To use this option, you will
need to do the following:
(1) Make certain that you have a
specific liability account number in the general ledger to track these
payments. If you don’t have one, create
one.
(2) Go to the FILE MAINTENANCE
menu and select the PAYROLL G/L DISTRIBUTIONS button. Add 2 records.
(a) Distribution type FEDERAL
INCOME TAX, code 04.
Use a description of EIC
payments, and enter the EIC liability account.
(b) Distribution type
DEDUCTIONS, code **.
Use a description of EIC
payments, the liability account, respond “Y” to zero at end of year, and “N” to
the garnishment questions. All other
fields should be left blank.
(3) Go to the FILE MAINTENANCE
menu and select the FICA TAX TABLE button.
There is a new field on the FICA/Medicare screen called MAX GROSS $ for
EIC. Enter 2966600 (the current 2003
limit).
(4) Go to the FILE MAINTENANCE
menu and select the FIT, STATE, LOCAL TAX TABLES button. Create tax tables for Federal 04.
Married
(only 1 spouse filing EIC),
Single
Exempt (married, both spouses filing EIC).
(5) Go to the Employee’s file
and get to their tax screen. In the
SPECIAL FIT field, select one of the AEIC options, but leave the FIT $ or %
field blank.
As soon as an employee has one
of the AEIC selections in their file the system will begin the automatic
calculation and payment of EIC during payroll - there is no other step you need
to complete unless you are converting an employee from manual calculation to
automatic calculation.
Notes:
(1) You should NOT create an
Employee Deduction of **. The system
will actually create a ** deduction file for the employee, but only uses it to
track the YTD payments.
(2) If the employee becomes no
longer eligible for EIC, you will go back to the SPECIAL FIT field and blank it
out. That will stop the automatic
calculation and payment.
(3) You will only use the
EMPLOYEE DEDUCTIONS option to “deactivate” any existing employee whose EIC
payment has been calculated manually in the past, or to adjust (add to/subtract
from) the amount being calculated automatically through the use of the SPECIAL
FIT field. “Deactivate” the manual
calculation by removing the amount/percent or by changing the deduction
frequency to a 9).
(4) To convert an employee from
the “manual” calculation and payment to the “automatic” calculation and payment
you will need to do 2 things.
a) Add an
AEIC selection to the SPECIAL FIT field, and
b) Go to
MAINTENANCE, then EMPLOYEE DEDUCTIONS and change the deduction frequency to 9.
c) You can
convert 1 employee at a time, as your time allows. (In other words, you can
have manual and automatic calculations occurring in the same payroll process.)