How to verify Microsoft Dynamics GP is calculating Payroll taxes correctly

Many times in support, we will get questions on our payroll tax calculation as users may feel it is incorrect.

Below is a great knowledge base article that gives you the steps of how Microsoft Dynamics GP annualizes its payroll calculation of taxes.
855655 Federal Tax Calculation
https://mbs.microsoft.com/knowledgebase/KBDisplay.aspx?scid=kb;EN-US;855655

Because Microsoft Dynamics GP annualizes its taxes, what drives the calculation is the pay period or the frequency fields on your pay codes, benefits, and deductions.

A common misconception when customers call is they may have the pay code pay period field set to weekly, as they have a weekly payroll, but the deduction will be set to monthly as it is only taken out once a month.
The frequency field on a deduction/benefit does not control when the deduction is taken, but instead the tax calculation of that deduction.

We may also see a customer say I am paying a bonus and hardly any taxes are getting taken.  If you look at the pay period of the bonus, it is annual, as it is an annual bonus, not realizing this affects tax calculation.

Another secret in support is this cool website below.  It is free tool that allows you to do what if scenarios and verify if Microsoft Dynamics GP taxes are really correct!

<www.paycheckcity.com/calculator/netpay/us/alabama/calculator.html>

Taxes are so much fun, hope this information is helpful to you.
Terry Heley

Comments

• Anonymous
  February 03, 2014
  Terry, This is great information. But, is there something in writing that explains why, for an employee whose wages and deductions remain constant, the calculation of Medicare and Social Security may vary each week by $0.01?