Article

More Critical Details of 2011 Payroll Taxes with Microsoft Dynamics GP

by Gloria Braunschweig
President, Dorian Enterprises, Computeration, Inc.

Related to my last piece on the 2011 US payroll tax mess created by last minute changes implemented in the last days of 2010, this alert for Microsoft Dynamics GP customers is simple to understand.  Simple to fix.  But what a mess if you don't get it.

If you rely on the January payroll tax liability calculations in Dynamics GP, you will be incorrect. You must manually calculate the liability until the 2011 Round 2 Payroll Tax Code is available and applied in late January.

Historically, Employer's and Employee's FICA has been exactly the same rate. Dynamics GP used the same percentage field to calculate the tax liability. With the tax amendments passed so late in 2010, Microsoft did not have time to develop and rigorously test new code. The 2011 Round 2 Payroll Tax Code update will fix this, but not in time for payment of January payroll tax liabilities for most companies.

The correct calculation for FICA/Social Security: Gross payroll subject to FICA/SS times (6.2% + 4.2%), which equals 10.4%, not the historical 12.4%.

FICA/Medicare calculation is still correct: Gross payroll subject to FICA/Med times (1.45% + 1.45%) which equals 2.9%

Again, if you rely on Microsoft Dynamics GP federal payroll tax liability calculations for FICA taxes in January, you will under accrue and under pay. 

Here's a question I recently fielded from a GP user on my blog.  The answer is important for everyone to understand:

Question

Hi Gloria,

I have a question about the Payroll tax code update problem. I believe I did everything in the correct sequence. How/what do I check ...

FREE Membership Required to View Full Content:

Joining MSDynamicsWorld.com gives you free, unlimited access to news, analysis, white papers, case studies, product brochures, and more. You can also receive periodic email newsletters with the latest relevant articles and content updates.
Learn more about us here

Get full access
Accounting Dynamics GP GP 2010 Payroll Processing Tax Management
About Gloria Braunschweig

Gloria has experience across the full spectrum of business operations and management. Decades of experience are documented in the book Rapid Implementation, establishing Gloria as a specialists using Microsoft SQL tools for implementation, integration, and business intelligence related to Microsoft Dynamics GP.

Gloria writes and presents on lean implementation concepts and business management systems for small and mid-size businesses. 

More about Gloria Braunschweig