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Increase FICA and MEDI Earnings, Taxable Earning and Tax Amount without affecting other earnings and other taxes

Increase FICA and MEDI Earnings, Taxable Earning and Tax Amount without affecting other earnings and other taxes

01 09, 2023

Issue/Symptom/Question

In processing FFCRA leave pay, the employee master flag was set to "Y" for Exempt from FICA....instead of "X". This excluded the employee's earnings from FICA and MEDI and the taxes were not calculated. How do I increase the FICA and MEDI earnings and calculate the correct taxes for these? 

Applies To

PENTA for Windows

Payroll > Exception Checks > Manual Checks

Payroll > Setup > Other Compensation

Resolution/Fix/Answer

You'll want to make the correcting entries via Payroll Manual Checks. Below are the steps to take:

  1. Make sure the "Exempt from FICA" field in the Federal Withholding tab is set to 'N' for this employee.

  2. Create a new Other Compensation record. 

    1. Calc Base = 3 - all other fields leave blank or as defaulted

    2. In the Tax Code tab, make sure the Include In All Earnings is set to 'N'

    3. In the FEDERAL EXCEPTIONS enter tax code = FICA

  3. Create and process a new Manual Checks batch

    1. Distribution tab - Check #0, Employee ID, Check Date = date within the pay period that needs to be affected, Net Pay = 0.00, all other fields = N

    2. Withholding - USA tab

      1. Enter the FICA & MEDI withheld amounts as a POSITIVE number 

      2. Enter the FIT as a NEGATIVE amount for the total taxes that should have been withheld

      3. Leave all other fields as defaulted

    3. Other Compensation tab - use the Other Comp number set up, enter the total wages that should have been included

    4. Distribute the batch

  4. Update the Other Compensation record to remove the FICA exception

  5. Enter a new Manual Checks batch

    1. Distribution tab - Check #0, Employee ID, Check Date = date within the pay period that needs to be affected, Net Pay = 0.00, all other fields = N

    2. Other Compensation tab - use the Other Comp number set up, enter the NEGATIVE total wages that 

    3. Distribute the batch

Check your work - the FICA and MEDI amounts should be increased, tax should calculate out to the expected tax rate. All other records should be the same as they were before the entries. 

Set up Other Compensation record:

Enter and Process a Manual Check Entry:

Update the Other Compensation record to remove the FICA FEDERAL EXCEPTIONS:

Process a Manual Check Batch to increase the Gross Wages: