Setting Up Employee Deductions and Earnings

To create and define the codes for each deduction that may be used in your system, use the Deduction and Earning Codes form.

Then, to set up each employee's deductions as specified below, use the Employees form.

Temporary Deductions (Union, Loans, Garnishes)

To set up temporary deductions for an employee:

1. On the Deductions tab, enter the employer's retirement contribution and specify whether the value is a percentage or an amount.
2. If applicable, enter a union deduction:
   • In the Union Deduction field, enter the amount of the deduction, whether a currency amount or a percentate.
   • In the Per field, select the type of deduction rate (whether the amount is to be deducted per hour, as a percent, or as a fixed, flat rate).
   • In the Union Freq field, select the frequency at which the deduction is to be made.
   • In the Union Liab Acct field, enter a valid General Ledger (G/L) account number to identify the union liability account that the union deduction is posted against.
3. If applicable, to automatically deduct an amount from an employee's paycheck for a loan, enter:
   • In the Loan Deduction field, the amount to be deducted per deduction, in the domestic currency
   • In the Loan Freq field, the frequency at which repayments should be deducted from the employee's pay
   • In the Loan Balance Due field, the amount of the loan to be repaid

   The system stops the deductions when the Loan Balance Due amount reaches 0 (zero).

4. If applicable, to automatically garnish wages from an employee's paycheck, enter:
   • In the Garnish Deduction field, the amount to be garnished
   • In the By field, whether it is a percentage or a domestic currency value
   • In the Garnish Freq field, the frequency at which garnishments should be made
   • In the Garnish Balance field, the amount to be garnished

     The system stops the deductions when the Garnish Balance amount reaches 0 (zero).

Other Deductions and Earnings

On the D & E tab (Employees form), specify the following for each deduction or earning type:

• In the Code field, the deduction or earning type code

  When you select a code, the system automatically displays the description for the deduction or earning in the Description field.

• In the Amount field, the amount to be deducted or added

• In the Type field, whether it is a percentage of the employee's pay or a flat domestic currency amount

• In the Frequency field, the frequency at which the amount is to be deducted or added

• In the Balance field, the total amount to be deducted or added

  NOTE: If this field is blank, the amount is deducted or added on an ongoing basis.

Additional Local Taxes

Additional local taxes can be deducted from employee checks and reported in box 20 of the W-2 form. This deduction method should only be used when two or more local taxes are necessary.

To set up this deduction, on the Deduction and Earning Codes form, in the Type field, select either Before tax deduction from gross pay or Deduction from net pay after tax. For more information, see the field level Help for that field.

CAUTION: Each additional local tax deduction generates an additional W-2 for each employee who takes that deduction.

Related Topics

Entering Information About a New Employee

Making Periodic Deductions

Setting Up an Employee for Direct Deposit

Steps for Setting Up Employees