Deduction Code
Enter the deduction code representing the deduction type you want to add or maintain, or click the Lookup button to list all deduction codes.
Deduction code 01 must be used for Tips Reported. This is a permanent record and cannot be deleted. If your payroll requires tip reporting, see Allocating Tips.
Deduction code FB is a permanent record and cannot be deleted. For more information, see Fringe Benefits.
When an earnings code with a fringe earnings type is entered in Payroll Data Entry, an offsetting line with an FB deduction code is created automatically to deduct the line amount from the net check amount. The fringe benefit information will be printed in the box labeled "Benefits included in Box 1" on your W-2 forms.
Description
Type a description for the deduction (credit union, insurance, etc.).
Deduction Type
Select the deduction type to use for this deduction code.
Employer contributions are entered as deductions in this task and are entered in Payroll Data Entry using the normal deduction procedures. The contribution amount, however, is not subtracted from the employee's check. Instead, the amount is debited to the contribution expense account and credited to the deduction accrual account.
The amount deducted from either the pension plan or cafeteria plan can reduce the employee's taxable wages based on the tax information specified in this field.
After deductions have been posted for a deduction code, the code cannot be deleted until year-end processing has been completed.
Calculation Method
Select the calculation method to indicate how this deduction should be calculated.
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Select Fixed Amount to enter a flat dollar amount. If you select this method, enter the dollar amount in the Standard Amount/Rate field.
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Select Percentage of Gross to calculate a percentage of gross wages. Enter the percentage rate in the Standard Amount/Rate field.
Example
The employee earns 500.00 in gross wages. You enter 5.00 in the Standard Amount/Rate field. The deduction will calculate as follows:
.05 * 500.00 = 25.00
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Select Based on Reg Hrs Worked to calculate a deduction amount by multiplying an amount by the number of regular hours worked. Enter the amount in the Standard Amount/Rate field.
Example
The employee works 40 regular hours, and you enter 2.00 in the Standard Amount/Rate field. The deduction will calculate as follows:
2 * 40 = 80.00
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Select Based on Total Hrs Worked to calculate a deduction amount by multiplying an amount by the total number of hours, including regular, overtime, sick, vacation, and so forth. Enter the amount in the Standard Amount/Rate field.
Example
The employee worked 32 regular hours and has 8 sick hours and 40 vacation hours. You enter .75 in the Standard Amount/Rate field. The deduction will calculate as follows:
(32 + 8 + 40) * .75 = 60
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Select Percentage of Net Wages to calculate the percentage of net wages (gross wages minus all tax deductions). If you select this method, enter the percentage rate in the Standard Amount/Rate field. This method is useful for calculating garnishment deductions. This method is not available for pension plan and cafeteria plan deduction types.
Note When a deduction calculated using this method causes the check amount to be negative, the deduction amount will be adjusted so that the check amount is zero.
Example
The employee earns 300.00 in net wages. You enter 5.00 in the Standard Amount/Rate field. The deduction will calculate as follows:
.05 * 300 = 15
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Select Equal to Earnings Code(s) to calculate a deduction amount equal to the earnings amount for up to three specified earnings codes. This method should be used only if you do not want to include certain earnings amounts on the paycheck. If you select this method, enter up to three earnings codes in the Equal to Earnings Code fields.
Example
Earnings code 09 (Meals) is used to record employee meal earnings for tax calculation purposes, and you do not want the meal amounts to add into the employee's net pay amount. Automatically deduct the meal allowance by establishing a deduction using this calculation method, and enter 09 in the Equal to Earnings Code field.
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Select Based on Reg + OT Hrs to calculate a deduction amount by multiplying an amount by the number of regular hours worked plus the number of overtime hours worked. Enter the amount in the Standard Amount/Rate field.
Example
The employee works 40 regular hours and 10 overtime hours, and you enter 2.00 in the Standard Amount/Rate field. The deduction will calculate as follows:
(40 + 10) * 2 = 100.00
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Select Based on Paid Hrs to calculate a deduction amount by multiplying the number of hours by the pay rate multiplier entered in Earnings Code Maintenance and then multiplying the total by the amount entered in the Standard Amount/Rate field.
Example
The employee has 40 regular hours with a multiplier of 1, 10 overtime hours with a multiplier of 1.5, and 1 double-time hour with a multiplier of 2. You enter 3 in the Standard Amount/Rate field. The deduction will calculate as follows:
((40 * 1) + (10 * 1.5) + (1 * 2)) * 3 = 171.00
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Select Percentage of Total Hrs to calculate a deduction amount by multiplying a percentage rate by pay rate 1 entered in Employee Maintenance and then multiplying that amount by the total hours worked. Enter the percentage rate in the Standard Amount/Rate field.
Example
The employee has 46 total hours with a pay rate 1 of 25.00. You enter 5.00 in the Standard Amount/Rate field. The deduction will calculate as follows:
(.05 * 25) * 46 = 57.50
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Select Based on Pay Rate to calculate a deduction amount by multiplying an amount by either pay rate 1 or pay rate 2. Enter the amount in the Standard Amount/Rate field, and select the pay rate in the Pay Rate to Use field.
Example
The employee's pay rate 2 is 10.00. You select Pay Rate 2 in the Pay Rate to Use field and enter 2.50 in the Standard Amount/Rate field. The deduction will calculate as follows:
2.5 * 10.00 = 25.00
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Select Percentage of Deduction to calculate a deduction amount by multiplying a percentage rate by another deduction amount. Enter the percentage rate in the Standard Amount/Rate field, and select the deduction code to be used in the calculation in the Deduction Code to Use field. This method is available only if Employer Contribution is selected in the Deduction Type field.
Example
The employee has a deduction amount of $100 using deduction code 06 in Payroll Data Entry. You enter 5.00 in the Standard Amount/Rate field and enter deduction code 06 in the Deduction Code to Use field. The deduction will calculate as follows:
.05 * 100 = 5.00
When you print the Deduction Code Listing, the following codes will print on the listing to show which calculation method is selected for each deduction:
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Fixed Amount
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A |
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Percentage of Gross
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P |
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Based on Reg Hrs Worked
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R |
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Based on Total Hrs Worked
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H |
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Percent of Net Wages
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N |
| Equal to Earnings Code(s ) |
E |
| Based on Reg + OT Hrs |
S |
| Based on Paid Hrs |
I |
| Percentage of Total Hrs |
T |
| Based on Pay Rate |
Y |
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Percentage of Deduction
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D
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Standard Amount/Rate
If there is a standard deduction amount or rate, use the following table to determine the amount or rate to be entered based on your selection in the Calculation Method field.
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Fixed Amount
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Enter the fixed dollar amount.
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Percentage of Gross
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Enter the percentage of gross wages (1.000 = 1%, 1.500 = 1.5%, etc.).
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Based on Reg Hrs Worked
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Enter the amount to be multiplied by the number of regular hours.
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Based on Total Hrs Worked
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Enter the amount to be multiplied by the total number of hours worked.
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Percent of Net Wages
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Enter the percentage of net wages (1.000 = 1%, 1.500 = 1.5%, etc.).
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| Equal to Earnings Code(s ) |
This field is not available if this calculation method was selected. |
| Based on Reg + OT Hrs |
Enter the amount to be multiplied by the total of regular and overtime hours. |
| Based on Paid Hrs |
Enter the amount to be multiplied by the product of the total hours worked and the pay-rate multiplier. |
| Percentage of Total Hrs |
Enter the percentage rate to be multiplied by the total hours (1.000 = 1%, 1.500 = 1.5%, etc.). |
| Based on Pay Rate |
Enter the amount to be multiplied by the selected pay rate. |
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Percentage of Deduction
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Enter the percentage rate to be multiplied by the deduction amount (1.000 = 1%, 1.500 = 1.5%, etc.).
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If there is no standard deduction, enter 0. The amount (or rate) entered establishes the default deduction amount displayed when this deduction code is entered in an employee record or in Payroll Data Entry. The default amount can be changed at that time. This field is useful if all (or the majority) of employees have the same amount deducted for this deduction type (for example, insurance).
Standard Limit
Type a standard deduction limit, in terms of the dollar amount, for all employee records using this deduction code. The limit entered establishes the default deduction goal displayed when this deduction is entered in an employee record. Entering an amount of 0.00 assumes no dollar limit.
Reset Balance at Year End
Select this check box to retain employee deduction records, regardless of whether or not the limit is reached for the deduction code. The amount in the Ded. Balance field is reset to the amount in the Ded. Goal field in
the Voluntary Deduction Maintenance window accessed in Employee Maintenance. Clear this check box if you do no
t want to reset the deduction balance at year end. This field is available only for pension plan deduction typ
es that have a limit entered in the Standard Limit field.
W2 - Box 12 Code
Type the Box 12 code that applies to this deduction. Elective deferred compensation and other reported contributions must be printed in Box 12 on W-2 forms by using the one-character code or two-character code defined by the IRS for this deduction. For more information about current Box 12 codes, refer to the W-2 form instructions provided by the IRS.
Deduction Code to Use
Enter the deduction code to use for the Percentage of Deduction calculation method, or click the Lookup button to list all deduction codes. This field is available only if Percentage of Deduction is selected in the Calculation Method field.
Note You cannot select a deduction code that uses the Percentage of Net Wages calculation method.
Pay Rate to Use
Select which pay rate to use for this deduction code. This field is available only if Based on Pay Rate is selected at the Calculation Method field.
Equal to Earnings Code
Enter up to three earnings codes for this deduction code, or click the Lookup button to list all earnings codes. These fields are available only if Equal to Earnings Code(s) is selected in the Calculation Method field.
Frequency of Deduction
Select the check box assigned to the pay period(s) of each month in which this deduction is to be applied automatically. For example, if a deduction is taken automatically every pay period, select the Every Pay Period check box. If the deduction is taken only when the deduction period specified in Payroll Data Entry is 1 or 3, select the Pay Period 1 and Pay Period 3 check boxes. If the deduction is always entered manually during Payroll Data Entry, clear all check boxes.
The pay period(s) selected are matched with the period specified in Payroll Data Entry, and deduction entries are automatically generated for employees with this deduction code. A deduction can be entered manually in Payroll Data Entry for periods not selected for automatic deduction.
Automatically Apply Deduction to Earnings Code
Enter the earnings code that will be increased by the amount equal to the deduction amount when this deduction is applied. Click the Lookup button to list all earnings codes. The earnings code must have Fixed Amount selected in the Method of Entry field in Earnings Code Maintenance. Leave this field blank if you do not want any automatic earnings applied.
To apply a deduction amount to an earnings code, the deduction code must be set up as an automatic deduction in the employee record if you use the Automatic Payment Entry feature. If you enter payroll data manually, the Auto Ded check box must be selected inPayroll Data Entry.
This field is not available if Equal to Earnings Code(s) is selected in the Calculation Method field.
Example
If you pay a cash advance for meals of $15.00 per pay period, you can set up a matching earnings code and deduction code for meal allowances. You can then enter the earnings code designated as meal allowance in this field. Each time an employee has this deduction taken for meals, there will be an automatic addition of an equal amount in the form of earnings. This enables you to have applicable taxes deducted from the earnings amount and reflected on the employee paycheck.
Deduction Accrual Account
Enter the general ledger account number for posting amounts for this deduction code, or click the Lookup button to list all general ledger accounts.
If the account number is longer than the field, use the left and right arrow keys to view the entire account number.
Accounts can be created in this field if the appropriate settings are defined in the Auto Create when all Segments are Valid field in General Ledger Options.
Contribution Expense Account
Enter the general ledger contribution expense account number from the chart of accounts, or click the Lookup button to list all general ledger account numbers. This field is available only if Employer Contribution is selected in the Deduction Type field.
If the account number is longer than the field, use the left and right arrow keys to view the entire account number.
Accounts can be created in this field if the appropriate settings are defined in the Auto Create when all Segments are Valid field in General Ledger Options.
Deduction Code Maintenance
