P4470

P-4470 Handling automobile or life insurance compensation.

MODULE:        PR
PROGRAM:       ACCUMWRK
AUTHOR:        NS/HZ 
DATE:          December 13, 1996

SYMPTOM:

     If an employer pays for an automobile that the employee uses for
     business or if the employer pays for certain life insurance policies
     for the employee, the employee is obligated to pay tax on a portion of
     the value of these benefits. How is this accomplished?

ISSUE/PROBLEM:

     In concept two things must be achieved:

     1.   The taxable value must be added to the employee's payroll.

     2.   This added value (above) must be neutralized to zero so
          that the employer does not pay the automobile benefit twice.

SOLUTION:

Step 1. Set-up the AUTO ADDITION and/or INSUR ADDITION earning/deduction
        table as appropriate, and also the DEDUCTION table file records:
     
     
Main   Second                 Affects Include
Key     Key    Description    Shifts  In Gross Fed FICA ST City
------ ------ --------------- ------- -------- --- ---- -- ----
31-54* AUTOMA AUTO ADDITION       N      Y       Y   Y   Y   Y
31-54* INSURA INSUR ADDITION      N      Y       Y   Y   Y   Y
31-54* DEDUC  DEDUCTION           N      N       N   N   N   N


                                       (E)arn                     W2 Code
                 Addition/             (B)enefit      G/L           for
                 Deduction Limit Basis (W)itholding   Account     Box 13
                 --------- ----------- ------------  -----------  ------
Auto  Addition:      A         Y           B         leave blank
Insur Addition:      A         Y           B         leave blank     02
Deduction:           D         Y           B         leave blank

* You may use any number within the 31-54 range. 


Step 2.   Use the ACCUMWRK program to enter the taxable amounts:

Method 1  The preferred method is to add the taxable compensation
          to the employee's regular payroll check.

          In the ACCUMWRK program enter the taxable amount in
          both AUTOMA and DEDUC (or INSURA and DEDUC).         

          (NOTE: If you only want to deduct FICA and no other taxes
           from the automobile and insurance amounts
           then the AUTOMA and the INSURA table file records should be set
           before ACCUMWRK to N Y N N  for Fed, FICA, ST, City
           AND SET BACK to    Y Y Y Y after you print the checks.)
           ------------



Method 2  An alternate method is to create a compensation check
          netting out to zero. This method causes the employer's
          FICA to be under reported.

     1.   In the ACCUMWRK program set Tax Frequency to 'N'(no taxes).

     2.   Enter the taxable amount in both AUTOMA and DEDUC.

     At this point the FICA becomes the facility's responsibility.
       OR 
     Prior to the end of the year deduct the appropriate FICA amount
     from the employee's check.