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Select Payroll Setup menu > Deduction Code Maintenance.

Use Deduction Code Maintenance to establish codes for voluntary payroll deductions (credit union deposits, insurance, etc.), and to establish calculation methods for each deduction. Voluntary deductions can be permanent and ongoing, or temporary and discontinued after the maximum amount of the deduction specified in the employee record has been reached (for example, repayment of a salary advance).

Do not use Deduction Code Maintenance for nonvoluntary deductions (federal and state withholding, FICA, etc.). Nonvoluntary deductions are a permanent part of the Payroll module and are maintained using Tax Table Maintenance.

You can click the Apply button to validate a record and automatically write it to the Employee file for a specified range of employees. This saves time if you want to apply a deduction code or change the standard limit amount or rate for a group of employees.

You can calculate deductions based on specified earnings types by clicking the Earnings button and selecting the earnings types to use in the calculation.

You can display federal, state, and local taxes for pension plan or cafeteria plan deduction codes. The federal government allows employee contributions for qualified pension plans to be deducted from taxable wages before federal taxes are calculated. Most state and local jurisdictions also allow a reduction of taxable wages by pension plan deductions. Two types of deduction plans can be tax exempt: pension plans and cafeteria plans. For information detailing the requirements of qualified pension plan deductions, consult your accountant.

After entering deduction codes, you can click the Print button to print the Deduction Code Listing.

Note When a deduction using the Percentage of Net Wages calculation method causes the check amount to be negative, the deduction amount is adjusted so that the check amount is equal to zero.

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