- Two new pre-tax deduction types are now to be reported on W-2s; Roth 401(k) and Roth 403(b). These used to be reported with regular 401(k) and 403(b) deductions but this year they have been split out. They now print in box 12 of the W-2 with, respectively, codes AA and BB.
In order to have the Payroll system properly recognize and categorize these deductions, if you have them, you will have to go into Payroll program 50, System Defaults, and select the Pre-Tax Deductions option. For any deduction that is a Roth 401(k) or Roth 403(b), you will need to change the "Code on W-2" field from 1 and 2 to 6 and 7.
- W-2s now have a separate area set aside where employee name suffixes (Jr., III, etc) are printed separate from the rest of the name. Though using this split name is optional this year, it will be required eventually. It is already a requirement for eFile reporters.
In order to deal with this new W-2 field we have added new fields to the Employee Master for First Name, Middle Name, Surname and Suffix. These are in addition to the regular Employee Name field which will remain and be used for all other purposes in the Payroll module. In order to print W-2 forms, you MUST fill in these fields--the W-2 printing routine will not generate W-2s using the regular employee name field any longer.
Before you start cursing us for making you retype all those names, there is good news. We have added a new option in program 26, Tax Forms, called Set Form Names. This option will attempt to automatically fill in the new Form Name fields based on your existing employee names. Assuming you've entered your employee names in one of the two recognized consistent formats:
[Last Name], [First Name] [Middle (optional)], [Suffix (optional)]
[First Name] [Middle Name (optional)] [Last Name] [Suffix (optional)]
you should be able to use this option to automatically set close to 100% of the new form names fields.
When the new option is run, it presents each proposed form name to you so that you can approve or decline the setting of the name. If you decline any, either because the program was unable to interpret the Employee Name as you wish, or because you wish to get better name information from the employee, you should write down the names that you intend to set manually. Keep in mind that any employee who doesn't get a form name will print on the W-2 with no name!
In a test run on a 100 employee payroll we found that we were able to convert all the names, including a few that needed to be dealt with manually, in about ten minutes, so dealing with this new feature should not be an undue burden on even really large payrolls.
For more information on converting the employee names, including what types of names will cause problems for the automatic processor, see the help article at the Employee Name Format prompt under the Set Form Names option in program 26.
- In 2007 the revised Alabama state tax withholding calculation make it impossible to calculate their taxes with any degree of accuracy with our current tax table structure. In order to calculate the Alabama taxes we therefore had to add an entire new page of calculation options in program 2, Deduction Tables. These options provide for giving the employee allowances based on their gross wages and their number of dependents. We are not aware of any other state that will make use of the new calculations, but you may have local or employee-specific deductions that may be able to make use of the new features. To learn more about the new calculations, see the section of newsletter #44 titled "How the New Allowance Page of the Deduction Table Calculates" later on in this newsletter.
- Payroll program 58 has been changed to have a single option for transferring tax tables (rather than the Tax Transfer 1 and Tax Transfer 2 previously used). There are also no longer two tax table files for Payroll (they were ADPRTAX1.DAT and ADPRTAX2.DAT). There is now a single file containing all tax tables named ADPRTXTB.DAT. The need for two tax table files dated from before some of you were born, when 5 1/4" floppy disks could hold a file no larger than 160 Kb. If you remember these disks you can consider yourself officially over the hill (but don't feel bad, we remember them, too).
Since the old tax table files will no longer be used, you may delete them from your RTS-Advantage SYS directory.
- Many revised tax tables are included in the patch. States that have reported revisions of their calculations for 2007 are Alabama, California, Hawaii, Kentucky, Maine, Michigan, Minnesota, Nebraska, New Mexico, North Carolina, North Dakota, Oregon, Puerto Rico, Utah and Vermont.
Connecticut's tables have not changed since 2006, but we have included revised tables in this release that take advantage of the new allowance screen to better calculate the tax amount. However, because Connecticut's tax calculation still requires a very unusual calculation for personal tax credits, we continue to supply only one sample table for each employee classification, for one of the larger ranges of wages amounts. Employers in Connecticut will have to create additional tables for employees with gross wages not covered by our sample tables. New tables created should be identical to the sample tables, but on the final credit screen replace the tax credit percentage with the correct tax credit percentage to apply based on the employee's gross wages (see table B in Connecticut's Circular CT publication).
Maryland's tax rates are unchanged since 2005, but the tables have been changed in this latest release to yield more accurate tax calculations.
Along with the above states, the Federal withholding (FWT) and OASDI tables have been updated for 2007.
- In addition to all the Payroll changes, there is one additional item in the patch; a fix for a problem in the File Maintenance module where using the Delete option on a keyed file in Unix was causing errors.