Employee Deductions

Purpose: Employees can have deductions taken each pay period. In order to add employee deductions, they must first be added at the company level. This help guide will show you how to add deductions for employees.

What if I am using the BambooHR Integration?

If you are using the BambooHR integration, you will manage your employees' benefit deductions on the Benefits tab in BambooHR. This help guide will give you more information on how to update benefit enrollment for an individual employee. Additionally, this help guide will show you how to add non-benefit deductions for your employees. 

Deductions

Navigate to the Employee’s Deductions tab and click “Add Deduction.” Select when you’d like the deduction to start.

1. Add Deduction

Company Level and Employee Level Information

Select the Company Deduction from the list. This will automatically populate the other fields in the Company Level Information and Employee Level Information sections. 

  • Start Date - Automatically populates with the deduction start date set up with the Company Deduction. This can be changed for the specific employee if needed. The effective date of when a deduction is pulled into payroll is determined at the Company Deduction level. This will either be the pay date, pay period start date, or pay period end date. It is important to set the effective date accordingly.
  • End Date - Enter an end date to stop the deduction. If the end date is prior to the pay date then the deduction will not be taken in payroll.
  • Priority Order - If there are multiple deductions, this determines the priority of this deduction. If there is not enough wage to cover all deductions, the administrator will get a warning to correct this when running payroll.

Employee Cost Override Section

If the amounts that have been entered for the company deduction are correct for the employee cost, you do not need to enter any data in the Override Section. If the amounts are not set up or they are not correct for the employee, you will need to enter amounts in the Override Section.

  1. Based on Override - Gross or Net. Net is used for disposable wages on garnishments.
  2. Amount Override Type - Dollar or Percent.
  3. Amount Override - Enter the per pay period amount to be taken. Negative deductions can be entered to offset other deductions. The deduction amount must be positive overall within a deduction type. For example, a negative deduction for Section 125 can be used as long as the employee has other Section 125 deductions that sum to a positive amount.
  4. Cap Amount Override Type - If the deduction has a limit, select Dollar or Percent.
  5. Cap Amount Override - Enter the Cap Amount. Cap amounts can cross over years if needed. For example, if you are creating a Garnishment that has a total amount of $1000 owed then you can enter that amount here to ensure the deduction stops once the employee has paid the $1000.
  6. Annual Maximum - Only enter an annual maximum if it is different for the employee than what has been entered at the company level. An annual maximum is an amount allowed to be deducted annually. The deduction will start over again at the beginning of each year.

Employer Cost Override Section

If the amounts that have been entered for the company deduction are correct for the employer cost, you do not need to enter any data in the Override Section. If the amounts are not set up or they are not correct for the employer, you will need to enter amounts in the Override Section.

  1. Based on Override - Gross or Net. Net is used for disposable wages on garnishments.
  2. Amount Override Type - Dollar or Percent.
  3. Amount Override - Enter the per pay period amount to be taken. Negative deductions can be entered to offset other deductions. The deduction amount must be positive overall within a deduction type. For example, a negative deduction for Section 125 can be used as long as the employee has other Section 125 deductions that sum to a positive amount.
  4. Cap Amount Override Type - If the deduction has a limit, select Dollar or Percent.
  5. Cap Amount Override - Enter the Cap Amount. Cap amounts can cross over years if needed.
  6. Annual Maximum - Only enter an annual maximum if it is different for the employee than what has been entered at the company level. An annual maximum is an amount allowed to be deducted annually. The deduction will start over again at the beginning of each year.

Additionally, you can enter a starting balance for Loan reports right above this section.

Global Limit

Some deduction types have annual maximums that are governed by federal rules, such as 401(k). These rules are automatically built into TRAXPayroll so they are not exceeded each year. These amounts are listed when viewing or setting up a deduction in company and employee deductions in the global limit section. Employees can elect a lesser annual maximum if desired.

1. Employee Deduction - 403(b)

Some employees may be allowed to contribute more than the normal annual maximums for 403(b) depending on their years of service with your company.

Check the “Exceed Global Limit” checkbox to allow an amount to be entered that is higher than the usual annual contribution for the 403(b). Then enter the annual maximum specific to the employee.

Loans

The Starting Balance is available for loan deduction types. Simply enter the loan amount and it will stop deducting once the amount is reached.

Once loan deductions have been collected in payroll, the remaining balance due will be shown along with the starting balance that was entered.

Employee Cost Override Section

If amounts have been entered for the company deduction are correct for the employee, you do not need to enter any data in the Override Section. If the amounts are not set up or they are not correct for the employee, you will need to enter amounts in the Override Section. Employer amounts can be based on the employee’s contribution of their wage.

2. Edit Employee Deductions

Employee deductions can be updated to change existing data. Click the “Action” button next to the deduction to make changes. The following options are available:

  1. End - as of today (today’s date)
    • Use this option to stop the deduction as of today.
  2. End - on specific date
    • Use this option to select the date you’d like to stop the deduction as of. 
    • To preserve historical data, end the existing deduction and add a new one if the deduction amounts are changing. 
  3. Make Change - to correct existing record
  4. Void - created by mistake but has history
    • This will enter an end date on the record one day prior to the start date.
  5. Remove - created by mistake
    • Use this option if the record was added in error.

What's Next?

Do you still need to set up your Company Deductions

Learn more about how to correct deductions during payroll.