End of Year Federal Income Tax Updates

NOTE: The process described in this article only applies to Self-Hosted Agencies. All Avail-Hosted ETMS Agencies will receive this update automatically on 1/1/2024.

In 2020 the IRS released a new W4 that eliminated the allowance withholding, but they did not require employees to update their tax withholding. This has led to two tax tables, one prior to 2020 and one after. This guide will walk the user through updating both tables in tax maintenance. Please reference the Publication P-15T,  it can be found at https://www.irs.gov/pub/irs-pdf/p15t.pdf

1. If the employee HAS submitted a Form W-4 for 2020 or later do the following in the Tax Allowance Setup:

Payroll > Tax File Maintenance > Tax Allowance Tables


  • Tax Record Type: FIT (Federal)
  • Tax Entity ID: 20
  • Tax Exemption Type: FWA (Federal Withholding Allowance)
  • Click Setup.
  • Pay Period must be Annual
  • Enter the amounts listed in 1g on Publication 15-T as the Allowance Amounts for:
    • Head of Household
    • Married
    • Single

Publication 15-T from www.irs.gov

2. If the employee HAS NOT submitted a Form W-4 for 2020 or later do the following in the Tax Allowance Setup:

  • Tax Record Setup: FIT (Federal)
  • Tax Entity Id: 20
  • Tax Exemption Type: CWA (Claimed Withholding Allowance)
  • Click Setup
  • Pay Period must be Annual
  • Enter the amounts listed in 1k on Publication 15-T as the Allowance Amounts for:
    • Head of Household
    • Married
    • Single



3. The next steps are to update the tax tables with the information from the Percentage Method Tables for Automated Payroll Systems from Publication 15-T:

Payroll > Tax File Maintenance > Tax Table Setup


  • Tax Record Type: FIT (Federal)
  • Tax Entity Id: FT (Federal Tax)
  • Pay Period: AN (Always choose Annual)
  • Filing Status: H, M, S (Update all three: Head of Household, Married, Single)
  • Click Setup

4. Using the Standard Withholding Rate Schedule enter the information for each filing status:

    • The system will automatically update with the information for Column E.

5. Now change the settings to the following:

    • Tax Record Type: FIT (Federal)
    • Tax Entity Id: 20
    • Pay Period: AN (Always choose Annual)
    • Filing Status: H, M, S (Update all three: Head of Household, Married, Single)
    • Click Setup.

6. Using the Form W-4, Step 2, Checkbox, Withholding Rate Schedule enter the information for each filing status:

    • The system will automatically update with the information for Column E.

NOTE: The Social Security (FICA) maximum taxable earnings increases for 2024 to $168,600 (see
https://www.ssa.gov/news/press/factsheets/colafacts2024.pdf for more details). No changes to Medicare for 2024
.

Payroll > Tax File Maintenance > Tax Fixed Percentage Setup

 

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