Sage 100 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 tor your 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 for Sage 100 2018 and higher. (See related resources for Sage 100 2017 and prior).
1. Open Payroll, Setup, Earnings Code Maintenance
2. Create an Earnings Code for Third Party Sick Pay with a Miscellaneous type. Set the Tax Rule to -8000039 Regular Wages.
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
7. NEW for version 2018 and higher: Setup a Tax Profile, make sure to select the correct 3rd party sick pay taxes you want to select. For example, if you only want to calculate 3rd party sick pay taxes for the employer then your Tax Profile may look like this:
8. Add the Tax Profile in Employee Maintenance to the applicable employee profile. See DocLink: How to use multiple tax profiles in Sage 100 payroll.
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 Earnings code for Third Party Sick Pay created in previous step on line 1 to enter the sick pay amount. In the lower grid for the Tax Profile Code, choose the Tax Profile created in previous steps. On the second line, use the Deduction code for Third Party Sick Pay created in previous steps above to enter the 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.
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 did not withhold employee taxes and the employer taxes will be reported.
1. Open Payroll, Main, Employee Maintenance, select applicable employee from look up
2. Click Tax Summary on More button
3. Select federal tax record
4. Select Detail button
5. Select Tax History Detail button
6. Select Fix button
7. Manually adjust any employer wages and/or taxes.
8. Complete steps 3-7 for state records
9. Complete steps 3-7 for local records
Notes:
• Need to have access to security option in Role Maintenance for Allow Editing of Employee Tax History in Employee Maintenance to fix employee records.
To report Third party sick pay on W3:
*** Review information in the IRS publication 15-A to determine if the following applies.
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
*** W2 Preparer's grid.
Select the checkbox for Third Party Sick pay for the employee so it will display on the W2.
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