FICA AND MEDICARE THIRD-PARTY SICK PAY DEDUCTION DESCRIPTIONS

To facilitate recording and reporting of third-party withheld FICA and Medicare from disability/sick payments, two new standard deductions have been created. FICA-3RD PARTY SICK PAY and MEDICARE-3RD PARTY SICK PAY deduction descriptions can automatically be created by selecting the Build 3rd Party Sick resource (currently resource number 53) from the Make Payroll screen (System Administration –> Version Control, if OpenRDA; Program Updates Menu, if Xpert). These deductions will have FICA as the Deduction Type and W2 Deduction Type. On the Compute tab, compute type will be a flat amount and without any gross amount limits; checked flags will be Active and Reduce Net, all rate types, and block nothing. You will only need to add the Vendor Identification and Vendor Address as well as the Employer ID (the vendor should be the same as your regular FICA deduction). If your organization has multiple EINs (Employer IDs), you can use the standard deductions as templates to create unique deduction descriptions for the EINs. When doing this, the deduction description ID must contain 3RD PARTY SICK; otherwise, the amounts will not pull into the Consolidated Tax Report and the 941 Tax Liability Report correctly. FICA and Medicare are normally withheld from disability payments by the third-party provider when the disability insurance premiums are paid by an employee on a tax-sheltered basis or are organization paid (with the employer responsible for remitting its share of FICA and Medicare tax; and reporting the employee and employer amounts on the 941 and on the W2s).