FICA/Medi earnings and tax adjustment

Owned by Sherry Gnant (Deactivated)
06 25, 2018

Issue/Symptom/Question

Employee that should have been FICA/Medi exempt was set up incorrectly to be subject to FICA  The employee's YTD taxable earnings and tax withheld will need to be adjusted. 

Applies To

Payroll/Employees/Employee Payroll Information/Withholding/Federal Withholding/Exempt from FICA:

Payroll/Exception Checks/Manual Checks

Resolution/Fix/Answer

To affect FICA/MEDI earnings and tax:

***NOTE*** The 'Exempt from FICA' flag on page 3 of the Employee Master must be set to No while this adjustment is in process for FICA and MEDI earnings to be changed.

Part A below will reduce the employee's total earnings, FICA taxable earnings and tax withheld to zero.  Part B will reinstate the employee total earnings to the correct amount.

Part A - apportions FICA & MEDI to FIT; decreases FICA/MEDI earnings; decreases gross (to be corrected in part B).

  1. Create a new Other Comp (or use an existing OC) for adjustments, using calculation base 3. On page 2, set the 'include in all earnings' flag to No. Enter one exception in the Federal Exceptions block for FICA.
  2. For each employee, create a 0 number, 0 dollar manual check. Enter the proper date, and a 0 dollar net pay. Answer No to each of the three questions at the bottom of page 1.
  3. On page 2, enter the date, the OU and a wash account, and a 0 dollar gross wages.
  4. To move the FICA/Medi tax to FIT: On page 3 enter a positive FIT amount equal to the sum of the FICA & MEDI tax portions of the adjustment. Enter the FICA & MEDI amounts as negative amounts to reduce the employee’s FICA/Medi withheld to zero.
  5. To remove the earnings: On page 7, enter the Other Comp selected in step 1 with a negative value of the amount by which the FICA(MEDI) earnings need to be decreased.
  6. Process the checks.


Part B - removes the decrease to gross wages.

  1. Remove the FICA exception from the Other Comp used above. Leave the 'include in all earnings' set to No.
  2. Enter another manual check for each employee using the same information as on steps 2 and 3 above, with only the other comp entered on page 7 (nothing on page 3) with the same amount entered previously but as a positive value.
  3. Process the checks.
  4. Change the Employee Master Exempt from FICA value back to Yes for these


Cause 

Employee that should have been FICA/Medi exempt was set incorrectly to be subject to FICA