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Federal and State Taxes window

Local/Other Tax Codes window

Setting Up a Federal or State Tax

Use these instructions for help setting up and adding (activating) an income tax that's supplied by Sage HRMS Payroll, such as federal or state income taxes, social security and medicare, and so on. 

To set up a tax that is not supplied by Payroll, use the Local/Other Tax Codes window.

After you have added the tax, you can use it in your Sage HRMS Payroll system. For example, you can assign the tax to an employee or use the tax when setting up an earning/deduction.

You may want to consider importing taxes from a file as an alternative to adding taxes manually. 

Before you start

  • Make sure you understand the impact the tax settings have on payroll processing.
  • Using the Earning/Deduction Codes window, define the earnings/deductions used to calculate your employees’ pay.
  • Determine the federal and state taxes you need, and the types of information you need to track and report in each.
  • Consider the levels of your taxes.
  • Determine the G/L account numbers to which you want tax amounts to post.

If you are using cost center overrides, you may want to set up base distribution accounts at the tax level since you will be overriding one or more of the distribution account’s segments with employee-specific segments. (If you use cost center overrides, tax amounts are distributed to the cost centers in which the taxable wages were earned unless you set the Use Cost Center Overrides For These Accounts option to None on the Payroll G/L Integration setup window.) A base distribution account has a valid account segment but may use zeros or some other number for the segments that will be overridden on an employee-by-employee basis.

Be sure that the G/L segment codes and accounts, including any base accounts, to which tax totals will post have been added in General Ledger.

To set up a federal or state tax

  1. Open Payroll > Payroll Setup > Federal and State Taxes.
  2. Choose the Select Federal Or State Tax button to open the Finder list and select the tax.

    Tip: You can also just type the tax code and press Tab on the keyboard. Payroll will verify the code and assume you are adding a new tax.

  3. Add any required tax information.
  4. Click Add.

After setting up a tax

Print a listing of taxes you set up, to verify that they are correct and complete:

  • From the Payroll Setup Reports folder, choose Tax Profiles.

You can now use the tax in your Payroll system. For example, you can assign the tax to an employee or use the tax when setting up an earning/deduction.