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Medicare Additional Tax Item
New Medicare Employee Adtl Tax Item
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New Additional Medicare Tax Employee Record
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Additional Payroll Tax Payroll Item Set-up
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Additional Medicare Tax Paycheck
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Resort the Payroll Item List
Payroll Issues - New Payroll Item brings Old Data Corruption Error
Recently we have seen an older form of data corruption associated with QuickBooks Payroll’s newest standard payroll item, the Medicare Employee Addl Tax. The error, reported in the QBWin.log file will appear as:
el_cpitm.c (8005): MESSAGE: 1592: Wed Apr 17 14:34:11 LVL_ERROR--Verify Payroll Item: Invalid payment template. Rcrd = 91. Ref = 174
el_cpitm.c (8006): CHECKPOINT: 1592: Wed Apr 17 14:34:11 Pay item name: "Medicare Employee Addl Tax", Payment template name: "Medicare Employee Addl Tax"
Typically corruptions associated with the Invalid payment template error are the result of QuickBooks inability to locate a specific payroll item within the payroll items list, or identify all of the components of a specific payroll item. Before we look at this error, we should at least review the specific payroll item in question.
The Additional Medicare Tax
Beginning January 1, 2013, a new Additional Medicare Tax applies to individuals’ Medicare taxable wages, compensation or self-employment income that exceeds certain threshold amounts based upon provisions of the Affordable Care Act, commonly known as “Obama-care”. Employers are responsible for withholding the additional 0.9% tax from Medicare taxable wages and compensation paid to an employee in excess of $200,000 in a calendar year.
QuickBooks Payroll Item
Starting with Payroll Update 21301 in mid-December 2012, QuickBooks payroll subscriptions included support for the new Medicare Employee Addl Tax payroll tax item. In order to insure compliance it was necessary that every payroll subscriber set up this new payroll tax item so that QuickBooks could properly handle tracking, calculating, withholding and reporting of the new tax. Once set-up properly QuickBooks reports the Additional Medicare Tax on Form 941, 944, 943 and W-2.
When the Medicare Employee Addl Tax payroll tax item is properly added for your company file and attached to the employees subject to Medicare, the payroll tax item appears in a variety of QuickBooks windows. We will review these locations, because this is one essential step in resolving the data corruption which is the subject of this article.
The Medicare Employee Addl Tax payroll tax item should appear as an Other Tax type in the Payroll Item List. To find it quickly, sort the list by Type. (See slide 1) If the new item does not appear in your Payroll Item list, or if you elected to change the name of this payroll tax item, you could have already identified the potential cause of the error. Another potential cause of this corruption results when users fail to accept the default 'taxable compensation' items in the set-up window for this new item.
For each employee subject to Medicare, the Medicare Employee Addl Tax payroll tax item should be listed on the Other tab of the Taxes window in the employee’s record. (See slide 2) If the item does not appear in the employee’s record, you could have found the possible cause of the error.
The Medicare Employee Addl Tax should also appear on the list of Federal Taxes in Payroll Setup. (See slide 3) If you used Payroll Setup to change where or how you pay your Medicare Employee taxes, you should have made the same change for the Medicare Employee Addl Tax, if you didn’t you may have found a possible cause for the error.
When you pay employees, you should see the Medicare Employee Addl Tax item in the Employee Summary section of their paycheck detail. (See slide 4) The amount for this payroll tax item should appear as $0.00 until the employee’s year-to-date Medicare wages exceed $200,000 in 2013. If the item does not appear on one or more employee’s paycheck detail records, or an amount appears for any employee whose Medicare YTD wages have not exceeded $200,000, you could once again have identified the possible cause of the error.
Resolving the Error
As you can tell from the error reported in the QBWin.log, there isn’t a great deal of information as to the potential cause of the error, other than the fact that the new payroll item is involved. Based upon our review of the new payroll item’s set-up, and how it should appear in various QuickBooks records, you can easily see that our first step in resolving this error is in verifying all aspects of the item’s set-up.
Verify Item Set-up
Open the Payroll Item List, and locate the item. Insure that the default name for the item Medicare Employee Addl Tax has been used, and not been changed. Problems have been seen when the name is changed because the apparently can cause a conflict with the internal name which is the same as the default.
From the Payroll Item list menu at the bottom of the list, select the option to Edit the item. Insure that the name of the agency to which the tax is paid is correct, this should be the same agency (vendor) name used for the Medicare Company and Medicare Employee payroll tax items, if it is not, this could very well be the cause of the error; it should be changed to the same agency. Verify that the item’s liability account is either the default Payroll Liabilities account, or the same liability account used for the Medicare Employee payroll tax item. You should also verify that you have accepted the default taxable compensation items during set-up, if you made any changes in these taxable items, this may very well be the cause of the template conflict. If you make any changes during the review process, be sure to Save.
Verify the Employee records
From the Employee menu, choose Employee Center; double-click on an employee’s name in the left column to open the employee’s record. The first verification needs to be of the employee’s social security number, insure that the employee record contains an appropriate number. In QuickBooks 2013, click the Payroll Info tab on the left. (In earlier versions of QuickBooks, click the drop-down arrow next to the Change tabs box, and select Payroll and Compensation Info.) Click the Taxes button. On the Federal tab, verify that the employee is subject to Medicare taxes by confirming that the checkbox next to Medicare is checked. Click the Other tab, and insure that the Medicare Employee Addl Tax is shown in the left hand Item Name box. (If it is not, you will need to add it from the drop-down menu.) The absence of this item, when the employee is subject to Medicare, can definitely be one cause of the error. If you make any changes, make sure you click OK to close the taxes window, and click OK to close the employee record. (Note: You need to repeat this process for each employee to insure that every employee is set-up properly.)
Re-sort Payroll Item and Employee Lists
Open the Payroll Item list; then open the QuickBooks View menu. Select the option to Re-sort list; close the Payroll Item list, reopen it, and repeat the Re-sort again. (See slide 5)
Open the Employee Center; then open the QuickBooks View menu. Select the option to Re-sort list; close the Employee Center, then reopen it, and repeat the Re-sort again.
Rebuild Your Company File
Close all windows inside QuickBooks; then open the File menu. Click the Utilities sub-menu, and then select Rebuild Data. Follow the steps to rebuild including backing-up your data. (Note: You will probably need to set the back-up options to ‘Quicker Verify’ your data.) After the verify completes, re-verify your data, following the same procedures as noted above. (Note: You should be able to change your back-up option to full-verification on this 2nd attempt.) Upon completion of the second Rebuild, perform a Verify of your data; click the Utilities sub-menu, and then select Verify Data.
Upon completion of these procedures, the Invalid payment template "Medicare Employee Addl Tax" error should be resolved.
William “Bill” Murphy