Deduction Information window

Linked Payable Account is the account (usually a liability account) in which all the deducted money will be accrued. The Default Withholding Payable Account you specified when setting up payroll appears as the default. You should change this default if you want to track the deduction separately. For example, if you are deducting union fees, create a Union Fees Payable liability account. This way, the balance sheet will display the deductions separately from your taxes and other deductions.

Type of Deduction may be one of the following choices:

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User-Entered Amount per Pay Period should be selected if you want to manually enter a specific amount for each employee each pay period. Note that manually entered deductions should be entered as negative values.

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Equals x Percent of allows you to enter a percentage of any of the wage categories. This amount will be deducted until the deduction limit (see below) is reached.

Type or select a wage category upon which the calculation is to be based. Alternatively, you can select Gross Wages or Federal Wages, which totals all wage categories (hourly and salary) you pay an employee.

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Equals x Dollars per allows you to deduct the specified amount per pay period, per month, per year, or per hour. This amount will be deducted until the limit (see below) is reached.

Deduction Limit may be one of the following choices:

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No Limit signifies no limit on the amount of money that can be deducted from the employee’s pay for this category.

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Equals x Percent of results in the maximum deduction amount being a percentage of a wage category. For example, a deduction might be $50 per pay period up to a maximum of 50% of the employee’s base salary. The special categories of Gross Wages and Federal Wages are also available here (refer to discussion in ‘Equals x Percent of’, above).

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Equals x Dollars per results in the maximum deduction being a fixed dollar amount per pay period, per month, or per year. For example, a deduction might be 10% of the employee’s gross wages up to $1,500 per year.