Follow these steps when a third party makes payment toward
extended disability. To ensure this information is recorded on the employee’s
W-2, it is important that these steps be followed exactly.
q
On the Payroll
Maintenance menu, select Additions,
and then Add.
q
The Name of
the addition is of your choosing (example: Third Party).
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The Addition
Method should be Add Data Entry
Amount.
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The tax impact depends on the requirements of your specific
state. Usually the tax impact is Social Security and Medicare (both employee
and employer).
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For W-2 Impact, select the option No W-2 impact.
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On the Payroll Utilities menu, select Cash Pay.
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Select the employee.
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Enter the Check
Date and the Pay Period End Date.
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For Check Number
enter nine 9’s (999999999). You MUST
enter these 9’s. This, combined with a
net pay of zero, tells the system this entry is third party pay.
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Select the Bank
Account. No cash will be removed from the account; however, the system
requires a selection.
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Enter the Month
to Adjust.
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Confirm the Quarter
to Adjust.
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For Net Pay
enter 0.00. You MUST enter a net pay of zero. This, combined with the check
number, tells the system this entry is third party pay.
q
For Posting
Information, select the Store and Department to be charged with the
expense. Next, enter any EMPLOYER taxes that were incurred.
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DO NOT enter anything in the Wage/Hours field, but you must select the field and leave it.
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In the Taxes
field, enter the amount of any taxes withheld from the employee AND any
Employer Tax that you pay.
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For Additions
& Deductions, enter the gross taxable amount of the third party in the
Addition you previously set up.
q
Select OK.
Since this is a third party payment, there is no balancing
to the net pay. If the screen displays a message saying that the calculated
federal dollars do not equal net pay, you either did not enter the 9’s for the
check number or you did not enter a net pay of 0.00.
You can build a report to see the total of the third party
pay for a given quarter and YTD. Fields to be included would be: Employee Name, Soc. Sec #, Addition (Third
Party) for the report quarter* (if
non-zero), and Addition (Third Party) for year to date* (if non-zero).
*Go to the
“defined” field in these columns and select the appropriate time frame.
Access the employee from Employee Maintenance.
q
Scroll down to and select the parameter W-2 Information.
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Select Sick Pay
Not Includible As Income.
q
In the field “WHOLE DOLLARS WITH NO DECIMAL” enter the
amount of sick pay NOT included in income because the employee contributed to
the sick pay plan.
This amount will appear in Box 13 with a code (J).