- Knowledge Base Categories:
- School Accounting System
- Payroll
Training Tidbit: Tax Pay Periods Per Year Field in Employee File
Did you know the School Accounting System uses the annual tax table amounts defined by the federal and state governments to calculate and withhold income taxes? During each payroll calculation, the system annualizes the salary for each employee in order to calculate the appropriate amount of income taxes to withhold. The information entered on the Taxes screen in the Employee File for the employee’s marital status and number of exemptions (if applicable), and the number entered in the Tax Pay Periods Per Year field on the Employment screen, are all used in calculating taxes.
The number entered in the Tax Pay Periods Per Year field should reflect the number of times the employee will be paid in the year. The number entered in the Tax Pay Periods Per Year field is very important as it is used to annualize the employee’s salary for the federal and state tax tables. For example, if an employee’s tax pay periods per year is 12 and the taxable gross for Federal Income Tax is $2,000 for a pay period, the system will take the $2,000 and multiply it by the number of tax pay periods per year to determine the annual taxable salary of $24,000 ($2,000 X 12) and then calculate the appropriate taxes for the employee using the designated tax table and number of exemptions.
To review the complete FIT calculation for specific examples, click here.
Note: To quickly look at the tax pay periods per year for your employees, generate the Employee Listing – Summary report (accessed from the Reports menu in Payroll, and then Employee Reports).