Error message when you click to select a check box or when you click to clear a check box in the Employee Deduction Maintenance window in Microsoft Dynamics GP: "Activity exists for this code. The Tax Status cannot be changed"

To resolve this problem, use the correct tax settings to create a new deduction code and to create a new benefit code.

Note If a benefit tax status or a deduction tax status is changed, the federal wages of the 941 report may differ from the federal wages of the payroll summary. Additionally, the reconcile process cannot adjust the difference. Therefore, to meet Generally Accepted Accounting Principles (GAAP) requirements, we recommend that you create a new deduction code or a new benefit code instead of changing the existing code.



Note Before you follow the instructions in this article, make sure that you have a complete backup copy of the database that you can restore if a problem occurs.

Note We recommend that you test the following steps by using a test company.

To create a new deduction code or a new benefit code, use the appropriate method.

Step 1: Create a new deduction code

1. Create a deduction. To do this, follow these steps:
   1. Use the appropriate method:
      • In Microsoft Dynamics GP 10.0, point to Tools on the Microsoft Dynamics GP menu, point to Setup, point to Payroll, and then click Deduction.
      • In Microsoft Dynamics GP 9.0 and in earlier versions, point to Setup on the Tools menu, point to Payroll, and then click Deduction.
   2. In the Deduction Setup window, type a deduction code name in the Deduction Code box, and then type a description in the Description box.
      
      
      
   3. In the Start Date box, type a date.
   4. In the TSA Sheltered From area, click the check boxes of the taxes that you want to use.
   5. In the Method list, click a method, and then type a value in the Single box.
   6. In one or more of the boxes under Maximum Deduction, type a value.
   7. In the Frequency list, click a frequency.
   8. If the deduction is based on pay codes, add the pay codes in the Selected box.
      
      
   9. In the W-2 Box box, type an appropriate value. In the W-2 Label box, type an appropriate value.
   10. Click Save.
2. Assign the deduction that you created to an employee. To do this, follow these steps:
   
   
   1. On the Cards menu, point to Payroll, and then click Deduction.
   2. In the Employee Deduction Maintenance window, enter an employee identifier (ID) in the Employee ID box.
   3. Click the lookup button next to the Deduction Code box.
      
   4. In the Deductions window, click the deduction that you created in step 1, and then click Select.
   5. Complete the required fields.
      
      
      Note You may have to override the default value in some fields for the employee.
      
   6. Click Save.
3. Disable the previous deduction code for the employee. To do this, follow these steps:
   
   1. On the Cards menu, point to Payroll, and then click Deduction.
      
      
   2. In the Employee Deduction Maintenance window, enter an employee ID in the Employee ID box.
   3. Click the lookup button next to the Deduction Code box.
      
   4. In the Deductions window, click the deduction code that is no longer used for the employee, and then click Select.
   5. Click to select the Inactivate check box.
      
   6. Click Save.

Step 2: Create a new benefit code

1. Create a benefit. To do this, follow these steps:
   
   
   1. Use the appropriate method:
      • In Microsoft Dynamics GP 10.0, point to Tools on the Microsoft Dynamics GP menu, point to Setup, point to Payroll, and then click Benefit.
      • In Microsoft Dynamics GP 9.0 and in earlier versions, point to Setup on the Tools menu, point to Payroll, and then click Benefit.
        
   2. In the Benefit Setup window, type a benefit code name in the Benefit Code box, and then type a description in the Description box.
   3. In the Start Date box, type a date.
   4. In the Subject to Taxes area, click to select the check boxes of the taxes that you want to use.
   5. In the Method list, click a method, and then type a value in the Single box.
   6. Under Maximum Benefit, type a value in one or more of the boxes.
   7. In the Frequency list, click a frequency.
   8. If the benefit is based on pay codes, add the pay codes to the Selected box.
      
      
   9. In the W-2 Box box, type an appropriate value. In the W-2 Label box, type an appropriate value.
   10. Click Save.
2. Assign the benefit that you created to an employee. To do this, follow these steps:
   
   
   
   1. On the Cards menu, point to Payroll, and then click Benefit.
      
      
   2. In the Employee Benefit Maintenance window, enter an employee ID in the Employee ID box.
      
      
   3. Click the lookup button next to the Benefit Code box.
      
   4. In the Benefits window, click the benefit code that you created in step 1, and then click Select.
   5. Complete the required fields.
      
      
      Note You may have to override the default value in some fields for the employee.
      
   6. Click Save.
3. Disable the previous benefit code for the employee. To do this, follow these steps:
   
   
   
   1. On the Cards menu, point to Payroll, and then click Benefit.
      
      
   2. In the Employee Benefit Maintenance window, enter an employee ID in the Employee ID box.
      
      
   3. Click the lookup button next to the Benefit Code box.
      
   4. In the Benefit window, click the benefit code that is no longer used for the employee, and then click Select.
      
      
   5. Click to select the Inactivate check box.
      
   6. Click Save.