Tracking Payroll Third Party Sick Pay in Dynamics GP

Microsoft Dynamics GP may not fully support the tracking of Third Party Sick Pay, however, we do have recommended suggestions on how to track it in Microsoft Dynamics GP.  We usually see 4 different scenarios/questions on how to record Third Party Sick Pay.  I want to outline these 4 scenarios below so you can use the option that best fits your business.   

Note: We recommend you always process these scenario steps in the Test company first. We recommend refreshing your test company with live company data  Here is a link to KB 871973 - "How to set up a test company that has a copy of live company data”: http://support.microsoft.com/kb/871973 .

Once the expected results are obtained in the test company repeat the steps in the Live company.

Scenario 1: How do I mark the W-2 to show that the employee has Third Party Sick Pay

To record an employee who will have a Third Party Sick Pay on their W-2. (HR & Payroll >> Routines >> Payroll >> Edit W-2s).

In this window you can edit the employee’s wages, taxes, and taxable wages accordingly to include Third Party Sick Pay.

Scenario 2: Responsible for tracking Employee Wages, Federal and FICA Wages and Taxes:

To track the employee’s Federal and FICA taxes withheld and taxable wages, set up a pay code specifically to track this information.

1. Set up a pay code for Third Party Sick Pay, mark the appropriate “Subject To Taxes” selections (HR & Payroll >> Setup >> Payroll >> Pay Code)

       2. Assign this pay code to the employee that is receiving the Third Party Sick Pay in the pay code maintenance window (HR & Payroll >> Cards >> Payroll >> Pay Code).

       3. Create a manual check to record the Third Party Sick Pay (HR & Payroll >> Transactions >> Payroll >> Manual Checks)

       4. This blog is a great resource on how to create manual checks https://community.dynamics.com/gp/b/dynamicsgp/archive/2014/09/24/how-to-process-a-manual-check-in-payroll

       5. Open the Payroll Manual Checks Entry Window

• Check Type: Manual Check
• Enter the necessary information (if using a batch enter the batch ID, Checkbook ID, check number, check date, Employee ID, posted date) > click on Transaction’s button.
• Manual checks do not ‘calculate’ anything. You MUST enter every transaction item related to this pay. This means but not limited to:
• Pay code (wages)
• Taxes (Federal, FICA Social Security, FICA Medicare, State etc.)
• Taxable Wages (Federal, FICA Social Security, FICA Medicare, State etc.)
• Employer liability for taxes

Note: An actual check will NOT be printed, manual checks are for recording purposes only.

• Transaction Type: select the appropriate type from the drop down menu.
• In the Code field: enter the pay code you set up for Third Party Sick > enter the dollar amount.
• Click Save
• In the Code field: enter the taxes and taxable wage, and employer tax liability information associated with the pay code.
• When you have all the necessary transactions entered for the manual check > post the batch or transaction

Suggested ways to verify the employee’s records are correct by following these steps (these steps are optional):

• Print the Period End reports such as the Employee Summary HR & Payroll >> Reports >> Payroll >> Period-End.
• Print the 941 quarterly reports and W-2 to the screen to ensure that everything was updated correctly.

 Close the payroll year-end (HR & Payroll >> Routines >> Payroll >> Year-End Closing)

• If you used the year-end close method and the results are as expected; remove the year-end close (HR & Payroll >> Routines >> Payroll >> Year-End Closing)
• Go back into the Year-End Close > select the year > click Process.
• A message will come up stating the year-end wage records already exists do you want to delete them? click delete > click cancel. This will remove the year-end close.

Scenario 3: Responsible for Employer FICA Tax Liabilities only.

Note: The amount will be displayed in the fraction of cents on the 941 Report. This is because fraction of cents is the difference between the employee tax liability minus employer tax liability. The employee record is not getting updated in these transactions only employer liability is getting updated.

Option 1: Create a manual check.

1. In the Code field: enter the FICA tax for Social Security and then again for Medicare.
2. When you have all the necessary transactions entered for the manual check > post the batch or transaction.

Option 2: To edit the employer’s share of the FICA tax, use the Payroll Edit Federal Tax Liabilities window.

1. Open the payroll Edit Federal Tax Liabilities window: (HR & Payroll >> Utilities >> Payroll >> Edit Liabilities).
2. Use the Hide/Show button to show the details in this window, the EFIC FICA cells are located on the 2^nd line of each transaction.
3. Find the Audit Trail Code that needs to have Employer FICA tax liability adjusted.
4. Move the cursor to the appropriate cell > make the change necessary.
5. Chose OK to save your changes.
6. Remember to unmark this box when you are done by going into the Edit Financial Fields option in the Payroll Setup window (HR & Payroll >> Setup >> Payroll >> Payroll >> Options button).

The changes you make using these options will be reflected on the following reports:

1. Federal Tax Liabilities List HR & Payroll >> Utilities >> Payroll >> Edit Liabilities >> click Print button.
2. Quarterly 941 Preparation Report HR & Payroll >> Reports >> Payroll >> Quarter-End >> the change will be seen in the fraction of cents.
3. Form 941 HR & Payroll >> Reports >> Payroll >> Quarter-End.
4. Quarterly 941 Schedule B Preparation Report HR & Payroll >> Reports >> Payroll >> Quarter-End >> the change will be seen in the month & date of the change.
5. Quarterly 941 Schedule B HR & Payroll >> Reports >> Payroll >> Quarter-End
6. The payroll Tax liability Table (UPR30200) will be updated with these changes. The payroll Employee Master Table will not be affected. If changes are made using this window, it is recommended to print the Federal Tax Liabilities List and keep the report for records.

Scenario 4: Responsible for FUTA/SUTA wages/taxes associated with the Third Party Sick Pay only.

The FUTA/SUTA reports are for tracking purposes only. With that said, a suggested method would be for you to manually track employee third party sick wages (for example in an excel spreadsheet). Then manually add the employees Third Party Sick Pay to the FUTA and SUTA form you file with the Federal and State government.

To record this in the General Ledger in GP, you would create a manual General Journal Entry to post the FUTA/SUTA liability for Third Party Sick Pay. 

I hope this information will help guide you in tracking Third Party Sick Pay in Microsoft Dynamics GP.

Margi Jandro