month, so that the total is as if it were for 12 months). Then divide by three for my monthly tax payments. Is all this correct (a miracle if it is!).
Thanks for your help.
Buz

No, you are going to enter the first three quarters in "after-the-fact" so the program has the payroll history of payroll and taxes for the year so far. If you looked at that tutorial, you will overwrite what the computer calculates to match the figures from your year to date payroll.

And only then should you create a payroll going forward to finish the year. The figures you enter MUST match what you've done so far this year by hand.

[Paul Mayer]

I understand creating 1st 3 quarter pay records. And it looks like that's the right approach, because the tax looks right. And I can create pay record for 4th qtr, then divide by three for his check. But I need to multiply the tax payment by three, right?

Sorry for all the trouble. :confused:

You MUST override the figure to MATCH EXACTLY what you've paid and collected in taxes for the year to day already. Since you've been paying and reporting all year so far, you MUST enter exactly YOUR payroll HISTORY without any deviation.

And only when that is done, perform future payrolls with PayWindow.

[Paul Mayer]

Paul, please let me know if my summary is correct:

I create first three qtr pay records so tax calcs come out right, then the "real" one for 4th qtr. I pay my employee by multiplying the 4th qtr NET PAY by 4, then dividing by 3 so that he gets his monthly checks. And I do the same for my monthly 941 tax payments.

Thanks.

No, just follow my instructions, enter year to date to match your current payroll history and then use PayWindow going forward. No special math at all. Enter your history like you saw in the tutorial and then use PayWindow by following the Tutorials on how to pay.

[Buz]

Sorry, I'm not following. I went through the How to Enter Year to Date Information tutorial. I don't understand the override. The window is shown initially with Earnings of $6,000. It then gets overwritten to $61,000. Other amounts are also overwritten. I don't understand why.

I thought I change date to last Mar 30, 2008, then press F6 for the employee and then enter $15K. Fed taxes due are shown as $2,268.50 when I press F6 again. But he hasn't been actually paid for that quarter, nor have taxes been paid.

Nor has he been paid for qtrs 2 and 3 and no taxes have been paid as a result. I want that all to happen in 4th qtr.

I guess I don't understand the override in the tutorial. Can you explain that please?
Thanks.

[Paul Mayer]

Sorry, I'm not following. I went through the How to Enter Year to Date Information tutorial. I don't understand the override. The window is shown initially with Earnings of $6,000. It then gets overwritten to $61,000. Other amounts are also overwritten. I don't understand why.

I thought I change date to last Mar 30, 2008, then press F6 for the employee and then enter $15K. Fed taxes due are shown as $2,268.50 when I press F6 again. But he hasn't been actually paid for that quarter, nor have taxes been paid.

Nor has he been paid for qtrs 2 and 3 and no taxes have been paid as a result. I want that all to happen in 4th qtr.

I guess I don't understand the override in the tutorial. Can you explain that please?
Thanks.

Carefully watch the tutorial. It shows you exactly what to do. Calculate and then type in all of the year to date information overwriting what was calculated and when you have it all typed in, save and close.

The tutorial shows you step by step with example figures typed in replacing the existing information. use the Tab key to move from one filed to the next.

I don't know how to explain it any simpler as the tutorial gives you a visual step by step walk through of the process.

[Buz]

Thanks for all you help, Paul. I finally got it. I develop software in my "day job", and while that can be challenging, I at least know how to navigate because I know the landscape. Things like ZPAY require me to poke around some.

BUz