TOTAL Planning Suite customer question:
I am trying to exempt a client’s wages from FICA taxes. I checked the box on the Income Tax Data File Status/Options screen to indicate Individual 1’s wages are exempt but I still see a listing for FICA on both the Easy Money and Golden Years reports. Can you help?
Money Tree’s support response:
Checking the “Wages Exempt” from FICA is the correct action to prevent FICA taxes. Note, the line item for FICA & HI Tax will still display, but it should only be including 1.45% for HI tax (Medicare). Golden Years has a supporting worksheet for this number on the FICA Worksheet D15 were you can see if it is indeed still including the 6.2% FICA rate, or if it’s just the 1.45% for Hospice Insurance.
Tax Data – File Status / Options tab, check “Wages Exempt” under FICA Tax. This will ensure the clients salary is exempt from FICA taxes. Any self-employment income will still be charged FICA and cannot be set as exempt.
The Current Year Cash Flow on Easy Money or Golden Years will still display a line for “FICA Taxes”. This line represents total payroll taxes – which includes both Social Security and Medicare.
If you are running Golden Years, you will find a breakdown on the FICA Worksheet, report D15. Here you can see there is no FICA tax charged on wages, but there is a tax charge for Hospital Insurance (Medicare).