If you changed the tax status (exempt from or deduct before options) on setup for an income/deduction after using it in at least one payroll, you will invalidate one or all of your quarterly reports and your W2/W3 statements at the end of the year. See Implications of changing the tax status for an income or deduction mid-year.
To fix the problem you need to start by deleting all checks created (that the income or deduction applies to) back through the last check prior to the change. Then do the following:
1. Change the old Income/Deduction back to the way it was originally set up.
2. Setup a new Income/Deduction with the new tax status.
3. In the Employee Setup window, click on an employee’s name who receives this Income/Deduction. Then click on the Income/Deduction tab and select the old Income/Deduction. Change the Rate/Amount to zero.
4. Next assign the new Income/Deduction to the employee and assign the Rate/Amount that applies. Then click Save.
Once the setup is correct, you need to re-enter the checks you deleted making sure they are exactly the same as the checks created previously with the exception of having the new deduction instead of the old one.
This will allow the program to retain the YTD balances for the previous checks in the old deduction reflecting the old tax status while the new checks will reflect the new tax status.