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FICA tax is imposed by the federal government on both employees and employers to fund Social Security and Medicare. The information on the percentage and limits is on the IRS website; in the Publication 15 (Circular E) Employer’s Tax Guide; on our website or you may check with your accountant.
Each year the rates must be updated in the Profits Plus Payroll (Module 1), System Management (Task 32), Update P/R Execution Parameters.
The employer must match the % taken out of the employee’s pay for FICA. If the mandated amount taken out of the employees pay is 6.2% then the employer must also pay 6.2%. Usually there is a FICA maximum. For 2010 the FICA maximum is $106,000.00, therefore when the employee’s earnings reach $106,800.00, they no longer have the 6.2% taken out of their pay and the employer no longer has to pay the matching percent. The percentage and maximum limit need to be verified and updated each year.
The employer must also match the percentage taken out of the employee’s pay for MEDICARE. If the correct amount taken out of the employees pay is 1.45% then the employer must also pay 1.45%. At the current time there is no MEDICARE maximum. The percentage and maximum limit need to be verified and updated each year.
FICA – the percentage and maximum limit are not affected by number of dependents claimed by an employee. Some health insurance plans may be pre-FICA deductions. Check with your accountant to verify.
After running Task #2 (Calculate the Payroll) reports are printed. One of the reports is a Pay Edit list (PAYREG). The second section of the the report shows the taxes due for the payroll. It shows the employee and employer FICA, MEDICARE and federal payroll taxes due. You can make your 941 employers tax payment using this sheet. You will then need to either enter a voucher into the Accounts Payable module or a manual journal entry into the General Ledger module. This isn’t automatically done through the payroll module.
At the end of each quarter the employer will need to file a 941 Employer’s Quarterly Federal Tax Return. The report on Profits Plus needed for this is in the Payroll Module, Tax Reports/Forms (Task 10), Quarterly 941 / Monthly Tax Summary (Sub-task 1)
Check with your state authority or accountant for any State payroll tax information and forms needed.