BCG Systems, Inc.

Dual Rate Tax Tables Now Available within Microsoft Dynamics GP

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In Mid-December, the Tax Relief Act of 2010 was passed and signed into law.  Included in this bill was a temporary change to the payroll tax for the employees’ portion of social security (FICA) from 6.2% to 4.2% while employers’ social security tax remained the same at 6.2%. In the past, the tax employers pay for social security was always the same as the employees’. For this reason, the tax tables within most accounting software had a placeholder for only one number. When congress implemented this small change, there was a scramble because very few accounting systems could support a dual table for social security taxes, including Microsoft Dynamics GP.

Due to the late passage of this bill, publishers had to be creative in their approach to a solution as there was not enough time to fully implement the necessary software changes before January 1, 2011. The Microsoft Dynamics GP development team has approached the situation in a step by step fashion:

  1. On Jan 1st, Microsoft updated their internal employee tax tables to the 4.2 % social security tax rate. The tax amount would be incorrect from the employer’s standpoint, but this insured employees received accurate payroll checks and withholding.
  2. Microsoft released the dual rate tax table software updates for the three supported versions of Microsoft Dynamics GP (9.0, 10.0, and 2010). Once this update is installed, it will calculate both the employer and employee portions of the FICA tax correctly.
  3. Although this law only called for the splitting of Social Security percentages Microsoft went one step further while implementing these changes to include dual table capabilities for Medicare as well.
  4. An updated 941 tax form for employers will soon be available from the IRS, and once it is, Microsoft will update Microsoft Dynamics GP versions 10.0 and 2010 with this new form immediately. However, the form will not be released for Microsoft Dynamics GP 9.0, since version 9.0 was recently retired on January 11, 2011.

Payroll processing with Microsoft Dynamics GP can bring control, accuracy, and compliance into your workplace through many ways and we here at BCG Systems, Inc. are dedicated to staying up to speed on product updates to ensure optimal accounting solutions for our customers. Contact us to learn more about Microsoft Dynamics GP and how to handle the recent payroll tax updates. Don’t scramble any longer than you have to!

By Mark Goodson, President of BCG Systems, Inc. a leading Microsoft Dynamics GP, Dynamics AX, and Dynamics CRM Partner

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