Adjustment example
This example shows how to make an adjustment for third party sick pay.
The employer received these information from the third-party carrier.
| Employee | John Doe |
| Total payments | $1000.00 |
| Percent employer funded | 100 percent |
This was withheld from the above gross amount:
-
$200.00 Federal withholding tax
-
$50.00 State withholding tax
-
$62.00 Social Security tax
-
$14.50 Medicare tax.
The employer makes the adjustment as follows:
| Employee deductions | Amount withheld | Taxable Amount |
|---|---|---|
| Federal withholding tax | 200.00 | 1000.00 |
| State withholding tax | 50.00 | 1000.00 |
| Social Security tax | 62.00 | 1000.00 |
| Medicare tax | 14.50 | 1000.00 |
| Wash deduction | 673.50* | |
| Net pay | 0.00 | |
| Company deduction | ||
| Employer SS tax | 62.00** | 1000.00 |
| Employer Medicare tax | 14.50** | 1000.00 |
| Excess SUTA taxable | 1000.00 | |
| FUTA taxable | 1000.00 |
* The amount of the "wash" deduction equals the difference between the gross pay and the employee deductions. When you specify a "wash" deduction, it enables the adjustment to net to zero, which satisfies the Adjustment (PR82.1) rule.
** The company deduction does not affect the gross-to-net equation. In this example, assume that the employee has already reached the State unemployment taxable wage limit, so Excess has been flagged on the unemployment deduction entry.
It is recommended that you review the distribution entries created by the adjustments because accounting entries might have been posted already. You can change or delete the distributions for an adjustment in Adjustment Distributions (PR82.2).