3 Replies Latest reply on Nov 18, 2011 7:03 AM by crusecontrol

    Computing Payroll Tax

    AllegroDataSolutions

      I am developing an accounting solution on spec and I have a question about how the payroll tax for Medicare is computed. Is is a straight percentage, or is it a percentage with a cap on the amount. I ask only because, in analyzing payroll data from another database, I see that, here in NY, the Medicare deduction never seems to go higher than 60 cents for any employee (although it is lower on smaller paychecks).

       

      In my solution, the user sets the tax rates and then those percentages are use to compute the tax for each payroll check. If the Medicare deduction is capped at 60 cents, it will require rounding down to that amount (assuming the cap kicks in at a certain dollar amount).

       

      Thanks.

       

      Ed Rubeo

      Allegro Data Solutions

      (Please post your response to this forum, rather than contacting me directly.)

        • 1. Re: Computing Payroll Tax
          RayCologon

          Hi Ed,

           

          I don't know the answer regarding whether there is a cap - but it seems likely. However this is not the place to be asking that part of your question, as you need an answer from an authoritative source, not a straw poll from people whose information may be out of date or otherwise inaccurate. I'd therefore suggest you get onto Google and locate and download the relevant guideline doc from the IRS - or give their toll free number a call if you can't find the appropriate source document.

           

          Meanwhile, assuming you do need to apply a cap, it won't require rounding as such, but truncation of the rated value. You can achieve that fairly simply with a calculation along the lines of:

           

          Min(0.60; rate * amount)

           

          But of course, that's the easy part.

           

          Along with that, I would also suggest that you consider making the cap amount a preference or setting in your solution, so that if it changes, an adjustment can be made without changing the code.

           

          Regards,

          Ray

          ------------------------------------------------

          R J Cologon, Ph.D.

          FileMaker Certified Developer

          Author, FileMaker Pro 10 Bible

          NightWing Enterprises, Melbourne, Australia

          http://www.nightwingenterprises.com

          ------------------------------------------------

          • 2. Re: Computing Payroll Tax
            timwhisenant

            Hi Ed,

             

            Don’t follow the other developers. Get your information from the source. The Internal Revenue Service provides publications for answering the questions you have. See http://www.irs.gov/pub/irs-pdf/p15.pdf  If that is still unclear, contact them or a professional accountant. Payroll tax matters are not difficult, but when done wrong can cause a world of hurt and headaches.

             

             

             

            Hope this Helps,

             

            Tim

            • 3. Re: Computing Payroll Tax
              crusecontrol

              I can second the heartache. And thats every year too!