There are a number of things that could cause withholdings to be incorrect, or make them appear to be incorrect on an individual paycheck. Please review the following items:
- Consider the source of the discrepancy.
Note: Since Social Security and Medicare are exact percentages the amounts withheld should always be as expected. If they are “off” by more than a few cents further investigation is warranted. State and Federal income taxes, on the other hand, are simply an estimate of what each person will owe the following April. Computer calculations for federal & state income taxes can vary by several dollars (when compared to a manual calculation) because manual calculations are based on a range of income, for example if you earn between X and Y withhold so many dollars. Computer calculations use the number of pay periods in a year to estimate annual income which results in a more precise amount to withhold on an individual check.
- Be sure you have the latest tax publication from your state or the federal government.
- Make sure you have the latest Procare tax tables installed.
- Confirm the Pay Periods have been configured correctly within the Employee Data section of Region and School Options.
- Confirm the correct Withholdings and Credits have been assigned to that employee and that Variables (like the number of allowances claimed) are also correct.
- Confirm that the tax exempt status of each General Withholding (health plan, retirement, etc.) is correct on the Payroll Formulas screen. For example some withholdings like a retirement or cafeteria plan may be marked as Exempt From certain taxes (confirm with your accountant) while others like health insurance or employee child care may not.