Microsoft Dynamics SL calculates incorrect additional Medicare withholding

Symptoms

Fed9, additional Medicare taxes for earnings over government specified limits, incorrectly calculates.

Cause

SL annualizes wages. That causes a large, one-time check to assume that the annual wages are greater than the defined limit and to calculated a fed9, Additional Medicare deduction amount, even though the wages are below the defined wage limit.

A second factor in a wrong calculation is when calculations look at the gross Fed6 Medicare wages without considering any pretax exemptions like 401k or insurance. 


Resolution

Microsoft Dynamics SL 2015 Cumulative Update 1 (CU1)
See KB article 3156382


Microsoft Dynamics SL 2015 and previous version:

To change the Fed9 setup, follow these steps: 

1. Open Deduction Maintenance (02.290.00)

2. In Deduction ID, type FED9.

3. Change the Min YTD Subject Base to 200000.00 and change the Max YTD Subject Base to 999999999.

4. On the Exemptions/Credits tab, click on an empty line, Press F4 to switch to form view.

5. Set up a new exemption.

Marital Status = All Statuses
Type = Exemption
Exemption/Credit ID = FED6
Description Fed6 subjwages
Base Type = Deduction Amount
Base Deduction ID = FED6
Calculation Method Fixed Percent 
Fixed Pct/Rate/Amt = 6896.5517
Annual Minimum = 0
Annual Maximum = 200000 
Maximum calculation = As Calculated
Reduce reported wages subject to withholding = Checked

6. Click Save. 

Note: Fixed % of 6896.5517 is calculated as 1/0.0145 = 68.96551724 converted to a % = 6896.5517

7. Set up any pretax exemptions such as medical insurance for Fed9 the same you have set them up for FED6.


NOTE: If the employee is not going to reach the 200000 amount then Exempt that employee from Fed9.

More Information

The script below can be used to show which employees had a FED9 amount withheld.

select calyr,empid,calytdearnded,YtdRptEarnSubjDed,* from EarnDed where EarnDedId = 'fed9' and CalYr = '2015' and CalYtdEarnDed<>0

The script below can be used to set FED9 subject earnings to zero for employees that had no FED9 deduction amounts. 

update EarnDed set QtdRptEarnSubjDed00=0, qtdrptearnsubjded01=0, qtdrptearnsubjded02=0, qtdrptearnsubjded03=0, MtdRptEarnSubjDed00=0, MtdRptEarnSubjDed01=0, MtdRptEarnSubjDed02=0, MtdRptEarnSubjDed03=0, MtdRptEarnSubjDed04=0, MtdRptEarnSubjDed05=0, MtdRptEarnSubjDed06=0, MtdRptEarnSubjDed07=0, MtdRptEarnSubjDed08=0, MtdRptEarnSubjDed09=0, MtdRptEarnSubjDed10=0, MtdRptEarnSubjDed11=0, YtdRptEarnSubjDed=0 where EarnDedId = 'fed9' and CalYr = '2015' and CalYtdEarnDed =0 

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