Setting Up Employee Deductions and Earnings

To create and define the codes for each deduction that may be used in your system, use the Deduction and Earning Codes form.
To set up temporary deductions (unions, loans, or garnishes) for each employee, use the Employees form, or the Employee 360 form:
1. On the Deductions tab on the Employees form, or Deductions and Earnings page on the Employee 360 form, enter the employer's retirement contribution and specify whether the value is a percentage or an amount.
2. If applicable, enter a union deduction:
  - In the Union Deduction field, enter the amount of the deduction, whether a currency amount or a percentage.
  - In the Per field, select the type of deduction rate (whether the amount is to be deducted per hour, as a percent, or as a fixed, flat rate).
  - In the Union Freq field, select the frequency at which the deduction is to be made.
  - In the Union Liab Acct field, enter a valid General Ledger (G/L) account number to identify the union liability account that the union deduction is posted against.
3. If applicable, to automatically deduct an amount from an employee's paycheck for a loan, enter:
  - In the Loan Deduction field, the amount to be deducted per deduction, in the domestic currency.
  - In the Loan Freq field, the frequency at which repayments should be deducted from the employee's pay.
  - In the Loan Balance Due field, the amount of the loan to be repaid
  The system stops the deductions when the Loan Balance Due amount reaches 0 (zero).
4. If applicable, to automatically garnish wages from an employee's paycheck, enter:
  - In the Garnish Deduction field, the amount to be garnished
  - In the By field, whether it is a percentage or a domestic currency value
  - In the Garnish Freq field, the frequency at which garnishments should be made
  - In the Garnish Balance field, the amount to be garnished
    The system stops the deductions when the Garnish Balance amount reaches 0 (zero).
To set up other deductions or earnings, use either the Deductions tab on the Employees form, or the Deductions and Earnings page on the Employee 360 form. Specify the following for each deduction or earning type:
- In the Code field, the deduction or earning type code.
  When you select a code, the system automatically displays the description for the deduction or earning in the Description field.
- In the Amount field, the amount to be deducted or added.
- In the Type field, whether it is a percentage of the employee's pay or a flat domestic currency amount.
- In the Frequency field, the frequency at which the amount is to be deducted or added.
- In the Balance field, the total amount to be deducted or added.
  Note: If this field is blank, the amount is deducted or added on an ongoing basis.
To set up a deduction for additional local taxes, on the Deduction and Earning Codes tab on the Employees form, specify either Before tax deduction from gross pay or Deduction from net pay after tax.
Additional local taxes can be deducted from employee checks and reported in box 20 of the W-2 form. This deduction method should only be used when two or more local taxes are necessary.

NOTES:
- When a deduction or earning is based on a percentage calculation and the deduction type on this form is Before tax deduction from gross pay, the system calculates the amount based on the employee's gross pay.
- W-2 box 20 works differently with the deduction type Deduction from net pay after tax than it does with any other type of deduction. If you use the Deduction from net pay after tax option with W-2 box 20, the system uses the same base pay used to calculate the primary city tax when the deduction is based on a percentage.
Caution: Each additional local tax deduction generates an additional W-2 for each employee who takes that deduction.