Set Up Federal Earned Income Credit (FEIC)

1. From the Maintain menu, select Default Information, and choose Employees. Sage 50 displays the Employee Defaults window.
2. Select the Employee Fields tab.
3. On a blank line, enter FEIC as the name of the new payroll field.

4. Enter or select a G/L account (liability) associated with the credit. To display a list of existing accounts, type ? in this field or select the Lookup button. To add a new account, type + or double-click the field, which displays the Maintain Chart of Accounts window.

5. Select the Calculate checkbox.
6. If you subscribe to a plan, select an FEIC formula. If not, type FEIC in the Formula column.
7. Click OK to establish the payroll field.
8. Now we'll assign the field to the correct box on the W-2 form.
9. Select Maintain, Payroll, Payroll Settings.
10. In the left-hand navigation area, click on Taxes, then Assign Tax Fields.
11. Click on the W-2 Fields button. Sage 50 displays the Assign Tax Fields for W-2s window.
12. For the Advanced EIC payment field (box 9), enter or select the FEIC payroll field.
13. Click OK. Then, select Finish to close the Payroll Settings wizard.

Typically earned income credit only applies to one or a few employees. You should only apply the formula to them.

Before You Begin This Step

• If you subscribe to a plan that includes payroll you receive multiple FEIC calculations based on marital status, working status of each spouse, and who files the W-5 form. Before you begin, go to Sage-maintained Payroll Formulas; read the instructions in the Formula box of the tax formula to make sure you understand which calculation to select for each employee's situation.
• If you do not subscribe to a plan,you can enter the amount for the FEIC. You must calculate this yourself and make sure that it is correct on the paychecks when you create them.

1. From the Maintain menu, select Employees/Sales Reps. Sage 50 displays the Maintain Employees/Sales Reps window.
2. Select an employee who is eligible for earned income credit. To display a list of existing employees, type ? in the Employee ID field, or select the Lookup button.
3. Select the Employee Fields tab.
4. For the FEIC payroll field, clear the Use Defaults check box.
5. Select the Calculated check box, then select the appropriate FEIC tax formula. (See "Before You Begin" above.)
6. Select a general ledger account for the field. This would normally be a liability account.
7. In the Formula column, select the appropriate supplied formula (if you subscribe to the tax service). Or, select the formula you set up for FEIC for this employee's filing status.
8. Select the Adjust button to set the Adjusted Gross for this field. Sage 50 displays the Calculate Adjusted Gross window.
9. In most cases, Gross is the only payroll field necessary for calculating Earned Income Credit. Check with your accountant if you are not sure about your situation.
10. Make sure the Gross check box is selected, then click OK.

11. Save the employee record, and close the window.

    Repeat this procedure for each employee who qualifies for the Federal Earned Income Credit program.