Table of Contents

Income Items

Greg Hatfield Updated by Greg Hatfield

A list of Income 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.

Income items may be added, edited, or deleted using the appropriate button below the Income Items list. To delete an income, 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.

To edit an income, click to highlight the item in the list and click the Edit button below the list.

To add an income item, click the Add button below the list. A description of each field on the Income Setup screen is below.

Income Setup Screen

Full Name

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

Program provided income items from the dropdown list include:

S Corp Paid Medical Insurance

Auto - Personal Use

Cost of Employer Sponsored Health Coverage

Users may change the taxability of the income items chosen from the list, if necessary, by changing the check box settings. Check your state's regulations.

Users may type the name of any income item not in the list. Be sure to mark the subject taxes for the item and in what Form W-2 box, if any, the item should be summarized.

Custom user created income items can be differentiated from the program provided income items by the light yellow shading on the Payroll Setup tab used to identify those user created Payroll Items. The title bar of the Income 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.

Workers' Compensation (WC) Code (Live Payroll only)

To prepare workers' compensation reports, each income item must be assigned a specific WC code, EXEMPT, or "Use employee default code". If the code is set to EXEMPT, then any income assigned to that Income Item will not appear on the report. If each employee's wages are earned under one workers' compensation code classification then it is recommended to set all non-exempt income items to "Use employee default code" and set each employee to use the appropriate default code. However, if employees perform multiple duties that have different workers' compensation codes, then the user must create custom income items and assign specific codes to them. When an employee performs those duties, the wages must be assigned to that income item. Wages can be assigned to multiple income items with different WC codes on the same paycheck.

Pay Type

This determines how the amount for this income item will be entered on the Payroll grid. Typically, income items related to time worked (regular, overtime, sick, or vacation pay) would be either Hourly (for employee paid by the hour) or Yearly (for employees earning an annual salary). Other income items would be fixed or variable.

Hourly – An hours column displays in the Payroll grid which will allow the user to enter the hours corresponding to this income item. Hours will import into forms requiring them and optionally appear on reports. The income amount must be manually entered into the column for the amount. The Live Payroll option allows entry of employee rates of pay and the program will calculate the amount of income. Fractional hours may be entered as a decimal (40.25) or by entering the minutes after the letter "m" (40m15 = 40.25).

Yearly – The income amount must be manually entered into the column for the amount. Optionally, the user can display an hours column in the Payroll grid to enter and track hours for yearly salaried employees. Hours will import into forms requiring them and optionally appear on reports. The Live Payroll option allows entry of employee yearly salaries and the program will calculate the amount of income based on the pay period.

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

Do Not Include in Net Pay

This option should be used for income items that are not pay of the net pay on a paycheck but are reported for informational purposes. The item may or may not be taxable. An example is Tips (cash). These are taxable cash tips reported to the employer by the employee. The employer reports them on the paycheck and withholds taxes. It is not included in the net check because the employee already received the income as cash tips.

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.

Total on Form W-2

The user may use this to specify in which box on Form W-2, other than box 1, if any, to summarize the income amount. Choices include boxes 7 through 12, or box 14 (other). Note that income subject to federal income tax is automatically included in box 1 on Form W-2.

Box 12 Code

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

Box 14 Description

If the income 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 Income is Subject To

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

Deductions the Income is Subject To

A list of all deduction items currently set up for this employer is displayed. The user can determine which deduction items the income is subject to by checking the box next to the deduction 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.

OK button

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

Cancel button

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

See also Payroll Items.

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