Setup Deduction Types

DESCRIPTION: Deduction Types are all those deductions that can be withheld from an employee's paycheck. Examples of this are Federal, FICA, FICA-Med, State, City taxes, along with special deductions such as pensions, deferred comp, garnishments, etc.

To setup a new Deduction type, click on the Payroll button,

, then click on the SETUP DEDUCTION TYPES button.

Please see the following topic for help on setting up filters in the deductions grid: Exploring Grid Filters

2. Enter a 3 digit code for this deduction in the CODE box.

This code is made up of three characters, numbers, or a combination thereof.

4. Enter a short description name of the deduction in the Short Name 1 box. (This will be the name that prints on the employee's check stubs.)

5. Enter the proper W-2 Info in the box, if applicable.

Example: Federal deduction will show the companies (Road Commission, Township, City) Employer Identification Number. (38-#######). For a deduction like MERS pension, you would need to put in the correct information, for example 414(H)(2). If you do not know the proper information, consult the IRS website, or contact your local accounting firm.

7. Enter the Calc order number.

Enter the order in which this deduction type should be calculated.

NOTE: It is recommended that you keep a list of your deduction types and the order of importance of their being taken from an employee's gross pay. If you need to see the current Calc Order list, select the report PR DED CODE LIST under the Reports section. Calc Order numbers do not need to be unique. In other words, you can use all ones for your mandatory deductions, all tens for your taxes, all twenties for your voluntary deductions, etc.

1. Items not subject to FICA/FICA-MED/Federal/State/City taxes, such as cafeteria plans.

2. Items not subject to Federal/State/City taxes, such as deferred compensation or deferred retirement plans.

Each deduction has a calculation type associated with it that tells the software how to calculate the deduction amount. The calculations that follow have been grouped into types (e.g., taxes, union dues, retirement, etc.) and define the calculation’s description and what information should be entered for the parameter 1 - 4 fields on the PR/PRS Parameter Titles screen:

If you clicked the State/Local box, you will also need to put in your two-character state abbreviation or three-character local abbreviation in the Tax code box.

TAX DEDUCTIONS
CALC #	USED FOR	Parameter 1	Parameter 2	Parameter 3	Parameter 4
1	Federal W/H	# of exemptions claimed by employee	Extra $ amount employee wants deducted	% the employee wants deducted	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
2	FICA	No Entry	No Entry	Employer FICA Adjustment Amount	Employee FICA Adjustment Amount
3	State	# of exemptions claimed by employee	Extra $ amount employee wants deducted	% the employee wants deducted	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
4	City	Annualized exemption amount. (Ex: if annual exemption is $600 and the employee claims 3 dependents, enter $1800 in Amt 1)	% of pay to withhold	Not used	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
18	Medicare	No Entry	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
Calc Type 21 is the calc type used for setting up the EFM deduction for the FICA-MEDICARE match
27	State of Wisc.	We DO have the tax table for Wisconsin taxes already setup for them. I go to the WS website every year and make any necessary changes to the tax rates for withholding
36	State withholding deduction for Misc states	State Tax Exemptions	State Tax Extra Withholding Amount	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
Used for other state's withholding taxes

MISC. DEDUCTIONS
CALC #	USED FOR	Parameter 1	Parameter 2	Parameter 3	Parameter 4
5	Employee Advances (also see Calc 28 below)	Amount to deduct per pay	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
6	Straight Dollars, Adjustable	Amount to deduct per pay	% to deduct per pay	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
9	Straight Dollars, Non-Adjustable (may be used for Deferred Comp)	Amount to deduct per pay	% to deduct per pay	No Entry	Adjust by adding to the deduction amount (may NOT enter negative dollars)
17	Straight Dollars, Adjustable	Amount to deduct per pay (If using a %, leave Parameter 1 blank)	% to deduct per pay (If using an amount, leave Parameter 2 blank)	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
21	Net Check	% to give back to the employee in a net pay check *	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
* If this deduction represents Friend of the Court demands for payment or IRS liens & the employee is allowed to keep
a percentage of their pay, then that's the percentage that should be entered in Parameter 1
NOTE: This calculation type is also used for the Employer's FICA/FICA-MED matching deduction.
28	Employee Advances (also see Calc 5 above)	Amount of money advanced to the employee	Declining balance of advanced amount	No Entry	No Entry
29	Null Deduction *	No Entry	No Entry	No Entry	No Entry
* If an employee has no Federal taxes (Federal, FICA, FICA-MED) being deducted from their pay, this calculation type
is required for a pay check to be issued to the employee.
The Null Deduction is most commonly found on election workers.

UNION DUES DEDUCTIONS
There are numerous formula in place for calculating various union dues. Please read through
the calculation descriptions below and select the calculation type(s) that apply to your entity.
CALC #	USED FOR	Parameter 1	Parameter 2	Parameter 3	Parameter 4
7	Union Dues	No Entry	Amount to Deduct	No Entry	No Entry
10	Union Dues	No Parameter Titles required.	No Parameter Titles required.	No Parameter Titles required.	No Parameter Titles required.
FORMULA: Total current pay x 2 divided by total current hours = Amount to deduct.
11	Union Dues	Amount to deduct if the employee is new or has no "previous pay."	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
FORMULA: Gets 1% of the most recent calculated pay period's taxable wages and then adds param 4 to that value
13	Union Dues	No Entry	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
FORMULA: Payroll rate x 2 = Amount to deduct
14	Union Dues	No Entry	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
FORMULA: Payroll rate x 2 rounded to next whole dollar (no pennies) = Amount to deduct
16	Union Dues	Amount to deduct	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
26	Additional Union Dues	Amount on which to base additional deduction	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
FORMULA: Multiplies the amount in Parameter 1 by the current hours to figure the deduction.
31	Union Dues	No Entry	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
FORMULA: If total current hours are less than zero, divide the current wages by the current hours and multiply by
2.50%. Then multiply the total wages by 1.30% and use the lesser of the two calculations.
32	Additional Union Dues	Amount on which to base additional deduction	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
FORMULA: If total current hours are less than zero, divide the current wages by the current hours and multiply by
2.50%. Then multiply the total wages by 1.30% and use the lesser of the two calculations. Finally, add the
amount in Parameter 1 to the lesser of the two calculations and multiply by the total current hours.
34	Union Dues	Amount on which to base additional deduction	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
If annual # of pays is >= 52 then factor = 0.6461 if < 52 but >= 26 then factor = 1.2923 if its < 26 but >= 24 then factor = 1.4 else factor = 2.8
Divides current earnings by the current hours then multiplies by the factor calculated from the above table
then compares that amount to current earnings X 1.45% and then uses the lesser of the two numbers
If there is a value in param 4 add that value to the deduction amount
If current employee hours worked = 0 then deduction amount = 0
33	Union Dues	Amount on which to base additional deduction	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
Param 1 Value + 2 cents multiplied by current taxable hours which are not overtime hours

35	Union Dues	Amount on which to base additional deduction	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
FORMULA: If total current hours are less than zero, divide the current wages by the current hours and multiply by
If annual # of pays is >= 52 then .6461 if < 52 but >= 26 then 1.2923 if its < 26 but >= 24 then 1.4 else it is 2.8
Then multiply the total wages by 1.45% and use the lesser of the two calculations.
Multiplies the amount in Parameter 1 by the current hours to figure the deduction and adds it to the previous calculation.
If there is a value in param 4 add that value to the deduction amount
37	Union Dues	Amount on which to base additional deduction	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
Deduction amount is 1% of employees previous payroll's taxable earnings
If no previous payrolls for employee then deduction amount = param 1 value
If there is a value in param 4 add that value to the deduction amount
RETIREMENT DEDUCTIONS
CALC #	USED FOR	Parameter 1	Parameter 2	Parameter 3	Parameter 4
8	MERS Exempt, Non-Adjustable	No Entry	No Entry	No Entry	No Entry
FORMULA: Subtract the MERS exempt pay and $4,200 from the year-to-date gross pay to arrive at the amount to deduct.
If the result is less than zero, then multiply the current gross pay by 3%.
If the result is greater than $4,200, then multiply $4,200 by 3% and multiply the amount over $4200 by 5%.
Subtract this result from the total year-to-date deduction amount to arrive at the amount to deduct.
12	MERS	Percentage	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
FORMULA: Subtract MERS exempt wages from the total current wages then multiply by the percentage in Parameter 1.
15	MERS Exempt, Adjustable	No Entry	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
FORMULA: This calculation type is identical to Cal 7 EXCEPT that you may make adjustments to the amounts withheld.
19	MERS Exempt, Adjustable, Reimbursed	No Entry	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
FORMULA: This calculation type is identical to Calc 8 except that you may make adjustments to the amounts withheld
and the amount of the deduction is used by Calc 20 (see below)
20	Reimbursed Retirement	No Entry	No Entry	No Entry	No Entry
FORMULA: Takes the result of Calc 19 (see above) and reimburses the employee that amount.
22	MERS Exempt, Adjustable	No Entry	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
FORMULA: This calculation type is identical to Calc 15 except that you may make adjustments to the amounts withheld.
23	MERS Exempt, Adjustable	No Entry	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
FORMULA: Subtract the MERS exempt pay and $4,200 from the year-to-date gross pay.
If the result is less than zero, then multiply the current gross pay by 1.5%.
If the result is greater than $4,200, then multiply $4,200 by 1.5% and multiply the amount over $4,200 by 2.5%.
Subtract this result from the total year-to-date deduction amount to arrive at the amount to deduct.
24	MERS Exempt, Adjustable, Reimbursed	No Entry	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
FORMULA: Subtract the MERS exempt pay and $4,800 from the year-to-date gross pay. If the result is less than zero,
then multiply the current gross pay by 3%. If the result is greater than $4,800, then multiply $4,800 by 3% and multiply
the amount over $4,800 by 5%. Subtract this result from the total year-to-date deduction amount to arrive at the
amount to deduct (used by Calc 25).
25	Reimbursed Retirement	No Entry	No Entry	No Entry	No Entry
FORMULA: Takes the result of Calc 24 (see above) and reimburses the employee that amount.
30	MERS Exempt, Adjustable	No Entry	No Entry	No Entry	Amount to adjust previous withheld tax (may be negative dollars to "give" the money back to the employee if too much withheld previously)
FORMULA: This calculation type is identical to Calc 8 except that you may make adjustments to the amounts withheld.

9. If the deduction type is exempt from federal and state withholding, but not exempt from FICA or Medicare (such as deferred retirement or deferred comp), then click the DEFERRED COMP radio button .

Do NOT click both the Deferred Comp and Exempt boxes!

10. If the deduction type is exempt from all taxes, including FICA and Medicare, for example a Health Insurance or cafeteria plan, then click the Exempt radio button.

12. If the deduction type is State tax or Local tax withholding, click the Stat or local box.

13. The Pay To field will contain the Address Code of the company or bank that will be receiving the check (if any) for this deduction.

Parameter Titles Screen -Sets the parameter titles used in employee maintenance.

Depending on the deduction type being set up, the titles you enter here will change. See the individual Calculation Types above. You may use whatever descriptive titles will help you remember what information is required when you’re setting up your employees’ deductions. These are the titles that will show up in EMPLOYEE MAINTENANCE under the particular deduction.

When you’re through entering or modifying deduction types, click the DONE button to exit the program.

You do NOT need to set up any of your Married and Single Withholding Tables for Federal Withholding. We will supply you with this file, electronically, every year. There is a file called "Tax Table yyyy-mm-dd.INI" (where "yyyy-mm-dd" equals the date of the tax table, e.g., Tax Table 2016-01-01.INI) that contains all the tax withholding information for the States of Michigan and Wisconsin, and Federal Married and Single Withholding Tables.