Microsoft Dynamics GP Year-End Update 2019: New 2020 Payroll W-4 how does it work in Microsoft Dynamics GP?

Well, that is a GREAT question you ask!  Lets dive into the specifics of this form and the year end change so you can properly set up your employees in the 2020 tax reporting year.

Here are some important links for you as we go through this process:

W-4 form for 2020
IRS FAQ on W-4 form for 2020
IRS Tax Withholding Estimator
15-T (what used to be called the Circular E for us oldies)

This year is a bit different than years past as we want to make sure and install the 2020 payroll tax table (releasing mid December 2019) and the 2019 Payroll year end update, preferable both by 1/1/2020 so you have the "new" W4 fields and the tax tables that go with those new fields.
(they do not need to be installed at the exact same time)

Then in a perfect world, all the taxes will calculate correctly and no employee will ever owe money at the end of the year or get a refund, that is the "intent" of the new W4, make the taxes more accurate, simplify the W-4 process for an employee.  So I hear anyway...…...

I have thought many ways how to start this blog,  but I think I will go off the W4 form each step and explain that step in Dynamics GP.  As we go through this, remember I'm only a GP EXPERT not a TAX expert and I think you will be saying the same to your employees as we all go through this educational process this year...fun times.

Step 1:  Enter Personal Information

Pretty basic, I think we all know what to do on this step.
Notice that Exempt is no longer an option on the form, that is by design.  I think the instructions state to write EXEMPT across the form.  There is still an Exempt filing status option in Dynamics GP for federal withheld.  You will see this under Cards | Payroll | Tax and the filing status is part of our tax tables.  We have also added a new filing status to our tax tables for Head of Household

Step 2:  Multiple Jobs or Spouse Works

You will not find a checkbox for this under Cards | Payroll | Tax, instead it will be handled through the tax table.  When you mark this box on the W-4, if you review the instructions and 15-T you will see for example Single has a Single tax table (STANDARD) and a tax table if you mark the box in Step 2.

                         

With our filing status once you install the 2020 tax table (releasing 12/20/2019) you will see we have a filing status of Single and Single, Higher

If an employee marks the box in Step 2, you should set the filing status to Single, Higher under Cards | Payroll | Tax
This would be the same process for Married and Head of Household options.

***You will see the new filing status once you install the 2020 tax table***

**All employees will "remain" unchanged when you install either the 2020 tax table update or 2019 year-end update, the employee record will not change, till they have completed a new 2020 W-4.**

Example: If I am an existing employee of your company, filing Single today with 10 exemptions, my record would stay the same for the 2020 payroll year until I fill out a new W-4.  Employees are not required to fill out a new W-4, only if your company wants them too.

If you are a customer that uses the Employee Self Service W4 product the form has the new checkbox and if marked will choose the new filing status once it has gone through the approval process.

Step 3:  Claim Dependents (new field in Dynamics GP)
**This new field was not added to Integration Manager or eConnect**

If you just install the 2020 payroll tax update and do not install the 2019 year-end update (kind of cheating your way through it), then you will not have the new field called Dependent Claim Amt under Cards | Payroll | Tax.  The new field on the W-4 correlates to section Step 3 Claim Dependents on the W-4 form.

Payroll will still run and not blow up on you, but you will not be able to "reduce" your YTD tax withheld by this field if it is not there.
How this new field figures into our tax calculation process is the following:

As the article states above, in Dynamics GP, we annualize everything.  Once we get down to the part of the calculation and we have figured out Terry's yearly withheld for this payroll week is $6,462.50 if I was a weekly payroll I would divide that by 52 which would be 124.28 federal tax withheld per week.

with this new field, lets say I have $1,500 in the field Dependent Claim Amt in Dynamics GP,  the calculation would be

$6,462.50 - $1,500 = $4,962.50 / 52 = $95.43 Federal tax withheld per week.

To clarify, Microsoft Dynamics GP will take care of the calculation, you just enter the per pay period amount for step 3 in the Dependent Claim Amt field.  I'm just trying to show you how we will back into this calculation above and what the program is doing.  This field in Dynamics GP is a per pay period field, meaning each pay period I will reduce my annualized YTD tax withheld by $1,500 each pay period in my above example.

Step 4:  Other Adjustments (Optional)


For step 4a-other income, there is no field for Dynamics GP to enter Extra Income to calculate taxes on.  If an employee has other income, use the IRS Tax Withholding Estimator to figure out any additional tax that is owed and put that in the Additional Withholding field to take out "extra" tax each pay period, under Cards | Payroll | Tax.

4b - there is no field in Dynamics GP for this, but if you want to reduce your withholding, you can enter a "negative" amount in the Additional Withholding field to do this.

NOTE:
When looking at the instructions on Federal 15T both those fields state to reduce / increase wages and then go calculate taxes and Dynamics GP does not function in this manner, we have no way to say increase/decrease Terry’s Federal Wage and then go look at the tax tables to calculate tax for this payroll.

Even tho she was “NOT” paid that amount in the GP payroll system.

At this point since it is not affecting a large majority of our payroll customers and it would take a very big change in the system, there are no plans to implement this functionality.

4c - This is an existing field that we have today under Cards | Payroll | Tax for Additional Withholding amount per pay period.  This amount will be added to the already tax withheld calculated by the system during the payroll process.

Step 5:  Sign and Date - self explainitory

Notes:

On the 2020 W-4 there are no Exemptions, but if you read the instructions from the 15-T it does state built into the tables based on the filing status you are allowed exemptions, but they enforce what the exemption will be.

We have made notes to the Payroll Admin what to enter based on the filing status the employee selected.  The system WILL NOT auto default the exemptions for the user.

In the example above, I choose Married, so I should put a 3 for the Exemptions.

If an employee fills out a 2020 W-4, we should never see 10 exemptions or 5 as an example, for the 2020 year only 3, 2, or 0 are options.

If you are using the Employee Self-Service, the W-4 has changed to the following format:

The top section will show what the employee has today under Cards | Payroll Tax.

In the example below, I'm changing my filing status from Married Higher withholding to Head of Household higher withholding.
Additional tax withheld from $61.00 to $200.00
Dependent Claim Amount from $51.00 to $100.00

Once the employee submits the change and it goes through the Workflow Approval process it will update the Cards | Payroll | Tax window and keep a history of the change.

Some are wanting a report of the W4, we do not print the W4 off the Tax window, but you can use the below VIEW that will create an easy SmartList for you from Designer.
The Detailed employee list will have this too, but way too much information, I like SmartList.

Where I have TWO put your company DB

USE [TWO]
GO
SET ANSI_NULLS ON
GO
SET QUOTED_IDENTIFIER ON
GO
CREATE VIEW [dbo].[EmployeeW4]
AS
SELECT A. EMPLOYID Employee_ID,
A. FDFLGSTS Filing, 
A. ADFDWHDG Additional_Withldg ,
A. dependentclaimamt Dependent_Claim_Amt,
A. fedexmpt Number_of_Exemptions,
A. statecd Default_State_tax,
A. LOCALTAX  Default_Local_tax
FROM UPR00300 A 
go
grant select on [EmployeeW4] TO DYNGRP

Run the above in Microsoft SQL Server Management Studio
Go into GP 
From SmartList click the NEW button, give it a list Name Employee W4
Go to the bottom expand out VIEWS, expand COMPANY

Find the VIEW EmployeeW4 and Mark all the columns, OK out, run the SmartList

Good luck with the new 2020 W-4!

Be sure to refer to the 2019 Year-End Blog Schedule to review current and upcoming blog posts and other helpful resource links related to Year-End Closing for Dynamics GP.

Terry Heley

Microsoft