Deduction Codes

Payroll - Deduction Codes Maintenance

Function

Deduction Code Maintenance defines and maintains employee deduction codes for voluntary (non-tax) deductions such as health insurance, credit union savings, and charitable contributions printed on the employee pay check. Deductions may be a fixed dollar amount or based on a percentage of total units worked or dollars earned per pay period. A deduction that applies to all employees during the same pay period may be designated for automatic assignment to new employees. The [Display additional options...] button provides access for creating a Code Listing report.

=> To access this task...

Select Deduction Codes from the Inquiry and Maintenance menu.

Deduction Code maintenance

About the Fields

The Deduction Code Maintenance screen is divided into two sections. The upper section (header) fields are used to enter the deduction code and the description of that code. The lower section is used to enter the locations where the deduction is accumulated.

In the Deduction Code field...

Enter a 2-character deduction code.
Click to select from a list of all valid contribution codes.
Click the record navigating buttons; to view the first record, to view the previous record, to view the next record, and to view the last record.

NOTE: For businesses such as restaurants, deduction codes may be defined to automatically deduct taxable tips (or any taxable dollars earned that are not to be included in employee pay checks) before the payroll pre-check register and payroll checks are printed. Refer to the description for Auto Deduct in the Pay Code Maintenance task. This makes the earnings from tips taxable, but the tips are not paid by employer.

In the Description field...

The description is displayed when this code is entered to define deduction codes in the Employee Masterfile Maintenance task.

Enter a description of up to 16 characters to identify the contribution code.

In the Report Code field...

This code specifies the column where these contributions are to be printed on the Payroll Deduction Report.

Enter a valid report code.
Click to select from a list of valid codes.

From the Deduction Type dropdown...

Enter one of the following to specify the calculation method used to calculate the amount of this deduction.

Select Fixed (F) from the Contribution Type list box to use a Fixed Dollar Amount for the Contribution.
Select Units (U) from the Contribution Type list box to use Total Units Worked (e.g., hours).
Select Dollars (D) from the Contribution Type list box to use Percentage of Dollars Earned.
Select None (N) from the Contribution Type list box to indicate No deduction type is required.

In the Periods Taken field..

Enter the payroll period(s) this contribution is to be taken, using the numbers 1, 2, 3, 4 and 5 to represent the payroll periods.

When entering more than one payroll period, enter the numbers one after another, with no spaces separating entries (e.g., 12345 to select all pay periods 1 through 5).

In the Total Code field...

This is the total to be used to calculate the deduction when you enter Units (U) or Dollars (D) in the Deduction Type field.

Enter a valid total code as the basis of the deduction.
Click to select from a list of valid codes.

In the GL Account field...

This is the accrual account to which amounts for this deduction are posted.

Enter a valid general ledger account number.
Click to select from a list of valid codes.

In the Deduction Rate field...

When a deduction rate/amount is entered in an individual employee’s deduction record, that rate/amount will override this one.

Enter the rate to be used to calculate the deduction when you enter Units (U) or Dollars (D) in the Deduction Type field.
Or, enter the fixed dollar amount to be deducted each specified payroll period when you enter Fixed (F) in the Deduct Type field.

In the Ded Limit/Init Bal field...

Enter the deduction limit or balance.

Limit

When a deduction is to be taken only until a certain total dollar amount is reached, enter the dollar amount limit. During automatic payroll calculation, the employee year‑to‑date deduction amount for this deduction is compared to the limit, and deductions will not be taken once the limit is reached. When a limit is entered in an individual employee’s deduction record, that limit will override this one. If the limit is set to zero, the deduction continues indefinitely.

Balance

Enter the dollar amount balance for this deduction. A deduction with a balance differs from a deduction with a limit in two major ways.

The balance of the total deduction is reduced by the amount of the periodic deduction during the payroll update. When the balance reaches zero, the deduction is no longer taken.
During year-end processing, any balance remaining is carried over to the new year.

Special Deduction checkbox...

Mark the box when this deduction applies only to certain employees
Unmark the box if this deduction applies to all employees.

All deduction codes other than those flagged as “special” are automatically assigned to each new employee when defined in the Employee Masterfile Maintenance task.

From the Balance or Limit dropdown...

Select Limit (L) for the deduction to be taken until a fixed dollar amount per year is reached.
Select Balance (B) if the deduction is to have a balance that will be reduced by the amount of the deduction each payroll period until that balance is zero.

Allow GL Account Entry checkbox...

Mark the box to allow individual G/L Account Number Override for the Debit Posting portion of a Voluntary Deduction.

In the Total To fields...

Enter a valid total code.
Click to select from a list of valid codes.

This code determines where the deduction is accumulated during calculation of payroll taxes, contributions, and accruals. For deductions, this field is only used in special situations such as reducing taxable dollars earned by the 401K deduction amount.

From the Operator dropdown...

Select Plus (+) when this deduction is to be added into the total specified above.
Select Minus (-) when the deduction is to be subtracted from the total specified above.
Select None when the deduction is to be neither added or subtracted from the total specified above.

When finished entering Deduction Code Information...

Click to save the record.
Click to clear the form and begin again.
Click to delete the record selected.

If the Window is closed without saving the record, the module issues this confirmation prompt:

Click [Yes] to save the changes.
Click [No] to return to the Payroll Maintenance Menu without saving the record.
Click [Cancel] to return to the Deduction Code Information being edited.

Selecting the [Display additional options...] button presents the option to create a listing of all Deduction Codes

Selecting this option creates the report:

Sample Deduction Codes Listing

See Output Options