Rose Business Solutions Dynamics GP

You should be aware by now that employees will have FICA Social Security withheld at a 4.2% rate in 2011 rather than the 6.2% rate used in 2010.  However, the employer still has to pay FICA Social Security at the 6.2% rate.  Under current Great Plains tax code calculations, this will result in incorrect amounts indicated on the Check Register for Employer Owed FICA ( see screen shots below) until the Service Pack/Tax Code update is released by Microsoft (currently scheduled for mid January 2011).   Any payroll run in Great Plains with a 2011 payroll check/direct deposit date run prior to the mid January Service Pack/Tax Code update must make corrections for the federal taxes submitted to the IRS and also make corrections to the general ledger posting journals from payroll.  You should also assume that the quarterly 941 and the year end employer tax reconciliation may also require adjustments for this issue. 

The screen shots below are taken from Fabrikam for one employee.  The tax schedule used is dated 12/22/2010 (Round 1 2011)  which includes the 4.2% withholding for Employee FICA Social Security.  The amount withheld from Pilar Ackerman is $52.96 ($39.37 + $13.59).   The Employer Owed FICA on the Check Register is also listed as $52.96.  The correct Employer Owed FICA is actually $71.72 ($58.13 + $13.59).  Using the Employer Owed FICA from the Check Register will result in under payment of FICA taxes due by the employer of $18.76 ($71.72 – $52.96).    The general ledger posting journals for payroll will also be incorrect and musts be adjusted as well. 

Do not install the Round 1 2011 tax table update in your environment until all payrolls have been prepared with payroll check dates in 2010 and your Year End Wage File has been created.  I can install the Round 1 tax table update in my environment as I am not preparing any actual payrolls.  When the Service Pack/Tax Code update is released in mid January, Microsoft will undoubtedly have additional updates and/or information available at that time.

It is critically important that the individuals responsible for transmitting taxes due to the IRS understand and are familiar with this issue.  Please share this information with those individuals in your organization that are responsible for payroll.   Microsoft will be updating their website with pertinent information, and I would recommend that all interested persons check with Customer Source at the Microsoft website.

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