Payroll Status Check

Run the Payroll Status Check Utility first when setting up a new company or converting to the new payroll program.

1. Go to Payroll, Utilities, Payroll Status Check.
2. Select Setup, then Click Run.
3. Drill down on any areas flagged in yellow or red.
4. Address any settings relevant to your locations required taxes.

Tax Profiles

1. Go to Payroll, Setup, Tax Profile Maintenance.
2. Select the Tax Profile to review.
3. Each tax profile must have a resident and work location. Set Tax Location to Both if you share the location.
   • (NR) means non-resident. Enable it only when replacing regular withholding to avoid duplicate taxes.
   • Enable local tax reporting in Payroll Options under the Additional tab when needed.

Company Tax Group Setup

1. Go to Company Tax Group Setup, then select the Federal tax group.
2. Fill in all G/L account fields for the taxes you're using.
3. Go to the Tax Rates tab.
4. Select Federal Unemployment Tax Employer Liability from the Tax column drop-down.
5. Enter the rate and effective date.
6. Repeat the steps for every state where you’ll process payroll.

  NOTE: Company Tax Group Setup stores organization-specific rates like federal unemployment. Most other rates update automatically.

Tax Rules 

Assign Tax Rules

Assign all earnings codes and qualified deductions to a Tax Rule.  The Tax Rule is what instructs the program on tax treatment of the wages and deduction amounts.

1. Go to Payroll, Setup, Earnings Code Maintenance.
2. Make sure you assign a Tax Code for each earning code in use.
3. Repeat this step for all qualified deductions in use (that is, a 401k deduction code).

To determine which Tax Rule to apply, use the Tax Rule Inquiry found in the Payroll, Utilities section.

1. In Library Master, Main, Role Maintenance, enable Payroll, Inquiry tasks under the Tasks tab.
2. Select the Tax Profile you want to review.
3. Review the locations and taxes shown for the selected Tax Profile.
4. Click Tax Rule Filter button on the right to view applicable Tax Rules.

 NOTE: This utility helps you find the correct Tax Rule for wages and deductions. 

Review Tax Rules

1. Select the earning and/or deduction Tax Rule to review.
2. The utility will default to display all Tax Rules available.
3. Select the reset all buttons, then select the specific Tax Rules you want to review.
4. Click OK.

Query online tax engine and review results

1. Click the binoculars icon in the upper right to query the online tax engine.
2. Review the Search Results based on the selected Tax Profile’s locations and enabled taxes.
3. Results show Federal, State, and Local taxable wage categories, depending on what’s enabled.
4. If the Tax Rule doesn’t apply to correct tax treatment.
   • Repeat the steps with a different Tax Rule.
5. Focus on correct tax treatment, not the Tax Rule name.

 NOTE: Sage support can't instruct which specific tax rules to use. 

Understand the tax rule indicators

• Black dot means earnings with this Tax Rule add to taxable wages in that wage bucket.
• The red dot means deductions with this Tax Rule reduce taxable wages in that wage bucket.

Employee Maintenance 

Confirm hire date and employee details

1. Go to Payroll, Main, Employee Maintenance, then select the employee.
2. Make sure you enter the hire date correctly.
   • Missing hire date causes errors during tax calculation.

Check tax settings on the Taxes tab

1. Go to the Taxes tab.
2. Select the correct Filing Status, dependents, and Default Tax Profile.
3. Review the Tax Calc Override setting.
   • You can’t override Federal or State withholding with a fixed amount.
   • This change follows IRS guidelines and W-4 rules.

Test Payroll Entries 

Run a test payroll check

• Run a test payroll entry through tax calculation to confirm settings from steps 1–5.
• Test one factor at a time for accurate results.

Start with regular wages only

• Create a test check with one line of regular wages.
• Compare the results with an online payroll calculator like https://www.paycheckcity.com.

Review tax rule if results don’t match

• If the taxes aren’t correct, check the settings from steps 1–4.
• Start with the Tax Rule in Earnings Code Maintenance.

Test other earnings and deductions

• If taxes match, test other earnings codes one at a time.
• Then test the deduction codes using confirmed earnings.

Understand deduction behavior

• Only qualified deductions affect tax calculation.
• The system applies Standard Deduction types after it calculates taxes.

Confirm results in reports

• Review Payroll Data Entry Audit and Employer’s Expense Summary.
• Make sure employee and employer taxes are correct.