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Third Party Sick Pay Setup

  • 8 September 2021
  • 5 replies
  • 476 views

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Hello,

I was wondering how it is recommended to set up third-party sick pay in Acumatica Payroll? For example, should it be an earning type, a tax attribute, both, etc?

The third-party pays the employee, but we have to withhold appropriate taxes and report wages on both form W-2 and 941.

Thanks!

Best answer by Olesia Alpeeva

  • Create expense account X
  • Create earning code – Third Party sick pay using expense account X
  • Create deduction code – Third Party Sick pay deduction using account X in liability

Scenario 1: Employer withholds taxes and submits W2

  • Create adjustment paycheck
  • Enter earning using Third Party sick pay code (make sure account X is used)
  • Enter deduction with the same amount as the earning using Third Party Sick pay deduction code (make sure account X is used)
  • Calculate
  • Go to the taxes tab
  • Adjust the Employee withholding taxes to 0
  • Save
  • Release

Scenario 2: Third-Party withholds taxes, and submits W2

  • Create adjustment paycheck
  • Enter earnings for the amount paid by third party
  • Calculate
  • Remove earnings
  • Go to the taxes tab
  • Adjust the Employee withholding taxes, taxable gross, taxable wage and taxable hours to 0 OR create a new adjustment paycheck and put the amount for Employer taxes in Amount, taxable gross, taxable wage and taxable hours
  • Save
  • Release
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5 replies

Olesia Alpeeva
Acumatica Moderator
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  • Acumatica Support Team
  • 20 replies
  • Answer
  • November 26, 2021
  • Create expense account X
  • Create earning code – Third Party sick pay using expense account X
  • Create deduction code – Third Party Sick pay deduction using account X in liability

Scenario 1: Employer withholds taxes and submits W2

  • Create adjustment paycheck
  • Enter earning using Third Party sick pay code (make sure account X is used)
  • Enter deduction with the same amount as the earning using Third Party Sick pay deduction code (make sure account X is used)
  • Calculate
  • Go to the taxes tab
  • Adjust the Employee withholding taxes to 0
  • Save
  • Release

Scenario 2: Third-Party withholds taxes, and submits W2

  • Create adjustment paycheck
  • Enter earnings for the amount paid by third party
  • Calculate
  • Remove earnings
  • Go to the taxes tab
  • Adjust the Employee withholding taxes, taxable gross, taxable wage and taxable hours to 0 OR create a new adjustment paycheck and put the amount for Employer taxes in Amount, taxable gross, taxable wage and taxable hours
  • Save
  • Release

Olesia Alpeeva
Acumatica Moderator
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  • Acumatica Support Team
  • 20 replies
  • November 26, 2021

On the 941 Form, the sick pay, Line 8, is manually entered, there is no way to pass this amount from the payroll software. 

To prepare W2/W3:

select the check boxes on the employee payroll settings that indicates that the employee has a third party sick pay  and it should be used in government reporting

 

On the W2, sick pay is indicated by a check box in the company set up on the W3 Information screen. 

 

 

From the preparer, you can also  indicate which employees have third-party sick pay by checking the box in the column labeled Third-Party Sick Pay. 

Then the amount of third-party sick pay that you enter in the company setup will display on the W-3 Form in Box 14.

Then the amount of third-party sick pay that you enter in the company setup will display on the W-3 Form in Box 14.

 


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If we create the Earning Type Code and the Deduction Code for Third Party Sick Pay, do both get coded to Box 14 or does the Earning Type Code go to Normal and the Deduction code go to Box 14?

 


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@mblassingame35- Only the deduction hits box 14.  The earnings hit Box 1.   Here is an example where the Earnings and Deduction were $875.00. 

 

 

 

 

 


  • Freshman II
  • 5 replies
  • January 14, 2025

In another scenario where the DBL company withholds the employees’ FICA but they do not issue a W2 we can certainly enter the Employees’ FICA amounts on the adjustment entry but the challenge becomes making the EFTPS payment using Aatrix.  Has anyone overcome this.  Aatrix will assume that the company has withheld this amount and include it in the deposit amount to be made. Is the only solution delaying the entry of the employees’ FICA withheld by the DBL company until after the EFTPS is processed and making a second adjustment?  


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