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An employee had 2 sec.125 childcare benefit amounts deducted before finding out she was not eligible. How can those deductions be returned to her and what must be done to fix the taxable earnings, fica earnings, etc? I searched the MBS Knowledge base and returned no results.
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Thanks for the response. I'll test and reply with the results.
Hi Gary,
1. Exempt emp from unwanted deduction
2. Calculate when there are earnings for the next check
3. In Review / Edit enter a negative amt to pay back the pretax deduction that was wrongly withheld. Increase the subject wages for any deduction which earlier had the subjwages reduced. Doesn't matter whether you change the subject wage on the Pretax deduction but makes more sense to do so.
4. Also in Review/Edit Increase the other deduction amts by the payback amt X the deduction %.
When we increase the subject wages for a deduction, we also need to increase the deduction amt by the amt - increase in wages times the % of that deduction. For example, if we pay back a pretax deduction for $100 by entering a -$100 for the pretax deduction amt, we will also increase the subjwages for fed1/fed2/fed3/fed6/fed7, etc by $100. Then we need to increase the deduction for fed2 by $100 X 0.042, fed3 by $100 X 0.62 etc. For deductions that were earlier reduced that are based upon a table, you will need to estimate the additional amt of taxes to add or, ask the employee or, do nothing since it is squared away at year end when you file your 1040.
The negative deduction amt will increase the check amt. All of the accounting and W2 info will be correct.
The only down side that I can think of is that all of the wages and deduction changes would go into the current quarter. And, you can't do this if you don't have at least one more payroll in the year.
Note that if you change a pretax exemption for Fed1/ fed2, etc, the federal wages on the 941 and W2s will change based upon the pretax exemption set up at that moment in time. However, all deductions other than federal types will not be changed. They use the value stored in the Earnded table for subjwages. This might be seen if a pretax is initially set up as an All Other type of deduction but then later needs to be a Pension/pretax type.
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