Withholding information identifies how the employee will be taxed during payroll entry. The employee's filing status and withholding amounts are maintained for Federal, State and Local payroll fields. This information can be obtained from the employee's Federal W-4 form and other withholding records. You can establish the percentage of gross pay that the employee wants to contribute to a 401(k) plan, if appropriate.
Basically, there are two steps for setting up employees' payroll withholding.
- Set up taxes and benefits in Payroll Settings. This will create the accounts and calculations to withhold money for these things. These accounts and calculations will appear on the Employee Fields tab in Maintain Employees.
- Enter the information necessary to withhold the correct amount for taxes and benefits for each employee in Maintain Employees on the Withholding Info tab.
To enter information about the employee's withholding information (federal and state filing statuses), click the Withholding Info tab in the Maintain Employees/Sales Reps window.
The fields in the grid are listed below. Click a field name to see information about that field.
Select a valid filing status from the drop-down list for the Federal, State, and Local
payroll fields. For the federal filing status, select either Single or Married
This identifies the state and local region where the employee resides; these values determine which formula is used during payroll entry. The State/Locality values will print on W-2 forms.
The state defaults to the state set up in Payroll Settings and the locality comes from the General Tab in Employee Defaults. You can select a different state or enter a new locality for this employee if necessary.
State Payroll Field: Enter or select the two-character state abbreviation from the drop-down list here. Use the standard U.S. state abbreviations, District of Columbia (DC), Puerto Rico (PR), and U.S. Virgin Islands (VI).
Local Payroll Field: Enter or select the appropriate locality code from the drop-down list here. This could be a city or county that requires a local tax. You can enter up to eight characters. Refer to the Sage-maintained formulas for valid locality codes.
Note: You must subscribe to a plan that includes payroll for payroll formulas to be used in Sage 50 and to be able to print W-2 forms from within Sage 50. If you don't subscribe, this information will be used for record keeping purposes and will be available if you sign up at a later time.
This field is only available for employees who were hired as of 2020. Enter the withholding amount the employee is claiming for eligible dependents.
This field is only available for employees who were hired as of 2020. Enter the withholding amount the employee is claiming for additional income that will not have withholding.
Note: This additional income should not be for employment.
This field is only available for employees who were hired as of 2020. Enter the withholding amount the employee is claiming for deductions.
Enter any additional money that should be withheld from this employee for the tax shown in the Payroll Field Name column.
These identify the standard Federal, State, Local, and 401(k)% payroll fields for which conditions unique to the employee must be set up. You cannot change the names of these fields.
(Optional) Special 1, Special 2, Special 3, Special 4, and Special 5 payroll fields allow you to customize payroll tax formulas, if necessary.
Enter the percentage of the employee's gross pay that should be withheld for the retirement plan listed in the Payroll Field Name column.
Important! You must set up the retirement plan in Payroll Settings for money to be withheld for this plan. Even if you enter a percent here, nothing will be withheld if the retirement plan has not been set up.
Check this box to indicate that the employee is in a 401K or other retirement plan. This box replaced the Pension and Deferred boxes on the W-2.
Specify if this employee is eligible to make catch-up contributions for the retirement plan shown in the Payroll Field Name column.
- If this employee is eligible, select Yes to allow an additional amount to be withheld for this retirement plan for this employee.
- If this employee is not eligible, select No.
If this employee is participating in an FSA plan, enter the amount to be withheld from the employee's check for the FSA plan shown in the Payroll Field Name column. This is the amount that should be withheld per paycheck, not the annual amount.
Important! You must set up the FSA plan in Payroll Settings for money to be withheld for this plan. Even if you enter an amount here, nothing will be withheld if the FSA plan has not been set up.
Check this box if the employee qualifies as an employee by statute based on IRS guidelines. Statutory employees may be subject to social security, Medicare, and FUTA taxes in certain conditions.
Four categories of workers who are independent contractors under common law are treated by statute as employees.
- A driver who distributes beverages (other than milk), meat, vegetable, fruit, or bakery products; or one who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission.
- A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company.
- An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done.
- A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. The goods sold must be merchandise for resale or supplies for use in the buyer's business operation. The work performed for you must be the salesperson's principal business activity.