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Microsoft Dynamics GP Customers Scramble to Reduce US Payroll Tax Following Last Minute Legislation

by Jason Gumpert
Editor, MSDynamicsWorld.com

For Microsoft Dynamics GP 10 and GP 2010 customers, the passage of new US legislation reducing employee payroll taxes 2 percentage points to 4.2% late in 2010 (while leaving employers contributions at 6.2%) is causing some headaches, with Microsoft and other software companies forced to scramble to address the changes and help customers avoid payroll problems.

In December, Summit Group Software noted the potential headaches:

"As many of you know as of January 1, 2011 all employees should have a FICA SS withheld of 4.2 percent (used to be 6.2).  The employer still has to pay the 6.2 percent.  Unfortunately,Microsoft Dynamics GP will store one rate at this time for employee and employer, thus the calculated 941 deposit and GL entry will be wrong.

"After you have installed the 2011 tax tables the FICA SS rate will be 4.2% and the system will DOUBLE this to cover the employer portion. During the payroll process the employee and employer FICA will calculate at 4.2 percent. You will need to adjust your GL to reflect the full 6.2 percent as well as recalculate the 941 deposit for the payroll. 2% of SS wages will need to be added to your 941 deposit and a general journal entry should be created so your withholding accounts and FICA expense accounts have the correct balances."

As Mark Polino points out on his blog, an update in two parts was planned, with the Round 1 Tax Update for 2011 already released in late December.

"Round 1 included the change to both the Employee and Employer portion due to Microsoft Dynamics GP calculation being based from one amount.  Due to this, General Ledger posting, inquiries and reports that show ...

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Accounting Dynamics GP GP 2010 Tax Management
About Jason Gumpert

As the editor of MSDynamicsWorld.com, Jason oversees all editorial content on the site and at our events, as well as providing site management and strategy. He can be reached at jgumpert@msdynamicsworld.com.

Prior to co-founding MSDynamicsWorld.com, Jason was a Principal Software Consultant at Parametric Technology Corporation (PTC), where he implemented solutions, trained customers, managed software development, and spent some time in the pre-sales engineering organization. He has also held consulting positions at CSC Consulting and Monitor Group.

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