Enter Employment Information

You can add basic information about each employee's position(s) in the Employment Information section of the Employee window. On the Payroll tab, click Employees > Employment Information.

Employment

Reason: Enter the reason for hiring the employee. If terminated, enter the reason for termination of employment.
Last Check Paid: View the Reference, Date, and Amount of the employee's last paycheck. This information comes from the latest paycheck.

Federal Tax Options

Form W-4

CAUTION: If employees submit Form W-4 for 2020 or after, you must update to PDS Ledger/Payroll version 9.1A in order to select the appropriate options which determine the correct withholding table to apply to these employees' wages. To update: On the File menu in your PDS program, click Check for Program Update.

Filing Status—Select the filing status from the drop-down list. The IRS has strict laws for filing status classifications. Make sure you are in compliance with these laws when you select a filing status.
CAUTION: The filing status you select here does not tell the program which tax table to use to calculate the amount of federal tax. You need to enter this in the Master Paycheck grid of the Wages/Master Paycheck window.
Form Year—Select the year of Form W-4 this employee uses.
Step 2 - Multiple Jobs—This option is available for use with Form Year 2020 and above. In Step 2 of Form W-4, employees can increase their withholding to account for higher tax rates due to income from other jobs in their household. Select this option if the employee either entered an additional amount to withhold per payroll period in Step 4(c) or checked the box in Step 2(c).
Note: This determines which withholding rate tables to apply to the employee's wages: if this option is selected, the Multiple Jobs table is used; otherwise, the Standard table is used. You can view these tables. On the Payroll tab, click Tax Setup > Federal Tax. Then, select a table in the left menu.
Withholding Allowances—If you use Form Year 2019 or earlier, enter the number of allowances claimed by the employee on the W-4. The program multiplies this number by the withholding allowance amount from the appropriate tax table, then subtracts the total from the gross wages before taxes are calculated.
Children under age 17—If you use Form Year 2020 or later, enter the number of children under age 17 claimed by the employee on the W-4. The program calculates the dollar amount for children and displays it next to this field.
Other Dependents—If you use Form Year 2020 or later, enter the number of any other dependents claimed by the employee on the W-4. The program calculates the dollar amount for other dependents and displays it next to this field.

W-2 Statutory Employee

Select if the employee's earnings are subject to Social Security and Medicare taxes but not to Federal Income tax.

W-2 Third Party Sick Pay

Select to file a W-2 for an insured's employee.

W-2 Retirement Plan

Select to include 401(k), annuities, or a pension plan.

Nonresident Alien

Select if the employee is not a resident of the United States.

For more about W-2 options, consult your tax adviser, the instructions for the W-2 form, or IRS Publication 15-A.

State Tax Options

: Each state has different definitions for personal exemptions, dependents, and other exemptions. See the tax documentation for your state for details.

Compliance with Filing Status

You can select an employee's W-4 filing status in the Federal Tax Options section of the Employment Information window.

CAUTION: The IRS has strict laws for filing status classifications. Make sure you are in compliance with these laws when you select a filing status.

Clergy

Select if the employee is self-employed. These employees do not fill out a W-4, so federal tax is not calculated on their regular wages. The base salary is exempt from the withholding of Federal Income tax, FICA wages, and FICA withholding.

However, self-employed members of the clergy are required to make quarterly estimated tax payments to cover Federal Income tax and SECA tax (the employee and employer share of FICA). The program includes the total wages for clergy employees on the quarterly 941 tax reports and prints a W-2 for these employees.

Clergy are considered as self-employed for FICA taxes on regular wages, but they are considered as employed for fringe benefits, such as car allowances. Some allowances have an applied FICA tax, so the employer is required to pay matching FICA.Since clergy are considered self-employed for FICA, salary is not included when calculating the employer FICA tax.

The program does not calculate FICA or federal tax on the clergy employee's regular wages, even if a FICA entry is set up in the Wages/Master Paycheck window to handle allowances.

Clergy Voluntary

Select if the clergy member filled out a W-4 requesting voluntary deductions for federal withholding on regular wages. A clergy member must fill out a W-4 to eliminate making quarterly federal tax payments. However, since clergy members are considered to be self-employed and are exempt from the withholding of FICA on their base wages, they are still required to pay the self-employment tax (SECA).

To avoid paying the SECA tax, clergy can elect to have federal tax withheld to cover the SECA tax. On the W-4, the clergy employee enters an extra amount to deduct. In the employee's Master Paycheck grid, select Federal-Extra in the Type column, and enter this extra amount. This amount must cover the estimated SECA tax liability by the end of the year. The extra withholding counts towards the employee's total federal and SECA tax liability.

Some clergy allowances are subject to FICA, federal, and local withholding. In order for the program to tax these allowances, you must set up specifications in the Allowances window. If an allowance is not exempt from FICA withholding, you must enter a FICA deduction entry in the employee's Wages/Master Paycheck window. Clergy-Voluntary employees are included on quarterly and annual tax reports and they receive a W-2.

Note: If you pay a religious order instead of making direct payments to clergy, you must add the religious order as a vendor and enter a recurring invoice for the total amount of the salary. Another way to pay a religious order is to set it up with a Contract filing status.

Contract

Select if the employee does not work for your organization on a regular basis. Contract employees do not fill out a W-4 or W-5 and they are responsible for their own FICA, federal, state, and local tax payments. The program does not calculate any of the employer's taxes for contract employees, but it prints a 1099-NEC form at the end of the year.

Exempt

Select if the employee is exempt from Federal income tax. This filing status does not mean that an employee is exempt from all taxes. If you select Exempt status, employees are still liable for FICA withholding and the employer must match their FICA deduction. The program includes exempt employees on quarterly and annual tax reports. Wages for exempt employees are included in the calculation of the FICA due on the quarterly tax report, and these employees receive a W-2 at the end of the year. If the employer pays a FUTA or SUTA tax, exempt employees are excluded from the calculation of FUTA, but are included in the calculation of SUTA.

CAUTION: If you enter a federal tax deduction in an employee's Wages/Master Paycheck window, the program calculates federal tax for this employee, even if the filing status is Exempt.

Head, Married, and Single

If clergy members claim this status on the W-4, the program calculates their wages in the same way as for employees.

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