Dundee Group Blog

Sage Abra Tax Updates Forthcoming

Sage Abra Q4 2010 Quarterly Tax Updates expected to be delivered the week of December 27th

This Alert applies to Abra Suite and Abra SQL HRMS with Payroll

The Federal Government released 2011 tax rates as of Friday Dec 17th. In response to this release, Sage Abra Q4 2010 Quarterly Tax Updates are delayed and are expected to be delivered the week of Dec 27th. This delay is necessary to incorporate the federal tax rate updates in Q4 which will minimize customer confusion and avoid the need to apply a hot fix after the Q4 update has been delivered.

The Q4 2010 Quarterly Product Update for Abra Suite 7.7x, 7.8x and 9.0x, as well as, Abra SQL HRMS Payroll 8.5, 10.0 and 10.1 will contain the Social Security employee tax rate changes per the legislation passed and signed by President Obama on December 17, 2010. The full extent of this change is described as follows:

Under The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which was signed by President Obama on December 17, 2010, the employee's share of Social Security tax in 2011 will be reduced from 6.2% to 4.2%. Therefore, the maximum an employee would pay in Social Security tax (if the employee is paid at least the wage base of $106,800) is $4,485.60. Employers would continue to pay the full rate of 6.2% for a maximum of $6621.60 on at wage base of $106,800 for 2011.

In addition we are delaying the release to address the following:

• Employee Tax Rate for Railroad Tier 1 Reduced, Effective January 1, 2011
• Employee Tax Rate for Social Security Reduced, Effective January 1, 2011
• Federal Withholding Tax Changes, Effective January 1, 2011

All other tax items addressed in Q4 are documented in the Release Notes. Upon availability, both Sage Abra Suite Payroll customers and Sage Abra SQL HRMS Payroll customers will receive an alert notifying of availability to download the tax update from Support Plus Online.

Hire Act Fixes for Sage Abra Payroll

This is a 3-Step Tutorial for those using Abra Payroll who have not made the edits necessary to update Taxable Wages for an employee for EMP9 tax code and decreased the EMP1 Employer Liabilities by the same amount.  

If you have already configured the EMP9 taxable wages and Employer Liabilities from Quarter 2, 2010, please disregard this article.

Step 1: Edit Payroll History (by employee)

Prior to doing any edits, make sure the Record and Deposit Liabilities process has been done.

From the menu bar, select Actions > Payroll > Edit Payroll History.

Select the Qualified Hire Act Employee and complete the tax history step.

Enter an Adjustment Effective date in the open quarter to be adjusted. Click Ok. Detail EMP9.

Increase EMP9 QTD Taxable Wages by the Hire Act eligible wages for this employee.
Increase EMP9 QTD Gross Wages by the Hire Act eligible wages for this employee.

Repeat above edit for payroll history for each eligible Hire Act Employee that needs to be adjusted.

Step 2: Edit Employer Tax Liability (for each check date)

Decrease EMP1 Employer Liability Amount (do not edit the Taxable wages or the Employee withheld amount).

Increase EMP9 Tax Wages by the amount of the EMP1 eligible Hire Act Tax Wages. If EMP9 does not exist for the check date, manually add this tax code to the edit employer tax liability screen.

Note: If you are a semi-weekly depositor, you will need to do this by check date so the Form 941 Schedule B is correct.

When prompted with the following message:

Click No to show the overpayment on the 941 line 15. If Yes is clicked, no overpayment will show for Line 15.

Step 3: Re-run Trial Quarter Close
After adjustments have been made, run Trial Quarter Close. Re-run the Pre-Close Employee Taxes Report (Quarter-End Reports) for FSOC and EMP9, and balance this to the Payroll Deposit Requirements Report for the quarter (Standard Payroll Reports).

 

IRS Announces Pension Limits for 2011

The IRS announced the changes to pension plan limits for 2011. In general, limits remain unchanged, or include a small inflation adjustment.

The IRS highlighted these features:

• The elective deferral (contribution) limit for employees who participate in section 401(k), 403(b), or 457(b) plans, and the federal government’s Thrift Savings Plan remains unchanged at $16,500.
  
  
• The catch-up contribution limit under those plans for those aged 50 and over remains unchanged at $5,500.
  
  
• The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are active participants in  an employer-sponsored retirement plan and have modified adjusted gross incomes (AGI) between $56,000 and $66,000, unchanged from 2010. For married couples filing jointly, in which the spouse who makes the IRA contribution is an active participant in an employer-sponsored retirement plan, the income phase-out range is $90,000 to $110,000, up from $89,000 to $109,000. For an IRA contributor who is not an active participant in an employer-sponsored retirement plan and is married to someone who is an active participant, the deduction is phased out if the couple’s income is between $169,000 and $179,000, up from $167,000 and $177,000.
  
  
• The AGI phase-out range for taxpayers making contributions to a Roth IRA is $169,000 to 179,000 for married couples filing jointly, up from $167,000 to $177,000 in 2010. For singles and heads of household, the income phase-out range is $107,000 to $122,000, up from $105,000 to $120,000. For a married individual filing a separate return who is an active participant in an employer-sponsored retirement plan, the phase-out range remains $0 to $10,000.
  
  
• The AGI limit for the saver’s credit (also known as the retirement savings contributions credit) for low-and moderate-income workers is $56,500 for married couples filing jointly, up from $55,500 in 2010; $42,375 for heads of household, up from $41,625; and $28,250 for married individuals filing separately and for singles, up from $27,750.

 

Read the official release here.