Solution Properties
Solution ID:
223924250031636
Last Modified Date:
Tue Jul 26 11:50:02 UTC 2022
Taxonomy Path:
Category//Transactions//Corrections
Author:
LegacyAuthorUS
Can I make any tax self-adjusting?
Description

What the formula can do

  • Formula calculates Total subject-to this year x Rate on the tax setup - Taxes taken this year to generate the tax amount missing so far this year
  • Adjusts the Federal tax FUTA_E on each check to catch the Tax amount up to the current expected year to date amount
  • Stops tax from calculating when YTD Tax exceeds the rate
  • Taxes calculated take the full amount of missing tax when ran (this can result in a significant amount of tax withheld on a check)

What the formula can't do

  • Correct taxes that use Tax Tables
  • Reduce tax already taken, because calculated taxes have a minimum value of 0 (can't create negative amounts on checks)
  • Correct tax in period where tax was initially incorrect
  • Gradually correct tax
  • Adjust taxes on employees who have reached or exceeded the limit (adjust these manually through Enter Checks)

Warning

Consult your tax accountant or tax attorney to assist in determining if you want to alter a tax to self-adjust. Incorrect setup of a self-adjusting tax can cause the software to withhold incorrect amounts. This can result in wrong amounts paid to the tax authorities, which may result in fines.

Tax updates provided by Sage may not correctly update taxes set up to self-adjust with this method. You’ll need to monitor and manage these tax updates in the future.

If there’s more than one check in the new.prt for an employee, taxes may calculate incorrectly.

Cause
Resolution

Create the formulas

These formulas are provided as an example. Adjust the tax level and tax ID as needed. Use these steps to create a formula.

 

Transfer tax fields

To see the transfer tax fields, go to Setup, Employee, Tax, and scroll to the end of the table.

  • If you use transfer tax fields, create the formulas in rows 1-3 of the table
  • If you don't use transfer tax fields, create the formula in row 4 of the table

 

Formulas

These formulas use the percentage from the tax ID found under Setup, Taxes, Tax Rates.

Formula ID Formula Notes
PRFUTA_E_YTDSUBJ Lookup (YTD Subject-to [PR Employee Tax], Employee [PR Check], 1, "FUTA_E") + Lookup (Transfer Subj-to [PR Employee Tax], Employee [PR Check], 1, "FUTA_E")
  • This formula retrieves the year-to-date subject-to amount
  • In this example, "FUTA_E" is the tax ID for the tax that will self-adjust
  • The 1 in the formula represents the tax level (1 = Federal, 2 = State, 3 = City)
PRFUTA_E_YTDTAX Lookup (YTD Tax [PR Employee Tax], Employee [PR Check], 1, "FUTA_E") + Lookup (Transfer Tax [PR Employee Tax], Employee [PR Check], 1, "FUTA_E")
  • This formula retrieves the year-to-date tax paid amount
  • In this example, "FUTA_E" is the tax ID for the tax that will self-adjust
  • The 1 in the formula represents the tax level (1 = Federal, 2 = State, 3 = City)
PRFUTA_E PRFUTA_E_YTDSUBJ [Public Formula] * Lookup (Percent [PR Tax], "FUTA_E") - PRFUTA_E_YTDTAX [Public Formula]
  • This is the formula that actually calculates the tax
  • This formula uses the amounts calculated by the other two formulas
  • This formula changes the rate to what is specified in Setup, Taxes, Tax Rates and self-adjusts back to the beginning of the year
PRFUTA_E Lookup (YTD Subject-to [PR Employee Tax], Employee [PR Check], 1, "FUTA_E") * Lookup (Percent [PR Tax], "FUTA_E") - Lookup (YTD Tax [PR Employee Tax], Employee [PR Check], 1, "FUTA_E")
  • Use this formula if you don’t use the transfer fields on the master file
  • This formula calculates the tax
  • In this example, "FUTA_E" is the tax ID for the tax that will self-adjust
  • The 1 in the formula represents the tax level (1 = Federal, 2 = State, 3 = City)

 

Update the tax setup

Change the tax setup to use the formula you created.

  1. Go to Setup, Taxes, Tax Rates.
  2. Enter the Tax ID.
  3. Click in the Formula field and click List.
  4. Select the formula and click OK. For example, PRFUTA-E in the table above.
  5. Click Save and then Close.
Steps to duplicate
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