Company-Level Deduction Setup: Field-Level Help
Background
A deduction is an amount of money taken from a paycheck in order to make a payment towards insurance premiums, 401k savings, wage garnishments, etc. For a full definition, see Deductions in our Payroll Glossary. For further reading about deductions, see our blog article An Overview of Payroll Deductions.
Field Level Company Deduction Help in Patriot Software
When you add or edit a company-level payroll deduction in Patriot Software, complete the following fields on the Deductions screen:
Type: When adding a new payroll deduction to be used by the company, select which Deduction Type will be used. The Deduction Type determines which types of tax are calculated on the deduction. Once the deduction has been used in a payroll, that particular Deduction Type cannot be changed. See the article Deduction Types for an explanation of each type.
Active: A new deduction will be active by default, which means it can be assigned to employees and used in payrolls.
If you are no longer using this deduction (e.g. an old medical insurance plan), edit the deduction and uncheck the “Active” box to inactivate the deduction at the employee level. The deduction will no longer appear in the drop-down list when assigning new deductions to employees.
If you reactivate the deduction at the company level, you must manually reactivate the deduction on each employee’s record.
Description: This long-word description will appear on employee paychecks. You may use any combination of letters, numbers, special characters, and spaces, up to 20 characters. An example would be “Medical EE Only.”
Method: Note that this field cannot be edited once you have saved this deduction, so choose carefully! Choose from the following:
- Fixed-Dollar: The deduction amount will be the exact fixed-dollar amount entered either on this master deduction screen here, or the employee’s deduction record.
- Percent: In most cases, this will calculate the payroll deduction based on a percentage of gross pay. The only exception is SIMPLE IRA deductions, where the percent is of gross pay minus any Section 125 deductions.
Amount: If this deduction has a set amount that is the same for everyone, enter the default amount. If this deduction amount will vary per employee, leave this field blank.
Limits: These fields are optional. The deduction can be set up with a dollar limit so that once the limit is reached, the deduction will automatically stop. See the article Deduction and Contribution Limits for more details.
W-2 Box: This drop-down field should be completed only in certain cases where the money from this deduction needs to be in a special box on the W-2, per IRS instructions. In some cases, we have pre-filled this box for you. Otherwise, leave this field blank. For further instructions on W-2 reporting requirements, see IRS Instructions for Form W-2 and “How to Fill Out Form W-2: Box-by-box Breakdown“.
W-2 Label: The choices in this drop-down field will be determined based on the selection in the W-2 Box field above. In some cases, we have pre-filled this box for you. If the W-2 Box field above is blank, this field will also remain blank.
After you add a deduction at the company level, you can now assign them to individual employees. See Employee-Level Deductions.
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