Table of Contents

Deduction Items

Greg Hatfield Updated by Greg Hatfield

A list of Deduction Items pertaining to an employer is shown on the Payroll Setup tab on the Edit Employer/Payer Information screen, which can be accessed by clicking the Edit Client button directly above the Client List on the main screen.

Deduction items may be added, edited, or deleted using the appropriate button below the Deduction Items list. To delete a deduction, click to highlight the item in the list and click the Delete button below the list. Note that the program will not delete items if paycheck data already exists for that item. The user must manually delete all paycheck data specific to that item, including deduction amount and subject wage amount (see the Options button above the Payroll grid to display the wage columns).

To edit a deduction, click to highlight the item in the list and click the Edit button below the list.

To add a deduction item, click the Add button below the list. A description of each field on the Deduction Setup screen is below.

Deduction Setup Screen

Full Name

When adding a deduction item, the user may choose from a dropdown list of program provided deduction items or type the name of a new deduction item. When editing an existing deduction item, the dropdown list is not available but the Full Name may be edited.

Custom user created deductions can be differentiated from the program provided deductions by the light yellow shadingon the Payroll Setup tab used to identify those user created Payroll Items. The title bar of the Deduction Items screen also specifies whether the item is program provided or user created.

Abbreviation

The abbreviated name entered here will display on the Payroll grid and Payroll Journal reports.

The deduction may be paid by the employee or the employer. Deductions paid by the employee appear as an item in the Payroll grid for deduction from the paycheck.

Make New Employees Subject by Default

This option is only available with the Live Payroll option. If this is checked, new employees will be marked as subject to the item on the Rates tab of the Employee Info screen and a column will appear in the Payroll grid for that item. If the box is not checked, then new employees will not be subject to the item.

Calculation Method

This determines how the amount of the deduction will be entered on the Payroll grid.

Percentage up to max pay – The program will calculate the deduction automatically based on the subject wages, Default Rate (%), and Maximum Wages. The Default Rate to be used for all employees must be entered. Once the maximum year-to-date subject wages has been reached for an employee, the deduction is no longer applicable and the amount will be zero (or blank in the Payroll grid). If the maximum wages is left blank, then there is no limit. If the rate is left blank, then the deduction will not be calculated.

Percentage up to max deduction – The program will calculate the deduction automatically based on the subject wages, Default Rate (%), and Maximum Amount. The Default Rate to be used for all employees must be entered. Once the total year-to-date deductions from the paychecks has reached the maximum amount, the deduction is no longer applicable and the amount will be zero (or blank in the Payroll grid). If the maximum amount is left blank, then there is no limit. If the rate is left blank, then the deduction will not be calculated.

Amount per hour worked – The program will calculate the deduction automatically based on the hours worked, Default Amount/Hr, and Maximum Amount. The hours worked includes all income items that are checked as subject to the deduction. The Default Amount per hour to be used for all employees must be entered. Once the total year-to-date deductions from the paychecks has reached the maximum amount, the deduction is no longer applicable and the amount will be zero (or blank in the Payroll grid). If the maximum amount is left blank, then there is no limit. If the default amount/hr is left blank, then the deduction will not be calculated.

Amount per total hours – This is the same as the option above but the total hours includes hours for the income items regardless of whether they are checked or not..

Fixed – The program will enter the same fixed Default Amount for the deduction for each paycheck entered as long as at least one income item is entered that is subject to the deduction. If a Maximum Amount is entered, then once the total year-to-date amount of deduction equals the maximum, it will no longer be calculated. The Live Payroll option allows users to enter a different fixed amount for each employee on the Rates tab on the Employee Info screen.

Variable – The program does not calculate the deduction. The user must enter the amount on each paycheck.

Garnishment % of disposable pay – The program will calculate the deduction as a wage garnishment. Live Payroll is required for the calculation of wage garnishments. See Garnishments for further information and a description of the fields required.

Total on Form W-2

The user may use this to specify in which box on Form W-2, if any, to summarize the deduction amount. Choices include box 10, box 12, or box 14 (other).

Box 12 Code

If the deduction amount is being summarized on Form W-2 in box 12, this box determines what code to select next the tax amount on the form.

Box 14 Description

If the deduction amount is being summarized on Form W-2 in box 14, a description must be entered to accompany the amount. Due to space limitations on the form, the description must be short.

Taxes the Deduction is Exempt From

A list of all tax items currently set up for this employer is displayed. The user can determine which tax items the deduction is exempt from by checking the box next to the tax item. For example: a 401(k) deduction would be exempt from CA SDI. Program provided deduction items are checked appropriately automatically for each program provided tax. For user added taxes and deductions, be sure to check the correct items.

Incomes Subject to the Deduction

A list of all income items currently set up for this employer is displayed. The user can determine which income items are subject to the deduction by checking the box next to the income item. For example: a non-payroll income item would not generally be subject to a deduction. Program provided income items are checked appropriately automatically for each program provided deduction. For user added deductions and incomes, be sure to check the correct items.

Subject Wages

It is the subject income items that determine the total income or wages that is subject to a deduction. The calculated amount of wages that is subject to a deduction is entered in the wage column for that deduction. To display the wages columns and view or manually edit the wages subject to a deduction item, see the Options button on the Payroll grid.

OK button

Click the OK button to save a new tax item or to save changes made to an existing deduction item.

Cancel button

Click the Cancel button to exit the screen without saving any changes.

See also Payroll Items.

See also Health Savings Account (HSA).

How did we do?

Customizing the Payroll Data Grid with the Options button

Employee/Payee Reports

Contact