W2 wages and tips are different than ss/medicare wages

[ValueVillage]

I have 1 employee whose W2 wages and tips (box 1) are different from their ss/medicare wages (box 3 & 5). I looked at her last check stub of the year and it is correct.

[Paul Mayer]

When you say differ, less than the SSA Wages? That would mean that they most likely have a deduction like a 401K or something that was marked as exempt from Federal Income Tax in the deduction settings where the 941 Box is checked in the settings.

See the settings (Item 7) on this page of the help file:

http://zpay.com/pw-online-help/DeductionsSettingsTab.htm?ms=AAAA&st=MA%3D%3D&sct=MzYz&mw=MjQw

[TheBigZ]

I'll chime in on this thread, as it was something I wanted to bring up anyway.

I've seen this scenario happen when I mark an employee as exempt from federal tax. The program doesn't include those wages, in wages. Now I see why it works that way for things that may be supplemental to ordinary pay, but here's how I was thinking about the exempt from federal option (and I'm guessing others are as well).

When an employee fills out a W4, box 7 allows for the option to write the word EXEMPT. A user of the program might then very easily decide to put Y in the exempt from federal tax box. And if they do, 941s, W3s and W2s will then be wrong. Of course the way the program would prefer, is for us to just put in 20 or whatever for number of exemptions. Like I said, I sort of see why the program does what it does, but it's definitely counter-intuitive to the W4 form. Also, while I don't have a way to go back and confirm, I feel like the program didn't used to handle the federal wages that way when you chose exempt... I'm almost certain I marked people exempt in other years, without having problems with the 941s, W3s & W2s. But I'm old & forgetful. ;)

[jcabral]

What you chimed in with may be my problem also. Can you confirm it and recommend a way to rectify? (I'm not an accountant...thank God...and have been using this great program for years without issue)
Facts are this:

In the Employees W4 he claimed 2 allowances and line 7 he said "EXEMPT"
In the Paywindow Employee setup I put in 2 for the "Number of Dependents: Federal" -and- the EXEMPT FROM FEDERAL box I selected YES
Box 1 in the W3 is $10,000 less than Boxes 3 & 5 (his wages were $10,000)
The sum of the wages shown in all 4 quarterlies (Box 1 of 941s) add up to the full amount (the $10,000 is in there)

Is this a program problem? Suggestions?




QUOTE=TheBigZ;11017]I'll chime in on this thread, as it was something I wanted to bring up anyway.

I've seen this scenario happen when I mark an employee as exempt from federal tax. The program doesn't include those wages, in wages. Now I see why it works that way for things that may be supplemental to ordinary pay, but here's how I was thinking about the exempt from federal option (and I'm guessing others are as well).

When an employee fills out a W4, box 7 allows for the option to write the word EXEMPT. A user of the program might then very easily decide to put Y in the exempt from federal tax box. And if they do, 941s, W3s and W2s will then be wrong. Of course the way the program would prefer, is for us to just put in 20 or whatever for number of exemptions. Like I said, I sort of see why the program does what it does, but it's definitely counter-intuitive to the W4 form. Also, while I don't have a way to go back and confirm, I feel like the program didn't used to handle the federal wages that way when you chose exempt... I'm almost certain I marked people exempt in other years, without having problems with the 941s, W3s & W2s. But I'm old & forgetful. ;)[/QUOTE]

[Paul Mayer]

It's not a program problem, if you marked them as exempt from FIT, then they did not have any wages subject to FIT.

Something that was just published by the IRS is:

"New W-4 Required to Continue Withholding Exemption in 2016

Beginning on February 17th, employers must withhold from the pay of any employees who claimed exemption from withholding on their 2015 Form W-4, but who have not submitted a new Form W-4 to continue the exemption in 2016."

So make sure that your employees have declared that they are exempt for this year as if not, then you will need to change that in PayWindow and take out FIT.

[jcabral]

Thank you Mr. President,
So to dummy it down for an engineer, Box 1 of the W3 does not really mean "Wages, tips & other compensation", it really means "Wages, tips & other compensation that are subject to Federal W/H"?

[Paul Mayer]

Correct, Wages tips, etc., Subject to Federal Income Tax.


Thank you Mr. President,
So to dummy it down for an engineer, Box 1 of the W3 does not really mean "Wages, tips & other compensation", it really means "Wages, tips & other compensation that are subject to Federal W/H"?