Hi Graziela,
We have an issue where Employee Medicare Tax withholding is incorrectly calculating on negative supplemental wages. When processing wage type as negative for an employee whose YTD Medicare wages is over 200,000, tax is not calculating correctly. Medicare employee withholding is 1.45% up to 200,000 and 2.35% on wages over 200,000. When we entered negative supplemental wages for an employee with over 200,000 YTD it calculates negative Medicare tax at 1.45% on the negative wages and on the positive wages calculates correctly at 2.35%.
The negative wages should have been looked at the YTD before determining whether taxes are at 1.45 or 2.35.
Semi Monthly Pay Period 19 (2015.10.01 to 2015.10.15)
Tax result for payment type Regular payment
Medicare Taxable earning Medicare Tax Taxable YTD
$14,622.12 $343.62 ($14,622.12*2.35% = $343.62) $286,153.60
Semi Monthly Pay Period 20 (2015.10.16 to 2015.10.31)
A wage type of (-1000) has been maintained for the employee in IT0015 for dated 2015.10.31.
Tax result for payment type Regular payment
Medicare Taxable earning Medicare Tax Taxable YTD
$14,622.12 $343.62 ($14,622.12*2.35% = $343.62) $3,00,775.12
Tax result for payment type Once-only payment
Medicare Taxable earning Medicare Tax Taxable YTD
$1000.00- $14.50- ($1,000*1.45% = $14.50) $1,000.00-
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Final Medicare Amount for Pay Period 20
Medicare Taxable earning Medicare Tax Taxable YTD
$13,622.12 $329.12 $2,99,775.12 ($14,622.12-$1000.00) ($343.62-$14.50) ($3,00,775.12-$1,000.00)
Issue is why system is calculating Medicare tax @1.45% on negative wages where as it is calculating tax 2.35% on positive wages.
Any comment/suggestion is appreciated.
Thanks,
Santosh