Sage 100 ERP does not support 3rd party sick pay. This is normally where a 3rd party insurance company is responsible for making the payment to the employee. Depending upon the sick pay plan, this information may be required to be reported on the W2. Refer to the IRS publication 15-A to a Tax Advisor. If the user determines that this information is to be reported on W2 form, they must identify which boxes must contain this information. In most instances you will be able to use the following resolution in versions 2017 and prior. (See releated resources for Sage 100 2018 and higher).

1. Open Payroll, Setup, Earnings Code Maintenance
2. Create an Earnings Code for Third Party Sick Pay with a Miscellaneous type, selecting all applicable taxes
3. Click Accept
4. In Payroll, Setup, Deduction Code Maintenance
5. Create a Deduction Code for Third Party Sick Pay with a type of Equal to Earnings Code and selecting the Earnings Code created in step #2. (This will allow the payments to be reflected on the 941 Form and be posted to the Earnings Code to be reflected on the W-2, while not affecting taxes. The taxes will be adjusted later in this process).
6. Click Accept

Enter the Third Party Sick payment(s) as a manual check through Payroll Data Entry:

1. Open Payroll, Main, Payroll Data Entry
2. Select applicable Employee from look up
3. Select the Manual Taxes check box and select No from Print Check drop down list
4. On the Lines tab, use the Earning and Deduction codes created in previous steps above to enter the earnings and deduction for the third party sick pay amount
5. Click the Taxes button, enter 0.00 for all tax amounts because the employee taxes are not withheld by the employer but by the 3rd party company
6. Run Tax Calculation
7. Print all applicable reports and make sure to print the Employers Expense Summary to determine if any Employer taxes are due
8. Update Payroll Check Register

This is a simple example that assumes the 3rd party company withheld applicable employee taxes and by using the 'Fix', the user is increasing the amounts withheld to date for employee taxes. There may be other situations that require a different approach. If your company is responsible for reporting the employee taxes withheld by the third party sick pay company, do the following:

1. Open Payroll, Main, Employee Maintenance, select applicable employee from look up
2. Click Tax Summary button
3. Click Federal button
4. Click the Fix button to manually increase all applicable Federal taxes that the third party withheld from the employees payment
5. Select State Code from look up
6. Click Fix button to manually increase all applicable State taxes that the third party withheld from the employees payment

IMPORTANT NOTE: If you used the "Fix" in Tax Summary to change any tax withheld amounts, you will need to manually change the tax withheld amounts for all applicable employees within the eFiling W2 Preparer grid or use the PR_40 utility to adjust amounts, see related article How to edit PR_40 file

Notes:

• Supervisor Rights on the Sage 100 ERP User ID are required to have access to the Fix button. The Fix button allows entry to the Quarter to Date and Year to Date fields.

To report Third party sick pay on W3:

1. Follow steps in Related Article below, How to print W2/W3 forms
2. In the W-3 Information window, check the Third-party sick pay (Box b)
3. In the Income Tax Withheld (Box 14) field, enter the adjustment amount for the employee share of Social Security and Medicare taxes that were withheld and deposited by your 3rd party sick pay payer with regard to sick pay paid by the third party
   • Note: This amount will be reported on line 8 of the 941 form

   

To report Third party sick pay on 941 form:

1. Follow steps in Related Article below, How to print 941 and Schedule B forms
2. On Line 8, manually enter the amount for the employee share of social security and Medicare taxes that were withheld by your Third-party sick pay payer
   • For more details see the IRS 941 form instructions at http://www.irs.gov/pub/irs-pdf/i941.pdf or ask Tax Advisor