Deduction Types

DEDUCTION TYPES

DESCRIPTION: Deduction Types allows you to create different deductions to use in your payroll. Examples of this are: Federal, FICA, FICA-Med, State, City taxes; along with special deductions such as pensions, deferred comp, garnishments.

To access: Click on the Payroll module then click the Deduction Types menu item.

The following windows will appear:

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

To enter a new Deduction Type, click on the New button.

Enter a three character (letters or numbers or a combination of the two) code in the Code field, then enter the Description for the code you have chosen. Also enter a Check display name that will appear on the paycheck.

Select the Calculation type for this deduction by using the drop down list.

The Calculation order is a number between 1-99. It is the order used to take the deduction away from the earnings. Several deduction codes can have the same Calculation order number. Calculation 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.

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 Calculation order list, select the report PAYROLL DED CODE LIST under the Reports section.

Order of Calculation:

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

2. FICA and Medicare taxes

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

4. Federal, State, City taxes

5. Other post tax deductions

6. Net Pay

If the Deduction Type is exempt from federal and state withholding, but not exempt from FICA or Medicare (such as deferred retirement or deferred compensation), then check the Deferred comp box.

If the Deduction Type is exempt from all taxes, including FICA and Medicare (for example a Health Insurance or cafeteria plan) then check the Exempt box.

If the Deduction Type requires Benefit earnings for the calculation, check the Include benefit earnings box.

If the Deduction Type is a retirement deduction, then indicate the Retirement plan type by using the drop down list. MERS information is required for all of your MERS deductions.

If the Deduction Type is a state withholding deduction, select the state from the State drop down list. Enter the State tax id number.

If the Deduction Type is for a local withholding tax, make sure you select the Local Withholding tab to enter the Local name for IRS. Also, by using the drop down list, select the Local withholding calculation method.

To automatically generate a check for the deduction, select a Pay to value from the drop down list. If this field is left blank, then no check will be generated. If multiple deductions have the same Pay to, then only one check will be generated which will include the sum of all the deducted amounts. For more information on how to create or modify a Pay to value, see Deduction Address

The W2 setup is used to specify the information for this deduction on the W2.

Each deduction has a Calculation Type associated with it that tells Pro Fund Accounting 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 checked 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	Handled by the W-4	Handled by the W-4	Handled by the W-4	Handled by the W-4
2	FICA	No Entry	No Entry	Employer FICA Adjustment Amount	Employee FICA Adjustment Amount
3	State	Handled by the W-4	Handled by the W-4	Handled by the W-4	Handled by the W-4
4	City	Handled by the W-4	Handled by the W-4	Handled by the W-4	Handled by the W-4
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
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)
38	Ohio State, School, District, Income Tax	Handled by the W-4	Handled by the W-4	Handled by the W-4	Handled by the W-4
40	Additional Medicare Rate (For Taxable Gross over Medicare Threshold)	No Entry	No Entry	No Entry	No Entry
Used for other state's withholding taxes

MISC. DEDUCTIONS

CALC #

USED FOR

Parameter 1

Parameter 2

Parameter 3

Parameter 4

Pay Back Employee Advances (also see Calc 28 below)

Amount 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)

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)

Straight Dollars, Non-Adjustable

Amount to deduct per pay

% to deduct per pay

No Entry

Adjust by adding to the deduction amount (may NOT enter negative dollars)

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)

Net Check

% to give back to the employee in a net pay check *

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.

Benefit Deductions

No Entry

Used by the Benefits to remove the dollars the Benefit adds

Add to an Employee Advance (also see Calc 5 above)

Amount of money advanced to the employee

Declining balance of advanced amount

No Entry

Dependent Care Reduction

No Entry

Reduces the taxable wages up to the alloted Federal maximum amount.

Null Deduction *

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 (steel workers)	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, 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, 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, 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, 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, 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, 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, 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.

Parameter titles tab: Each of the different Deduction Calculation types have extra parameters that the Employee maintenance window will ask for. Enter the Parameter titles for the Calculation type you specified. These are the titles that will show up in the Employee maintenance under the particular deduction. See the above charts for an explanation of the Parameter titles. You may use whatever descriptive titles will help you remember what information is required when you are setting up the employees' deductions.

When you have finished entering or modifying Deduction Types, click the Save button. A success message window will appear. Click OK.

Click on the X in the upper right corner of the window to close the window.