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 .
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, 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 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.
- 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.
- 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
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.
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.
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.
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.