Thursday, May 1, 2014

Flat Tax Rates and Additional Amounts in Dynamics GP

Every time I train someone on payroll in Dynamics GP, I point out the flax tax rate fields available on both the Pay Code Setup (Setup-Payroll-Pay Code) and Employee Pay Code Maintenance windows. (Cards-Payroll-Pay Code).

And I emphasize that if a value is entered in either of these fields, it will override the tax settings for the employee and take the flat rate instead.  So, for example, an employee who is set up this way...

....with a Federal Filing Status of Married and 1 exemption, if there is a flat tax rate on their pay code then it will ignore the Federal Filing Status and number of exemptions when calculating Federal withholding.  However, and this a significant HOWEVER, it will NOT ignore the Additional Withholding amount.  So in the case above, the system will take 28% Federal withholding PLUS an additional $100 on the payroll.  This is true regardless of whether the payroll includes pay codes other than the one with a flat tax rate.  So, even if you run the Bonus payroll separately, it will still take 28% plus $100.
The devil is in the details, right?  So the options would be (feel free to chime in if you have other alternatives) to either adjust the flat percentage to offset the additional amount or remove the additional amount from the Employee Tax Maintenance window prior to building the payroll and then adding it back afterwards (not fun, I know).
Christina Phillips is a Microsoft Certified Trainer and Dynamics GP Certified Professional. She is a senior managing consultant with BKD Technologies, providing training, support, and project management services to new and existing Microsoft Dynamics customers. This blog represents her views only, not those of her employer.

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