Payroll check without taking taxes out

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Posted on by Nancy Cohen

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My client writes: I need to be able to run a payroll check with only Soc. Sec. and Medicare being taken out. No Fed or State Taxes! This is a 25 Year Bonus Check . I do not know how I can process this check for only these taxes taken out. Under Payroll I have the access to include or not include benefits and deductions BUT I don’t see anywhere to handle the taxes.

Does anyone know if this is possible and how to do it?

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Thomas Franz 1,105 on at

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The only way I can think of to do this is to modify the employee tax card and set their Federal Filing Status to Exempt during the Calculate Checks process, then change it back to the previous value. So long as there are not a significant number of employees involved, this may be viable.

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Bill Campbell 12 on at

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Do you have an option on the Pay Code for the Bonus to note taxable or not?

In Canadian we have the option in the card setup for the Pay Code.

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Thomas Franz 1,105 on at

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Bear in mind that if you mark the pay code as not subject to Federal Tax, this will exclude it from Box 1 wages on the W-2.

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Bill Campbell 12 on at

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Would you not have the shown in Bonus as it is not part of the normal salary - but a bonus?

I think we split that here in Canada - maybe I am wrong.

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Bill Campbell 12 on at

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second to that - why would it remove it from the Wages - you are not changing the type only if it is TAXABLE income.

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Terry R Heley Microsoft Employee on at

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Hi Nancy, you can do how Bill suggested to not mark the pay code subject to Federal or State tax.
If it is anything other than pay type of business expense, it will update the gross wages. But it will not update the state and federal tax.

So you would need to go back through manual checks and do a transaction for taxable wages for state and federal, just the wage piece of it.

That is an option.

You could mark exempt at Tom indicated, but that is only on the federal window, cards | payroll | tax.
Here is another trick you can do in this KB that works for federal and state.

Once the check is cut, you will want to change it back.

https://support.microsoft.com/en-us/kb/855651

Thanks!

Terry Heley

Microsoft

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Nancy Cohen 460 on at

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Thank you all for your suggestions, we did change the pay code: Bonus just for that employee to not be subject to Fed or State taxes and that did it.

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Sherlene Sorenson 967 on at

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I second Terry's answer for changing the Employees Tax Maintenance settings. Set the Federal to Exempt, and set the State like the KB shows with the negative $.01 in Additional Tax Withholding and positive $.01 in Estimated Tax Withholding. My personal recommendation is to not mess with subject to tax settings on paycodes, benefit codes or deduction codes at the employee level, because it causes problems with reconciling what your taxable wages are at 941 and W2 time. Keep those subject to tax settings consistent with the setup level for easier reconciliation processes. The pay is technically subject to tax, but you just don't want withholding from that check. Be sure to set the Employee Tax Maintenance back to what the employee normally has after the special bonus check is cut.

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