Tip Reporting Codes

The following earnings and deduction codes are established automatically within the Payroll module to accommodate the processing of tip earnings.

Note These codes are permanent and cannot be deleted or changed.

Earnings Codes

05 - Tips Reported

This earnings code is used to enter all reported cash tips. The amount of the reported tips is added to the gross pay, so that the appropriate taxes are calculated. The amount entered for this earnings code is deducted automatically as deduction code 01 (Tips Reported); therefore, it does not actually increase the check amount.

06 - Tips Differential

This earnings code is calculated automatically to apply the difference between the minimum wage and taxable wages (including tips reported) if the employee's total wages fall below the minimum wage specified in Payroll Options. When the tip differential is calculated, all earnings codes, except those for which Excluded from Tip Calc. is selected in the Type of Earnings field in the Earnings Code Maintenance window are included when comparing earnings to the minimum wage. Tip differential is calculated only if earnings code 05 (Tips Reported) has been entered.

TA - Tip Allocated

This earnings code is used to enter the gross receipt amount associated with each employee. The rate entered in the Tip Allocation Rate field in the Payroll Options window is used to calculate the amount of tips allocated to the employee. The amount entered for this earnings code does not increase the check amount.

TE - Tips Earned

This earnings code is used to enter the amount of tips to be paid to the employee, and should be used to pay employee tips collected by the company for banquets, credit card sales, etc. Because the employee has not already collected the tips, the tips earned amount is not deducted automatically from the employee check.

Deduction Code

01 - Tips Reported

The tips reported amount (earnings code 05) is added to the gross pay for tax calculation purposes. After taxes have been calculated and subtracted, deduction code 01 is used to deduct the tips reported from the pay amount.

For more information, see Allocating Tips.