Calculating Payroll taxes

How does the Sage 300 CRE Payroll application calculate taxes?

FICA taxes

FICA taxes (SOC, SOC_E, MED, MED_E, MEDADDL) are self-adjusting taxes. The self-adjusting calculation includes any populated check tax records in the Payroll New file.

Sage compares the employee's YTD Subject to wages (including the current check) to the employee's YTD Tax and the current tax rate. It adds the difference to the check. 

Federal and State withholding taxes

Annualization

Sage Payroll annualizes the taxable wages on the check to determine the employee's annual earnings. It applies the estimated earnings to the tax table to determine the amount of tax.

The annualization uses the Pay Frequency from the Pay Group (Setup, Pay Groups) to determine how many pay periods to annualize.

Supplemental wages

See steps to set up bonus pays or supplemental wages you need to tax at a specific rate.

Tax table calculations

See an example of how tax tables calculate.

Unemployment and Local taxes

Payroll uses the Subject To amount from the check multiplied by the Rate in Setup, Taxes, Tax Rates.

More Information

• Taxable Wages are Gross Wages minus Pre-tax (for Federal and/or State) deductions
• Some states like Arizona use a formula instead of a tax table. To determine if the tax uses a table, verify the Table Type in Setup, Taxes, Tax Rates

Testing the tax calculations

You can test tax calculations in Payroll by using the Tax Calculator in Tools. Enter the State and Taxable wages and filing status. The tax calculator will give you an estimate of the taxes for State and Federal Taxes. It doesn't display Local taxes. Self-correcting taxes amounts can vary when adjusting to meet year to date.

Why are the tax amounts on my checks in Payroll different from that my outsource company gives me?

What are Gross, Taxable, and Subject To wages?