Set Up a Tips Payroll Field (Manually)

Related topics

Record employee cash tip income during payroll entry

Learn about recording charge tips vs. cash tips (may be optional)

Set up other payroll deductions

Set up an employee

Pay employees

Perform other payroll tasks

Read the employee tips overview

If you selected Yes to recording tips when initially setting up payroll, Sage 50 automatically creates a Tips employee payroll field. If you do not have a Tips payroll field, you can set one up manually.

Create the tips payroll field

  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 Tips as the name of the new payroll field.
  4. If tip income is not paid directly to the employee on paychecks, select the Memo check box.

    Memo fields log tips for reporting and tax calculations, but do not post an entry to the general ledger.

  5. Do not select the Calculate (Calc) check box. Employee tip earnings are added manually during payroll entry.

    Now, you must add the Tips field to the taxable income for employee taxes such as: Fed_Income, Soc_Sec, Medicare, and State.

  6. Select Fed_Income (the default Federal Withholding payroll field), or any other tax field for which employee tip earnings are required in computing taxable income.

  7. Click Adjust. Sage 50 displays the Calculate Adjusted Gross window. Make sure the Tips check box is selected, as well as Gross.

    Tips will be added to the gross pay when computing taxable wages. This ensures proper calculation of withholding as well as proper taxable gross reporting on payroll tax forms.

    Note: You must subscribe to a plan that includes payroll for withholdings to be calculated within Sage 50.

  8. Do this for each applicable EE and ER field.

    For example, select Soc_Sec (the default Social Security payroll tax) next. Then, select the Adjust button and add tips to adjusted gross. Continue to do this for each employee payroll tax field and for each employer payroll tax field that needs to be adjusted to include tip income.

  9. Click OK to establish the payroll field.

Update W-2 Form

  1. From the Maintain menu, select Payroll and then Payroll Settings.
  2. In the left navigation area, click on Taxes and then Assign Tax Fields.
  3. Click the W-2 Fields button. Sage 50 displays the Assign Tax Fields for W-2s window.
  4. In the Allocated Tips field, enter or select the Tips payroll field from the list.
  5. Click OK. Then, select Finish to close the Payroll Settings window.