| Record a taxable fringe benefit as a lump sum at year end |
Resolution | TIP: To print the expanded sections, use the Print to PDF option Before you begin - Consult your Tax Advisor for the taxable status of the fringe benefit. Sage analysts are unable to assist with tax advice
- Follow all steps below to ensure your W-2, quarterly and annual tax reporting is accurate
1. Set up a taxable deduction for the fringe benefit amount - PR, Utilities, Maintain Deductions.
- Click the New button to create your new deduction.
- Enter a deduction ID and Description.
- Method - Variable, entered on time card.
- Category - Company-Ind.
- Enter the desired General Ledger accounts for the Credit account and Debit account.
- Active - select the From option. Enter the active date to include the computer date that you’re processing the check.
NOTE: Active dates use the computer date and not the check posting date. - Select the appropriate taxable fields for the deduction.
CAUTION: Select FWT and SWT taxable if the deduction must report in Box 1 and Box 16 of the W-2. - Click the 'W-2...' button.
- In the Box number to use field specify the W-2 box for this fringe benefit. For example, Box 12 and the appropriate ID to use.
- Save.
- The screenshot below is an example only.
 2. Set up an Other Pay to record the employee taxable income - PR, Utilities, Maintain Other Pays.
- Click the New button to create a new Other Pay.
- Enter the Other Pay ID and Description.
- Method - Variable, entered on time card.
- Category - Individual.
- Define the General Ledger account for the Debit account. Consult your CPA as which accounts to use.
- Select Add to gross and clear all the taxable check boxes.
NOTE: Select Add to gross for tax reporting to be correct. - Active - select the From option. Enter the active date to include the computer date that you’re processing the check.
- Save.
- The screenshot below is an example only.

3. Add the Deduction and Other Pay to the employee record - PR, Employees, Maintain Employees.
- Click the Deductions... button and assign the deduction.
 - Click the Other Pays... button and assign the other pay.
 4. Process the time card to record the fringe benefit - Select PR, Processing, Time Card Entry.
- Click the Ded/Other pays button and deselect any active deductions or other pays. This check is for processing the fringe benefit only.
- In Earnings, select the fringe benefit Deduction.
- Enter the amount of the fringe benefit in the Gross Pay field.
- Save.
- The example below is a fringe benefit for 5000.00.

5. Calculate, Post and Print the payroll check - PR, Processing, Automatic Payroll Calculation.
- Calculate the payroll for the employees.
- OK the message "One or more employees has checks with a negative balance...".
- Review the Payroll Register for accuracy.
- PR, Processing, Manual Payroll Calculation.
- When prompted to use the calculated check information, select Yes.
- Click Fed/State taxes... Zero the FWT and SWT amounts and OK to save the change.
 - Make note of the negative net amount showing. This is the Employee/Employer OASDI and Medicare and any other mandatory taxes withheld.
 - Click Ded/Other pays... Enter the negative net amount in the Other Pay.
 - Click OK and save the record. The new net pay amount for the check is now zero.
 - "OK to post this zero amount check?" click Yes.
- Save.
- Select PR, Processing Print Payroll Checks, and print the checks.
W-2, Form 941, and Form 940 |
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