46.4 Standard Deductions

The next step in setting up a Payroll System is to create the file of standard deductions. The file can be accessed from the Standard payroll deductions option on the Select, Payroll menu:

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Typically, there are entries for federal and state withholding taxes, social security withholding, and unemployment taxes. For further information on how to enter the standard deductions, see Chapter 29, Standard Deductions.

NOTE: the deduction tables were designed to work with the Federal withholding taxes. The Internal Revenue Service (IRS) provides tables for annual salaries, monthly salaries, semi-monthly salaries, etc. They also note that it is acceptable to compute the withholding tax based on annual amounts and then apportion the tax for the given pay period. This means that only the annual tables need to be entered. Calcpay projects the gross pay for a given period to an annual gross salary. The appropriate tax is computed and adjusted for the given period. For example, if an employee is paid $400/week, calcpay projects that to an annual salary of $20,800 ($400 52). If the withholding tax for this annual salary is $3,016, calcpay adjusts the withholding tax to the weekly pay period as $58 ($3016 / 52).

When deciding on a deduction code, you can design your own scheme. As a suggestion, you can use the following:

Code Description

fwhs Federal Withholding-Single

fwhm Federal Withholding-Married

swhs State Withholding-Single

swhm State Withholding-Married

fica Social Security Tax

futa Federal Unemployment Tax

suta State Unemployment Tax

luta Local Unemployment Tax