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  • 1.  Tax Updates

    Posted Aug 24, 2022 06:25 PM
    Hi,

    How does your organization ensure it stays current on mid-year tax updates?  Do you have a habit of running the "Check for Tax Updates" utility under the Microsoft Dynamics GP button > Maintenance > U.S. Payroll Updates before running each payroll?  Is there another way you're getting reminders any time GP releases a new tax update (does your GP partner send reminders, or does the "Connect" feature on the Home module in GP help keep you reminded)?

    My state (SC) recently passed legislation to consolidate some tax brackets and reduce the highest marginal rate (horray!)  I'm accustomed to only having to run the "tax update" at year-end, as mid-year tax table adjustments haven't been that common for my state to my recollection.  However, I just so happened to read a separate thread on this discussion forum about "over withholding" taxes (I believe that was a user in CA), and it dawned on me, I wonder if there is an updated tax table for SC that has been released as a GP update as a result of our state's recently passed tax legislation passed earlier this summer?

    Our "Last Tax Update" date in our GP environment (18.4.1384) is 12/16/2021.

    I was doing some research to see if we might have missed an update that should have been applied.  Originally, I was thinking we are probably in good shape because Rounds 2-6 don't seem to have an impact on Federal or SC based on the notes at US payroll tax update - Dynamics GP | Microsoft Docs.

    Update 2 (1/20/2022): Arkansas, Illinois, Louisiana, Minnesota, North Carolina, North Dakota, Rhode Island, Vermont
    Update 3 (3/23/2022): Colorado
    Update 4 (5/12/2022): Alabama
    Update 5 (6/8/2022): Utah
    Update 6 (7/15/2022): Idaho, Maryland

    However, upon closer review of Round 1, I see that the release date is 12/21/2021, which is subsequent to the date of our Last Tax Update (12/16/21) in our GP system.  And the Round 1 update does reference "FICA Social Security Limit $147,000", "Federal tax tables added 12/30/2021", and "South Carolina", all of which I anticipate would impact our payroll.

    Does this mean we need to run the "Check for Tax Updates" utility and apply updates to our GP environment?  It seems like that might be what we need to do, especially in order to ensure our FICA continues to withhold all the way up to $147,000 (2022) which is an increase from $142,800 (2021). 

    We don't have any employees who would have reached the FICA limit yet, but are there other issues that I should be concerned with?

    Thanks for any feedback!

    ------------------------------
    Ashton Blocker
    Joint Municipal Water and Sewer Commission
    Lexington
    ------------------------------


  • 2.  RE: Tax Updates

    TOP CONTRIBUTOR
    Posted Aug 25, 2022 08:08 AM
    Hi Ashton,

    We recommend running it monthly, after the last payroll of the previous month has posted and prior to running the current(new) month's payroll. It doesn't take long and prevents missing changes in the tax tables. Especially if you run payroll in multiple states. The other issue is you can't run the tax updates for 2022 until you have completed the 2021 payrolls and run the year-end process. Then running the 2022 tax update will pickup the FICA limits, which change annually. I suggest a recurring appointment in Outlook on the 1st of the month or a date that is appropriate for your pay schedule.

    Hope that helps,

    ------------------------------
    Mark Wiley
    Dynamics Credentialed Professional
    Senior Solutions Architect
    GraVoc
    Ohio Office
    ------------------------------



  • 3.  RE: Tax Updates

    Posted Aug 25, 2022 05:15 PM

    Mark,

    Good tip!  We'll keep that in mind as we adjust our process moving forward, so as not to miss an important tax update.

    Can I ask, do you happen to know off the top of your head whether when we do go ahead and run a tax update, presumably that will update us to the most recent round (i.e., Round 6 released 7/15/2022), the calculations that run behind the scenes on the next pay run, does the system just look at the gross wage for that one check, or does GP attempt look at YTD amounts and attempt to "true-up" any previous under/overwithholding (thinking about the Federal Income Tax) via one larger adjustment to the first paycheck after the application of the updated tax tables?

    In other words, my anticipation is that, we may be in a situation where we've slightly overwithheld (and remitted) from employee paychecks ytd, based on my best understanding of the 2022 tax tables versus the 2021 tax tables.  In any given period, this appears to be a relatively minor amount.  However, we are now in August, so we've run 17 of our 26 pay dates so far.  I'm wondering if GP will attempt to makeup that overwithholding on the first check after the tax update is applied, or does it just run the calculation on the wages reflected on that singular paycheck?

    I think we're going to run a test check in our test environment to see if we can figure it out ourselves, but thought I'd at least ask in case anyone on this forum has any experience with such a situation.



    ------------------------------
    Ashton Blocker
    Joint Municipal Water and Sewer Commission
    Lexington
    ------------------------------



  • 4.  RE: Tax Updates

    TOP CONTRIBUTOR
    Posted Aug 26, 2022 08:13 AM
    Ashton,

    GP only looks at the current cycle for calculating state taxes. So it will not "true up" the annual amount. Generally, the amounts are not too bad and the employee will get a slightly larger refund when they file their state taxes. The only tax that tries to "true up" is FICA, as that will impact the 941 reporting.

    Good idea to test it out. As they say, "Your mileage may vary..." and as GP has updates, the way some things operate in the software changes and my past experience can work against me. :)


    ------------------------------
    Mark Wiley
    Dynamics Credentialed Professional
    Senior Solutions Architect
    GraVoc
    Ohio Office
    ------------------------------



  • 5.  RE: Tax Updates

    Posted Aug 26, 2022 12:15 PM
    Mark,

    Thanks again for your feedback on this topic!  We've found your experience/perspective to be valuable.

    Just to recap, we did go ahead and login to GP (as our sa user) and run the "Check for Tax Updates" function using the "Automatic" method (via our Authorization Number).  I confirmed that our "Last Tax Update" field updated to 7/15/2022 which coincides with the most recent round (Round 6) of tax updates for 2022, as far as I can tell.  

    I used our "Demo" company database to run our payroll before applying the tax update and then again after applying the tax update to compare the net payroll amounts for each employee and am relieve to report that there was no change.  I don't know if that means that whatever Federal or SC adjustments that are applicable to us were already included in the 12/16/2021 tax update we already had installed in our environment or what, but the update to 7/15/2022 doesn't appear to have resulted in any change to employees' net pay amounts. 

    I also tested the one employee we have that might have a FICA wage limit issue later in the year by adding an extremely large bonus to his paycheck, and the YTD maximum that gets withheld on their paycheck after applying the tax update ends up being $9,114.00 which coincides with 6.2% of $147,000 which is the 2022 FICA wage limit.  Lastly, I hand calculated the SC tax withheld based on the published SC tax tables and  compared it to the withholdings calculated by GP and it tied back to within $1.  So, I feel very good about where we are with the tax update now.

    And I took your advice to add a calendar reminder to run the Check for Tax Updates monthly.

    Thanks again!

    ------------------------------
    Ashton Blocker
    Joint Municipal Water and Sewer Commission
    Lexington
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