Tax Rates Tab

This section of the screen must be manually updated at the beginning of every year (or any other time there is a change in the tax rates) to reflect the current federal and state tax rates and limits. Tax rates, which are based on a percentage of gross wages, must be entered as real numbers. For example, 6.2% would be entered as 6.2 (not as a decimal .0062). The cutoff amounts are used by the system to determine when the program will discontinue calculating the various taxes for individuals who earnings for the calendar year have met the cutoff limits. Be sure to enter the current rates BEFORE you process the first payroll check for the new calendar year. Please check with your company's accountant prior to updating these fields to insure that the correct information is entered. Please also refer to the document titled Calendar Year End Notes in the System Administrator Manual for more information.

•Federal Withholding - AccuBuild uses the 'Alternate 2 Percentage Method' for calculating FWH and these tables are stored internally by the software. Customers who have selected to update their software annually will receive a program update at the end of each calendar year which will automatically install the new tax tables for the coming year. Although you may not change the withholding tables yourself, you may manipulate the federal withholding tax on a single employee by either adding additional FWH to each paycheck or using the 'Override Auto Tax Calcs' option. Both of these options can be found on the Employees > Fed Tab screen.

•FICA (Social Security) - For 2013, please enter the employee rate of 6.2%; AccuBuild will automatically use 6.2% for the employer contribution rate.

"The Temporary Payroll Tax Cut Continuation Act of 2011 reduced the Social Security payroll tax rate by 2% on the portion of the tax paid by the worker through the end of February 2012. The Middle Class Tax Relief and Job Creation Act of 2012 extended the reduction through the end of 2012. Under current law, this temporary reduction expires at the end of December 2012." (http://www.ssa.gov/pressoffice/factsheets/colafacts2013.htm)

Note: Due to the FICA tax cut in 2011, the employer portion of the FICA Social Security and Medicare taxes will be stored separately in the TaxAmount3 and TaxAmount4 fields in the prchecks.adt table.

•FICA (Additional Medicare) - Beginning 1/1/2013, the new Additional Medicare tax is applicable to any employee who has exceeded the $200,000 wage limit.

•	Additional Medicare - Tax Rate (Employee) – The tax rate for 2013 is 0.9%; enter 0.9 in this field.

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Additional Medicare - Exempt Wage Cutoff – This field contains the amount of Medicare Wages that must be reached before the Additional Tax is required. In 2013, the Exempt Wage Cutoff amount is $200,000 which means that the Additional Medicare Taxes are only due on Medicare Wages that exceed $200,000 for the payroll year. Once this limit is reached, the Additional Medicare tax will be withheld from the employee's check.

Note: Due to the additional Medicare tax in 2013, this employee deduction will be stored separately in the TaxAmount5 field in the prchecks.adt table.

•	Additional Medicare – Tax Rate (Employer) – This field is a READ ONLY field and contains the Additional Medicare Tax rate for the Employer. Currently for 2013, there is NO required tax for the employer tax burden so a rate of zero is shown.

•Federal Unemployment Tax - The FUTA tax rate is 6.0% but generally you can take a credit for the amount that you pay into a state unemployment fund. If you are entitled to the maximum 5.4% credit and the state is not determined to be credit reduction state, then the tax rate is 0.6%.

"A state that has not repaid money it borrowed from the federal government to pay unemployment benefits is a "credit reduction state." The Department of Labor determines these states. If an employer pays wages that are subject to the unemployment tax laws of a credit reduction state, that employer must pay additional federal unemployment tax when filing its Form 940." (http://www.irs.gov/pub/irs-pdf/p15.pdf)

•If you have payroll in only one state, and your state is a credit reduction state, then enter the proper tax rate in the FUTA field.

•If you have payroll in multiple states, and one or more of the states is a credit reduction state, use 0.6% as the FUTA tax rate. Due to the fact that there is only one FUTA tax rate field, you will need to manually adjust the FUTA tax rate accrual with a general journal entry.

•You may utilize the FUTA Tax Liability Report to help you determine the tax amount due. This report will compare the accrued FUTA (posted with each pay check) and the calculated FUTA (based on the Federal rate of 0.6%) to calculate an over/under accrued amount which may then be adjusted with a general journal entry. Again, if you are in a credit reduction state, refer to the single state/multiple states notations above and consider how this may impact the report. Please check with your CPA if you are uncertain of the FUTA tax rate for your company.

•State Taxes - Select the State Tax Settings button to access the state tax rate and cutoff limit information. If you own the multi-state payroll option, be sure to update the information for each state in which you work.

•State Withholding - These tables are stored internally within the software. Customers who have selected to update their software annually will receive a program update at the end of each calendar year which will automatically install the new tax tables for the coming year. Although you may not change the withholding tables yourself, you may manipulate the state withholding tax on a single employee by either adding additional SWH to each paycheck or using the 'Override Auto Tax Calcs' option.

•Multi-State Payroll - If you own the multi-state payroll option, then refer to the Payroll > Employees > State tab documentation for more information on setting up the payroll system

•If your company is located in Delaware, Indiana, Maryland, New Jersey, New Mexico, New York, Oregon, or Puerto Rico, or if you have employees that live or work in those states, then be sure to read the documentation in the Frequently Asked Questions section of the Payroll Manual in order to properly set up the Payroll system for the specific tax requirements for those states.

This section of the screen contains two Local Deduction fields that may be set up for your company. The local deduction codes are used to define the various payroll tax districts that the state(s) in which you work may require you or your employees to pay. These codes may then be linked to the job site location, the employee's residence and to your company's physical address. The Payroll system will look first to the job list, then to the employee's file and then finally to the company's local tax codes (as defined on this screen) when calculating these various payroll taxes.