How to enter Third-Party Sick Pay Adjustments

How to process 3rd party sick pay adjustments into payroll to record them on the employees' W-2's, and to pay any applicable employer taxes.

How to enter the payments –
You 1st need the information from the insurance company with gross amounts, taxable amounts, and tax withholding amounts.  The wages are taxable for Federal and State withholding, however, the employee may or may not elect withholding.  The system will calculate the taxes based on the filing status listed on the Employee Information screen. 
Using the Payroll Quick Links, select the Payroll Prep Process and Add/Edit Pay Statements.
New Pay Statement, select the employee.
Select earning code and save.  Only one type of earning code can be used on a pay statement.  If there is ever a case, where an employee received a taxable payment and a nontaxable payment, they need to be broken out into separate pay statements. 

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Under the Utilities menu, select Tax Overrides (Advanced) to confirm the tax withholding amounts.  These amounts may vary by pennies for FICA/Medicare due to the rounding.  If the employee elects Federal/State withholding those amounts will need to be corrected here as well.  Do not zero out the employee withholding for the FICA, it needs to be there.  If it is set to zero and the wages are there, the next time the employee is paid, the FICA will self adjust itself and withhold from the employee's next pay statement.  It needs to stay on this adjustment pay statement, even though the money is remitted by the third party. 

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Close and save the pay statement

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The preview of the pay statement will display the (3P) in front of the tax codes for the Third Party.  Verify the dollars are correct for Gross pay, taxes, and net pay.

Close and finalize the payroll.