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Third Party Sick Pay

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If non-taxable

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  •  Go to Core/Adjustments
    • Click Image Modified
    • Employee- Find employe by typing in a few characters of forst or last name
    • Payroll Item- From Drop Down Image Modified choose Federal Tax 001
    • Type-From Drop Down Image Modified choose Third Party Pay
      • Transaction Date-{*}Enter or choose date from calendar
    • Amount- Enter in the amount for the non-taxable third party pay
    • Description- Enter in a description (optional)
    • Click Image Modified
Info
This will cause the amount to print in box 12 with code 'J'.

If taxable:

  •  Go to Core/Adjustments
    • Click Image Modified
    • Employee- Find employee by typing in a few characters of first or last name
    • Payroll Item- From Drop Down Image Modified choose Federal Tax 001
    • Type-From Drop Down Image Modified choose Total Gross
    • Transaction Date-

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    • Enter or choose date from calendar
    • Amount- Enter in the amount for the taxable third party pay
    • Description- Enter in a description (optional)
    • Click Image Modified
      Go to Core/Adjustments
    • Click Image Modified
    • Employee- Find employee by typing in a few characters of first or last name
    • Payroll Item- From Drop Down Image Modified choose Federal Tax 001
    • Type-From Drop Down Image Modified choose Taxable Gross
      • Transaction Date-{*}Enter or choose date from calendar
    • Amount- Enter in the amount for the taxable third party pay
    • Description- Enter in a description (optional)
    • Click Image Modified

Note
You will repeat the same process listed above for the following records as well:
  •  Ohio

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  •  OSDI (if applicable)

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  •  Medicare

    Info
    On the medicare record, increase the total medicare tax by any amounts the company withheld from the benefit
    •  Go to Core/Adjustments
      • Click Image Modified
      • Employee- Find employee by typing in a few characters of first or last name
      • Payroll Item- From Drop Down Image Modified choose Medicare Tax 6XX
      • Type-From Drop Down Image Modified choose Amount Withheld
        • Transaction Date-{*}Enter or choose date from calendar
      • Amount- Enter in the amount withheld from the benefit by the third party
      • Description- Enter in a description (optional)
      • Click Image Modified
      • The district will need to pay any board amount that is due for it to show properly on the W2:
      • Go to Core/Adjustments
      • Click Image Modified
      • Employee- Find employee by typing in a few characters of first or last name
      • Payroll Item- From Drop Down Image Modified choose Medicare Tax 6XX
      • Type-From Drop Down Image Modified choose Amount Withheld
        • Transaction Date-{*}Enter or choose date from calendar
      • Amount- Enter in the amount the board needs to pay
      • Description- Enter in a description (optional)
      • Click Image Modified
  •  Contact any city involved for the employee, ask if the amount is city taxable

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    •  If yes

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    • , Increase the total and taxable gross amounts on the corresponding city record as follows:
      •  Go to Core/Adjustments
        • Click Image Modified
        • Employee- Find employee by typing in a few characters of first or last name
        • Payroll Item- From Drop Down Image Modified choose City Tax Code XXX
        • Type-From Drop Down Image Modified choose Total Gross
          • Transaction Date-{*}Enter or choose date from calendar
        • Amount- Enter in the amount to increase the total gross by
        • Description- Enter in a description (optional)
        • Click Image Modified
      •  Go to Core/Adjustments
        • Click Image Modified
        • Employee- Find employee by typing in a few characters of first or last name
        • Payroll Item- From Drop Down Image Modified choose City Tax Code XXX
        • Type-From Drop Down Image Modified choose Taxable Gross
          • Transaction Date-{*}Enter or choose date from calendar
        • Amount- Enter in the amount to increase the taxable gross by
        • Description- Enter in a description (optional)
        • Click Image Modified

If desired, calculate the tax amount due on the payment and enter that figure as an error adjustment on the City Payroll Item for a remaining payroll; otherwise the employee will have to pay the tax later

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Warning
There is a special field on the 941 for adjustments needed due to Third Party sick payments and how they relate to medicare withholdings. The district should reference the 941 instructions as well as the information in IRS Publication 15-A on these payments as needed.

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Warning

If the notice from the company indicates FICA tax was withheld, the district will need to contact the agency as it is our understanding most school district employees should not have FICA tax withheld from this payment. The agency will need to correct this and issue a new statement as the employee can not recover the incorrect withholding on a tax return, tax returns are for federal income tax, not federal FICA or medicare.

Revised: 12-Nov-2018