Calculating FICA!

[Royce]

Greetings Fellow FileMakers -

What is the best way to calculate FICA for payroll, taking into consideration the FICA Maximum ceiling?

Thanks for the help...

Royce

[comment]

Something like Min ( amount ; limit ) * rate, I guess?

[Royce]

How do you apply that when your limit is between payperiods - or it only happens once when you crossover from under the limit to over the limit and the amount isn't the limit it is a portion of the limit.... (I wonder if I can make that more confusing.....)

[comment]

I know very little about this. I was under the impression that this is a once-a-year calculation. If not, you will need to do something like:

( Min ( P + A ; L ) - P ) * rate

where P is the sum of amounts paid so far, A is the current amount, and L is the limit.

[LaRetta]

What is the best way to calculate FICA for payroll, taking into consideration the FICA Maximum ceiling?

Hire it out to a Payroll Service. And I'm not joking at all. You are tackling a most difficult procedure. You must be capturing more than just FICA here. You must have fields for each breakdown. FICA is estimated based upon (something like) 7.5% which the employer matches to a maximum per year based upon (several) conditions, salary being only one. As you pay an employee, that percentage is deducted and held in FICA. It is a ROUGH estimate which is finalized each quarter and then again at year-end. And it is serious business and I mean SERIOUS. Why are you attempting to write a payroll program? It is not possible for you to keep up on the tax regulations and reporting requirements.

Nonetheless, you need a field which contains an employees FICA contribution each pay period. That summary is then compared to the limit. If last pay day they were $100 short of the limit and this payroll, based upon the percentage of their gross wage, they are over the limit, you take only the max and it ends (as Comment indicated). If an employee terminates, you prorate based upon their salary (gross) at the time of termination (based upon the SAME percentage) up to the limit. If your business (or their accountants) know that you are writing a program to do payroll, they would (rightfully) freak (or should). The business is responsible for holding that Employee's money!!

Comment has you covered so far so I haven't wanted to step in and I thought you just wanted to compare your bottom lines. But I felt I must tell you that there is NOTHING more serious than an Employee's and Company's money. And there is NOTHING taken more seriously by the IRS. Truly. Hire it out. It is CHEAP nowadays - even cheaper than hiring a minimum wage employee to track the numbers and prepare the Quarterlies and a LOT more dependable. And it is a Payroll Service's job to keep the regulations straight. Simply, you should be seeking financial advice and not programmer's advice.

LaRetta

[Royce]

LaRetta,

I love management decisions over technical ones - they're usually cheaper...

Thanks for the thought - it's good counsel. In general I would agree. But I've been doing it already for seven years (accounting correctly) - I just wanted a better way than the convoluted way I had setup back in FM3 or 4 - can't remember). With FM 8 I am trying to streamline code and I was wondering if there were an easier way. I've been programming with FM since it came out in mid late 80's - but for some reason, this one just didn't click - maybe I'm tired - been converting, cleaning up, fixing and making sorely needed updates since the end of November non-stop.

Again, everything's been working correctly, it just is convoluted and I was looking for the "Better" way - while I continue to convert from FM 6 to FM 8. I have 20 different files for tracking quotes, POs, Invoicing, Payroll, Taxes, Time clock, Jobs database, and a host of other manufacturing related dbs - I'm a newbie to the forum and it's been great getting help from fellow programmers and people honestly interested in the technology.

Thanks again and thanks for your attitude in your posts.

Blessings,

Royce

ps - it's my company and I've had to do the accounting for the last 16 years...so I have everything in place already AND working well, otherwise I agree - hire it out!

Edited January 30, 2007 by Guest

[Royce]

Comment - I didn't think about using min... so that got me going last night from your previous counsel.

Thanks for taking the time to help. I love working with you folks - and I hope to give as much as I get.

Royce

[LaRetta]

Royce,

I've worked with Payroll on/off for past 30 years (and from auditing/tax perspectives as well). Your original posts felt like 'a newbie with a great idea' and I was concerned. For having taken it on in FileMaker (including Pension, Vacation, benefits etc?), you have my total respect and I'll quit worrying like a mother hen.

LaRetta

[Royce]

LaRetta,

I realized that after I got your first post...however...it's better for you to say something (right) and be wrong, than it is to not say anything and let someone stumble into areas better left alone... you made the right call...do it again...and again...and again...besides, we all need mothers!

Thanks again (and again!). I look forward to calaborating in the future.

Best regards,

Royce