Rose Business Solutions Dynamics GP

Over the years, you learn where to obtain good, useful information.  You also learn who provides consistent, accurate and helpful commentaries on difficult subjects.  Terry Heley, Escalation Engineer, at Microsoft is one of those people.  Terry has been managing Microsoft Dynamics GP payroll code and tax updates for a long time.  She is also the most knowledgeable person I know of when it comes to Microsoft Dynamics GP payroll issues.  I recently had a difficult garnishment setup situation for one of our customers.  After a considerable amount of frustration and trial and error, I reached out to Terry for any insight she may have on our garnishment problem.   She provided me with a set of examples outlining garnishment setups for tax levies, child support, creditor garnishments, garnishments taken before child support and multiple garnishments with previous marked.  As they say, a picture is worth a thousand words.  Well, when it comes to garnishments, an example is even better than a picture.  Below is the first of a series I will be posting about setting up garnishments in Microsoft Dynamics GP.  Thank you Terry.

Garnishments-Tax Levies:

A federal tax levy is accomplished by ‘garnishing’ an employee’s wages to the extent that they are not exempt from the levy.  For example, there may be a tax levy that is for $25,000.  The tax levy deduction will be taken from the employees ‘take-home pay’ until it reaches the exempt amount.

The exempt amount is an amount that comes from the table (after looking at form 668-W that the employee fills out – (according to the number of exemptions, the pay period, and the filing status)).

The ‘take-home pay’ will be calculated as Wages, minus all Taxes and Deductions (both voluntary and involuntary) that were in effect at the time of receiving the tax levy.  Once an employee’s take-home pay has been determined, all but the exempt amount is subject to the levy.

Any new payroll deductions that are initiated by the employee after the levy has been received by the employer must be deducted from the exempt amount when determining the employee’s net pay, unless they are required as a condition of employment.  (This also includes increases in elective deductions such as a 401k.)

It looks like Tax Levies are always an amount (by looking at the form 668-W).

Ex:  Employee Arthur receives $1,211.54 every two weeks.  On Aug 1, 2010, the employer receives form 668-W stating that a federal tax levy was being issued against Arthur’s wages for $25,000.  Arthur claimed married filing jointly with 3 personal exemptions on Part 3 of the form.  (The exempt amount taken from the table is $657.69.)  As of Aug 1, Arthur had the following deductions:

Prior to the Tax Levy, Arthur’s take-home pay is $987.30 ($1,211.54 – $224.24).  The exempt amount of Arthur’s take-home pay (taken from the table) is $657.69.  Therefore, the amount subject to the tax levy is $329.61 ($987.30 – $657.69).  And the take home pay after the Tax Levy is $657.69.

How would we set up this deduction?

Pay code

Other Deductions

Calculate Checks report

Recap

Prior to the Tax Levy, Arthur’s take-home pay is $987.30 ($1,211.54 – $224.24).  The exempt amount of Arthur’s take-home pay (taken from the table) is $657.69.  Therefore, the amount subject to the tax levy is $329.61 ($987.30 – $657.69).  And the take home pay after the Tax Levy is $657.69.

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