If the amount of a deduction/tax is not what you expect, check the following items:

Use the proper payroll period (pay frequency)

•If you pay weekly, but tell the program the check is for two weeks of work (Biweekly), the tax calculated by the software will be roughly half of what you were expecting.

•If you are comparing against a weekly tax chart, make sure you have told the software the payroll period is weekly.

Use the proper Status

•Status greatly affects the tax calculation.

•Single status has the most withholding.

Married status has the least.

•For federal withholding, you must use the status on the last valid W-4 form you received from the employee.

•If the employee does not give you a valid W-4 form, you MUST use the Single status, with zero allowances, and zero additional withholding.

•For state withholding, refer to your state's rules.

•Some states have their own withholding form, some use the federal form.

•It is best to have a second form - even if it is a second copy of the federal W-4, where the employee indicates their state status, allowances, and additional withholding.

Use the proper number of allowances

•Zero allowances causes more tax to be withheld.

•For federal withholding, and most state withholding calculations, more allowances equals less tax.

•Make sure to enter the number of federal and state allowances the employee has designated.

Zero withholding can be correct

•Zero can be the proper amount to withhold, depending on the employee's status, allowances, earnings, and pay frequency.

Consider Retirement and Section 125

•Employee Retirement and Section 125 contributions are excluded from the federal and state withholding calculations (lowers the amount of federal tax withheld).

•The single exception is Pennsylvania, as PA does tax employee retirement contributions.

Consider additional withholding

•If the employee has designated additional withholding, the additional amount is added to the calculated amount.

•When comparing what Medlin Payroll Software calculated against the federal or state calculation, remember to subtract the additional amount from what Medlin Payroll Software is using, to get the actual calculated amount.

State Tax Calculation

•On the Employee data screen, make sure you have selected the appropriate State Tax Calculation for each employee.

Social Security

•Medlin Payroll Software calculates the Social Security contribution using the employee's YTD gross pay, and the proper limit(s) and percentage(s), then subtracts the amount of SS previously withheld.

•The difference is the amount withheld on the current check.

•This method keeps the 'fraction of cents' adjustment on Form 941 to a minimum, as well as 'catching' and correcting errors caused by manually entering an incorrect amount.

Medicare

•Medlin Payroll Software calculates the employee Medicare contribution using the employee's YTD gross pay, and the proper limit(s) and percentage(s), then subtracts the amount of Medicare previously withheld.

•The difference is the amount withheld on the current check.

•This method keeps the 'fraction of cents' adjustment on Form 941 to a minimum, as well as 'catching' and correcting errors caused by manually entering an incorrect amount.

Federal Withholding

•Medlin Payroll Software uses the 'Percentage Method' published in IRS Publication 15.

•The percentage method provides the most accurate calculation.

•We follow the IRS recommendation to round to the nearest dollar.

•Comparing against another program, or against another calculation is not always accurate.

•Compare against the required calculation - the 'percentage method' in IRS Publication 15.

•When comparing against the 'charts' or 'tables', our calculation is more accurate.

•The tables are built with the percentage method, but are designed to be 'close enough' for a range of earnings.

Zero can be the proper amount to withhold, depending on the employee's status, allowances, earnings, and pay frequency.

State Withholding

•Medlin Payroll Software uses the percentage method (or similar) as published by each state.

•The percentage method provides the most accurate calculation.

•We follow each state's recommendation for rounding.

•If their tables are rounded, we round as well.

•When comparing against the 'charts' or 'tables', remember, our calculation is the most accurate.

•The tables are built with the percentage method, but are designed to be 'close enough' for a range of earnings.

•Comparing against another program, or against another calculation is not always accurate.

•Compare against the required calculation - the 'percentage method' in your state's guide book.

•Zero can be the proper amount to withhold, depending on the employee's status, allowances, earnings, and pay frequency.

Local and Misc Deduction Types (Annual Basis and Paycheck Basis)

•To select the Local/Misc calculation method, open the Setup section, then click Program Options:

•The Default is: Annual Basis (YTD gross pay x percentage) - the amount previously withheld.

•If there is a limit for this deduction, the maximum amount withheld for the year will not be over (limit x percentage).

•Calculating using the annual basis provides the most accurate withholding by reducing rounding issues.

•The annual basis will also adjust the deducted amount if a new rate is not set before entering paychecks for the new year.

•'Per-Paycheck Basis' (Paycheck gross pay x percentage).

•If there is a limit for this deduction, the maximum amount withheld for the year will not be over (limit x percentage).

•This option should only be used if the percentage for the deduction changes during the tax year.

State Tax (Table or Bracket Type) Deduction Appears Too High or Too Low

•Are you using the current tax year version and revision of Medlin Payroll Software, as shown in the lower left of the Medlin Payroll Software screen?

•Are you comparing against the latest calculations provided by your state?

•Are the employee allowances, marital status, pay period, and state tax calculation set correctly?

•Compare apples and apples.

•If your state uses a bracket system - not a flat percentage - compare the Medlin Payroll Software calculation against the annual percentage/exact calculation, not against a table.

•Tax table charts are close enough for withholding purposes, but may vary a few dollars from a percentage/exact calculation.

•On the Employee screen, are there any amounts in the Additional Withholding Tax fields?

•On the Employee screen, are there any amounts in the adjustment fields (nonwage income, other deductions, tax credits, and other wages)?

•Has the employee been marked as exempt from state withholding?