“Not Calculating Payroll Tax” Issue in Sage 50 – How to fix

Last updated: April 2nd, 2024

Organizations of all sizes, from startups to mid-size companies, have begun using Sage software. This software makes the simple tasks related to accounting and finance much easier to handle. It’s not hard to see why it has become a popular choice: even non-finance professionals can use it without any problems.

Are you payroll taxes being calculated incorrectly? Is your payroll taxes amount different from the online tax calculator? This issue usually occurs due to incorrect settings in Sage 50. In this article, we will outline some simple steps to manually resolve the problem.

Must Read: How to fix the Sage 50 payroll update error?

Let’s Discuss More About the Payroll Taxes Calculation Error

Reasons & Resolutions

Incorrect settings of Sage 50 can result in a payroll taxes related problem. The following scenarios will happen once the issues are there:

Step 1: Prior to Starting:

Make sure you are using Gross Pay instead of Net Pay when you compare the results on these two websites.

Step 2: Verify you are not in history mode

1. Is there a History menu beside the Help menu?
2. If yes:
   • Click the Calculate taxes automatically button in the Pay cheque module or
   • Close History before continuing.

Step 3: Verify you have installed the latest tax update

1. Select Help and go to About Sage 50.
2. Confirm you have the latest release of Sage 50.

Step 4: Verify the Payroll ID active?

1. Select Help and go to About Sage 50.
2. Select Support Info.
3. Confirm the Payroll ID is Active.

Also Read: Sage 50 2021 Download

Step 5: Verify the Income Has Been set Properly

1. Select Setup and go to Settings.
2. Select Payroll and then select Income.
3. Verify Calc. Tax is checked.
4. Open the Employee Record and click on the Income tab.
5. Verify the Amount per Unit and Hours per Period are correct.

How to Solve the Wrong Payroll Taxes Problem

Solution 1: Have you updated your tax exempt status for your employees? You can find out here.

• Once you’ve selected the Maintenance option, select Update Employee Claims.
• Under Federal / Provincial, select your location, as well as the province in case you employ people from multiple provinces.
• Choose all employees that are current in your system still.
• Click the “Update Basic Personal Amount” button to update the amounts for employees’ taxes if all employees have the basic claim amount. If it is not manual, then enter the employee personal tax credit amount.
• When you are finished, please choose Close.

Solution 2: Check if You Setup the Income Properly

• To get started, choose Setup, Settings, Payroll, Income
• Either choose the “Calc. Tax” option or “Calc. Tax (Que)” for your Income tax rates.
• To see your employee’s income, you will need to open the Employee Record, click on the Income tab.
• Make sure the Amount per Unit and Hours per Period are accurate.

Step 3: Settings for Automatic Taxes Calculation

• Open the Paycheques journal.
• Create a paycheque as you normally do.
• Click on the Taxes tab to enter your earned amount.
• If your EI or CPP taxes are white, you’re in the clear. Consult Sage Experts if your tax boxes are grey.

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Sage Payroll Tax Report

Small and medium-sized businesses can benefit from Sage Payroll Tax Report by automating many of the tasks related to payroll taxes, such as calculating, withholding, and reporting taxes. It is user-friendly and easy to use, making it an excellent choice for all businesses.

The Sage Payroll Tax Report has the following features

With Sage Payroll Tax Report, payroll taxes can be managed more efficiently. Here are some of the features:

• Automatic Tax Calculation: Using this software, taxes are automatically calculated from each employee’s paycheck based on their earnings and exemptions.
• Tax Filing and Payment: Taxes can also be filed and paid through the software, ensuring timely payments and preventing penalties.
• Multi-state Support: Multistate tax laws are supported by Sage Payroll Tax Report, making payroll taxes for employees in different states easy to manage.
• Customizable Tax Forms: Businesses can create and print custom tax forms, such as W-2s and 1099s, for their employees and independent contractors, using the software.

Sage Payroll Tax Report: How Does it help With Compliance?

Sage Payroll Tax Report automates many payroll tax-related tasks and helps businesses stay compliant with tax laws by:

• Automatic Updates: Businesses don’t have to worry about staying current with the latest tax laws because the software automatically updates.
• Error Checking: Using the software, businesses can identify and fix errors before they become IRS problems.
• Reporting: To demonstrate compliance with tax laws, Sage Payroll Tax Report generates detailed reports.

Troubleshooting Payroll Tax Calculation Errors during Payroll Entry

When calculating paychecks during payroll entry, Sage 50 takes both Payroll Formulas and employee setup information into account.

When Sage 50 calculates no or inaccurate amounts during payroll entry, what do you do?

When you enter payroll, you won’t be able to calculate federal, state, and most local payroll taxes automatically if you just installed Sage 50. (Sometimes, payroll tax amounts will be inaccurate or zero.) Subscribe to Sage Business Care and install the latest update to stay current with regulatory changes and calculate these tax amounts within Sage 50. As an alternative, your payroll taxes and other deductions must be calculated and entered manually.

You need to verify that you have installed the latest update if your formulas are still not calculating correctly when you have subscribed to Sage Business Care.

If you want to know the version of the Sage-maintained formulas currently installed, you can do so by selecting “About Sage 50 Accounting” from the Help menu. This will display the current version of the Sage-maintained formulas that are installed on your system.

In case you have installed the latest update, the first four digits of the version indicate the current payroll tax year. For instance, a version number of 20120101 represents the payroll tax formulas for the year 2012, with the version number 0101. However, if the first four digits of the tax formula version do not correspond to your current payroll tax year, or the tax table version is 19000101, which is a generic tax formula, it is recommended that you install the latest update.

What to do if Sage 50 Displays Error Messages During Payroll Entry

• If there is an error in Sage 50 while calculating or displaying a paycheck, the software will display an error message. The message will attempt to explain the issue and provide information regarding the error, enabling you to address the problem accordingly.
• It’s possible that a formula existed last year, but hasn’t been updated for this year. Subscribers to Sage Business Care will need to get the latest tax update.
• It is also possible that the filing status is incorrect, which is typically related to state tax calculations. You would need to change the employee’s filing status to a valid state filing status.

Common Reasons Sage 50 Displays Payroll Formula Errors during Payroll Entry

Sage 50 payroll formulas are only accessible through Sage Business Care plans.

• In the event that a message indicates a missing formula from the previous year, it is likely that the current year’s formulas have not been configured. To establish tax formulas, you can opt to either subscribe to Sage Business Care and install the latest update or create your own calculation using User-Maintained Payroll Formulas. For those who are already subscribed to Sage Business Care and experiencing this issue, reinstalling the tables may resolve it. If you’re interested in learning more about setting up a user-maintained tax calculation, please provide additional information.
• If the calculation is for a local income tax: Ensure that the Locality field in Payroll Formulas matches the Locality field in Maintain Employees/Sales Reps exactly (including character spaces). For New York City (NYLIT), you can enter “NYC Res” (New York City proper) or “YONK Res” (Yonkers). Please note that the locality codes are case-sensitive.
• If you desire to create new payroll calculations: The new tax formula must be setup in user-maintained formulas, and the employee must be set up properly in order to use the formula.
• If the message indicates that a tax formula you created cannot be found : After the tax name, there should be a space followed by the current calendar year (for 2012, K401 12 or VAC_Rem 12).
• If you just started a new payroll tax year and can’t find the state unemployment (SUI) tax table : In the user-maintained tax formulas, SUI tax formulas are maintained by you and are not updated with your payroll tax solution.

Still need help?

Get in touch with our Sage 50 team to calculate federal, state, and local payroll tax amounts within Sage 50 and to stay current with regulatory changes & other Sage 50 help and support.

Frequently Asked Questions