Vermont Child Care Contribution Tax

Owned by Knowledge Assistant
Last updated: Jul 02, 2024 by Moriah Yorkey
2 min read
Description of Issue

The state of VT has a new Child Care Contribution tax (CCC) that will be effective 7/1/2024. How do we setup this table or deduction so it's ready for the July Payrolls? 

Context

  • Payroll

  • Deduction and Benefit Master

  • Employee Deductions

  • W-2 Processing

Cause

Resolution

A new tax table does not need to be created. The VT Tax documentation (see additional information) writes this is an employer paid deduction that withholds .44% from wages subject to VT State Taxes. Employers can decide to have Employee's pay up to one quarter of the contribution (up to .11%). 

If Employers determine employees will contribute, those wages need to be reported in box 14 on the W-2. 

How to setup the Deduction:

  1. Go to Deduction and Benefit Master (Payroll>Payroll Setup>Deduction and Benefit Master)

  2. Click Add.

  3. Define a deduction code outside of the normal Tax Deduction ranges, Example 6050. (Do not use any number in the other tax ranges, 3000-3999, 4000-4999 or 5000-5999 ranges) 

  4. Define Descriptions.

  5. Select applicable priority, Category 01-Tax, Insufficiency M-Mandatory, Calc Code 03-PCT from Deduction Master. 

  6. Define applicable Check Type and Vendor information. 

  7. in the Empe/Empr field, define either 2-Employer Pays or 3-Both Pays, depending if the site will be withholding an employee contribution.

    1. Or the Employee paid deduction can be created under a separate deduction code. 

  8. In the Amounts/Limits fields, define an Empr Amt/Pct of .44. 

    1. If Employees will be contributing, define the applicable percentages in the Empe Amt/Pct and Empr Amt/Pct fields. 

      1. Example: If the employees will be contributing the full one quarter of the withholdings, the Empe Amt/Pct should be defined with .11 and the Empr Amt/Pct fields should be defined with .33.

  9. Define any other applicable fields.

    1. If Employees will be contributing, go to the Options tab.

    2. Define applicable Box 14 W-2 Code. 

  10. Click Accept. 

  11. Click Exceptions in the toolbar. Search for the VT State Deduction code (example 4000) Click Accept. 

    1. The exceptions for SIT should match the new Child Care Contribution Tax. 

  12. Take screenshots of the setup and then Add the Exceptions for the new Tax Deduction as needed. 

    1. Or use the Copy option in the toolbar to copy the SIT deduction Exceptions to the new Deduction code. 

Additional Information

https://tax.vermont.gov/business/child-care-contribution

https://tax.vermont.gov/sites/tax/files/documents/GB-1326.pdf

Â