Has anyone heard if BB intends on having an update to the tax tables as a result of the new stimulus package?  By April 1st, we need to have the new rates in place.

Wayne K.

I haven't heard anything about this from Blackbaud, nor have I seen anything on Blackbaud's website.

But you don't have to wait for Blackbaud.  The IRS has published the new tax tables and you can start using them immediately.  You can update the tax tables within Payroll 7 yourself using the instructions in Knowledgebase article BB246638. 

Just make sure you use the numbers in Table 7 (ANNUAL Payroll Period) for both the Percentage Method of Withholding and the Percentage Method of Advance EIC Payments.  They're found on pages 3 and 5 of the IRS document I linked above.

If you feel a bit unsure about doing this, just compare your existing tax tables to those in IRS Publication 15 so you can see how Blackbaud came up with the tables.  Then plug in the new numbers.

That's what I'm going to do.  It'll make my employees happy sooner and I don't have to stress over when Blackbaud will come up with the new tax tables to download.

Blackbaud now has something on their Financial Edge blog about this, but no indication of whether they're planning to release new tax tables.  Better plan on making those changes yourself...

Here's a tip for the Advance EIC tables.  You only have to change one dollar amount for the "Married" and "Married both filing" categories; it's the one after the word "and" in the second section on the right side of that window.  You don't have to make any change for the "Single" category.

For the Federal income tax tables, you don't have to change any of the rates, just the dollar amounts.  The "Deduction per exemption" amount stays the same.

And because these are income tax changes, don't make any change to the Social Security or Medicare tax rates.

Thanks for the information Paul.  We will update the tables.  I thought BB might send out an update but it's not a big deal.

Thanks again,

Wayne Knight

Paul - thank you. This is great information. I'm curious. Do you plan to set up a new table effective 2/17/2009 and after, or do you just plan to revise your existing 2009 table?

I set it up as a new table.  Our payroll period started February 16, so I used that as the starting date of the tax table.  I'm guessing that Financial Edge will probably use the pay date to determine which tax table to use, but we like to record changes here on pay period boundaries for consistency.

 Paul

That was my first instinct as well. I will try that approach. We track things by pay period as well.

Lea McCormick
Church Schools in the Diocese of Virginia
Richmond, VA

I spoke with BB today and they said that at this time they do not plan to release an update for the new tax tables. However, it could change if enough people call in. I thought that was a bit strange in that when would they do it March 30th? Much easier to do it myself. Thank you guys for the details on the best way to get it done. Audrey

I know that we can manually update the tables ourselves...but is it completely accurate?  It would appear that we can only change the wage brackets and percentages.  How do we change the dollar amounts to withhold in addition to the percentages?  For example:

Old table for Single says those between $10,400 and $35,400 should have $775 withheld plus 15% of wages in excess of $10,400. 

New table for Single says those between $10,400 and $36,200 should have $322 withheld plus 15% in excess of $10,400.

Where do I change the $775 to $322?

If Blackbaud doesn't make the change, it would appear that my employees aren't getting the full benefit of the new tax tables.  I'm hoping I'm wrong and that someone here can show me where to go to make these changes.

Hope,

You don't have to change the $775 to $322.  It's already built into the calculations. 

For a single person earning $7,180 or less, their tax is 0%.  Once they earn more than $7,180, they are now in the 10% tax bracket (but only on the income over $7,180).  Let's say this person earns exactly $10,400.  To calculate the withholding, you take 10% of the amount over $7,180.  That's 10% of $3,220 or $322, exactly the dollar amount you were looking for.  (And notice that this person's withholding is only 3.1% of their income, even though they are in the 10% tax bracket.)

Another example: a person earning exactly $36,200.  You withhold $322 plus 15% of the amount over $10,400.  Fifteen percent of ($36,200 minus $10,400) is $3,870.  Add that to $322 and you get $4,192.  Again, that's the dollar amount used in the next tax bracket.

The IRS puts those dollar amounts in the tax tables to make it easier for humans to calculate the withholding.  But FE just needs to know where each tax bracket starts and what percentage rate to use for that tax bracket.

Imagine FE calculating the withholding on the person with income of $36,200.  It takes 0% on the amount up to $7,180, 10% on the next bracket (up to $10,400) and 15% on the next bracket (up to $36,200).  For the first tax bracket, the withholding is $0.  For the next one, it's ($10,400 minus $7,180) = $3,220 times 10% or $322.  For the next bracket, FE takes $36,200, subtracts $10,400 (resulting in $25,800) and takes 15% of the result, yielding $3,870.  It then adds up all those withholding amounts ($0 + $322 + $3,870) and comes up with $4,192.  It got the same result as using the tax tables, but without having to be told those dollar amounts you were wondering about.

Here's a copy of my tax table for Single.  Click on it to see a larger version.

Thank you very much!  Your explanation was very clear, and makes perfect sense.  I was really hoping it would be that easy.