FICA (SOC, MED, SOC_E, MED_E, and MEDADDL) taxes are set up as self-adjusting taxes. When processing payroll:
- The YTD Subject To (Setup, Employees, Taxes) plus any checks in the new file with subject-to for the tax is multiplied by the Percent (Setup, Taxes, Tax Rates).
- The YTD Tax (Setup, Employees, Taxes) is subtracted from the result to determine if any additional tax needs to be withheld.
Note: These taxes are reported quarterly on the Form 941 which requires the totals to balance.
Determine if there are any invalid checks in the New file:
- From the Payroll Inquiry menu, select Check information, Check activity, New file.
- Review the list of check records for any invalid entries.
- Void and delete any invalid check records. For more information, see How do I void a Payroll check or direct deposit? and How do I delete a check in Payroll?
Determine when the totals went out of balance:
- From the Payroll Reports menu, select Pay Period Processing, Deposit Summary.
- Enter the check dates for the first quarter (1/31 - 3/31).
- Click Ranges and select the applicable employee.
- Multiply the Subject-to amount by the tax rate for the tax that's out of balance and compare to the Contribution amount.
- Repeat steps 1-4 for each quarter to determine when the tax totals got out of balance.
Option A - The totals are out of balance in the current quarter:
Let the self-adjusting tax calculate the amount. To confirm the amount that calculates, manually perform the calculations using the year to date totals stored on the PR Employee Master tax record plus the amount of the current check.
Option B - The totals are out of balance in a prior quarter:
If the YTD Tax amount does not match the YTD Subject To X the tax rate in a prior quarter or year, correction checks may need to be entered and posted to correct the prior quarter tax totals. See How do I correct taxes issued to the wrong state, local or province on a printed or posted check?