How do I set up employer paid FICA?

AMS Payroll can calculate the Employer Paid FICA.

First, setup a User Defined Field named XFICA. At the AMS Payroll Menu, select Payer>Payer Edit>User-Defined Fields. Double-click on the first available blank line, enter XFICA in the Field Name, enter “N” in the Net Deduction and the Add to Gross Pay, and enter an “X” in the Exempt from FICA, Exempt from FUTA and Exempt from SUTA.

Please note: The adjustment percentage and maximum taxable wages are defined as zero because the program has these figures built-in. Please do not adjust this.

When entering a check for the employee:

Enter the Net Pay amount.
Select Employer Paid FICA from Pay Rate.
Enter a checkmark (or -1.00) for XFICA, Social Security and Medicare.
Click CALC and each of these fields will calculate the correct figures.

NOTE: This feature requires that the employee be setup as a 942 or 943 employee on the employee’s Status Information screen.

Know Your Industry When Setting Up FICA Taxes

Setting up employer paid FICA is an important step in getting your Federal taxes in order, but be sure you understand industry-specific rules that may apply to your business.

For example, household employees are subject to a different set of rules. These employees include housekeepers, maids, babysitters, gardeners, and others who work in or around a private residence as an employee. Household Employment Taxes are handled with Schedule H, which is used to report household employment taxes if you pay cash wages and they are subject to Social Security, Medicare, or FUTA taxes. Additionally, you should not withhold FICA taxes from wages you pay to your spouse, your child if they are under 21 years old, your parent, or an employee who is under 18 at any time during the calendar year.

Similarly, agricultural employees are subject to their own, industry-specific taxation forms. Employers who paid wages to agricultural employees that are subject to an income tax, Social Security, or Medicare withholding must file Form 943. Employers are subject to withholding on wages if you pay an employee cash wages of $150 or more for farm work during the year or if the total wages you pay all farm workers is or exceeds $2,500 for the year. Foreign workers on work visas are often exempt from paying Social Security taxes.

If your business employs or involves household employees and agricultural workers, take care to understand these industry-specific tax requirements.

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