non-cash income / taxable fringe benefit

karin-jensen

When I started with Lawson almost 4 years ago, I was taught to enter non-cash income with a process group of A and a tax frequency of 8 (annual). Can anyone tell me if this is required entry for non-cash income, or was this just the payroll manager's preference?

The reason I ask is that we just processed a check to tax a $50 gift certificate, and instead of deducting a normal amount of federal income tax on a non-resident alien, it deducted about $400 more. When I did a manual check to try to replicate it, the same thing happened. However, if I entered the non-cash without the PG=A, TF=8, it processed the taxes normally. I've looked back on this employee when non-cash has been processed in the past, but I haven't seen this replicated.

marty

I'm not sure what your pay code set up is, and still less sure that the set up we have from our previous-previous payroll manager is the correct way, but this works for us.



We have 2 pay codes designated to "award" for this scenario. We gross up the tax so that the employee is not impacted but the taxes are paid.

We use one for the value of the gift (say $20 for a $20 gift card). It's calculation type is F - non-cash income, and the disposable income is set to exclude from.

The second is used for the calculated FICA/Med tax (hand calculated). It's calculation type is A - additional flat rate.



For manual checks we use a cycle 8 so that no other benefits are deducted, and the result is a net 0 "check." If we're adding them to a batch or directly to PR36, we use a PG 8 on each of the two lines. We've found that if paying other non-cash income on the same check (per diem, for instance) it errors out, and we end up doing manual checks after payroll.