Employee-Level Deductions

Employee-Level Deductions

You can make deductions from employee paychecks for various reasons, such as benefit premiums, 401k savings, loan repayments, wage garnishments, employee purchases, etc. You must first set up the deductions at the Company level before assigning them to individual employees.
  1. Payroll > Employees > Employee List
  2. Click the employee’s name in the Employee List.
  3. Click the Deductions & Contributions link on their record.

To add a new deduction, click the Add a New Deduction link at the top right. A set of blank fields will appear.

Deduction: Select from the dropdown list of existing deductions set up at the company level.  To add a deduction that is not in the list, you will first need to add the deduction at the company level.

Active:  This checkbox will be marked by default.  When the Active box is checked, the deduction will occur in any payrolls for this employee as long as a limit has not been reached, and the deduction has not been turned off in the Payroll Entry screen.  If the Active box is unchecked, the deduction will not occur.

Method:  This will be either “Fixed Dollar” or “Percent.” This is determined by the deduction you have selected, and is set up at the company level.  This is for information purposes on the employee’s deduction screen, and cannot be changed here.

Amount:  Depending on the above Method, enter either the dollar amount or percent of pay that should be deducted from each pay check.  If there is a Company Default Amount set up at the the company level, the default amount or percent will automatically fill in the field.  If you do not want to use the company default amount, click “Use a Custom Amount” and fill in the custom amount for this employee.

Limits:  These fields are optional.  The Deduction can be set up with a dollar limit within a pay date, month, calendar year, or lifetime so that once the limit is reached, the Deduction will automatically stop.  See Deduction and Contribution Limits for more details.  If there is a Company Default Amount set up at the company level for a limit field, the default amount or percent will automatically fill in the field.  If you do not want to use the company default amount and want to use a custom limit for the employee, click “Use a Custom Amount” and fill in the custom amount for this employee.  If you want to remove the limit, click “Use a Custom Amount,” delete the default amount and leave it blank.

Catch Up?:  Only if the deduction type is 401(k), 403(b), or Simple IRA, or HSA, there will be an additional checkbox that appears at the bottom of the field list.  You will need to check this box for any employee that meets the IRS eligibility requirements for contributing catch-up amounts:

  • For 401(k) and 403(b) – anyone turning age 50 or older in the current calendar year
  • For Simple IRA – anyone turning age 50 or older in the current calendar year
  • For HSA – anyone turning age 55 or older in the current calendar year

Checking the Catch Up box allows the additional deduction to be tax exempt, and will set an automatic deduction limit so the deduction stops once it reaches the higher catch-up limit.

To edit a deduction, click the Edit link in the row. You can now make changes in the appropriate fields for that deduction. You can inactivate or activate a deduction, or change the amount per pay and limits. ClickSave.

To delete a new deduction, click the Delete link in the row. Note: you may only delete a deduction if it has not yet been used in a payroll. If the deduction has been used in a payroll, the delete link will not be visible. Click Yes to delete this deduction.

About Deduction Priorities

The priority of deductions becomes an issue when the employee’s pay is less than the total amount of deductions scheduled to be taken in a paycheck. If this happens, deductions will be prioritized and deducted in order until there is no pay remaining and the net paycheck amount is zero.

Deductions are prioritized in order of how they currently appear in the deductions list. Deductions appearing in the first row will be taken first, deductions in the second row will be next, and so on.

To reorder deductions, place your cursor on the deduction row to the far left. Blue arrows will appear. Click and drag this deduction row above or below the other deduction rows.

If there is not enough money to take the first deduction, the system will move on to the second deduction. If there is not enough money for the second deduction, the system will move on to the third deduction, and so on.


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