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Use the Main tab of the Payroll Items screen to specify information about new pay items, deduction items, and employer contributions.

Choose Setup > Payroll Items and then click the Main tab.

Fields & buttons

  • Description. Enter a unique identifying description for this payroll item.
  • Type. Choose either Deduction, Employer Contribution, or Pay as the payroll item type.
  • Inactive. You can designate a payroll item as inactive if it not currently being used. Payroll items designated as inactive will no longer display in lists of payroll items.
  • Report description. You can choose to specify a different description for the payroll item that will display on reports and checks. If nothing is entered in this field, the regular description will display on reports and checks.
  • Agent. This field is available only when the current payroll item type is either deduction or employer contribution. Here you can specify the agent type vendor for this payroll item for liability tracking. The Agent drop-down list contains all vendors specified as payroll agents in the Main tab of the Vendors screen. If you enter a vendor that does not yet exist, the application prompts you to add the new vendor on the fly.

The options in this section vary depending on the type of the current payroll item.

Calculation type

Select the appropriate calculation type from the drop-down list and then enter the amount, rate, or percentage.

  • For employer contributions:
    • Fixed amount
    • Hourly rate - Total hours
    • Percent of after tax pay
    • Percent of deduction
    • Percent of gross pay
    • Percent of net pay
    For employer contributions, you can choose to use a flat percentage, rate, or amount, or to use a graduated amount. If you want to use a graduated amount, click the Table button to open the Graduated Table dialog, where you can specify the graduated contribution amount and limit.
  • For deduction items:
    • Fixed amount
    • Hourly rate - Total hours
    • Percent of after tax pay
    • Percent of gross pay
    • Percent of net pay
  • For pay items:
    • Fixed amount
    • Hourly rate
    • Hourly rate - Total hours
    • Percent of gross pay
    • Percent of sales
    • Piece rate (this calculation type is not currently supported)
    • Salary - Hours sensitive
    • Salary amount

Special type

This field is available only for Pay items.

  • Indirect Tips
  • None
  • Nonemployee compensation. This is generally selected for pay items used by independent contractors. The application reports amounts for this type on the Form 1099-MISC form as Box 7 - Nonemployee Compensation Wages.
  • Nonemployee reimbursement. This is used for pay items that are not to be reported on Form 1099-MISC for an independent contractor (such as expense reimbursements).
  • Premium Wages
  • Reported Tips
  • Service Charge. This is a compulsory charge for service. (For example, it could be a 15 percent charge of a bill for a large group in a dining room. The service charge is not a tip. If an employee receives tips in addition to the compulsory service charge, the service charge will be part of the calculation for minimum wage verification for tipped employees.) 
  • Tipped Wages
  • Weighted Average Overtime

Notes

Alternate minimum wage

This field is available only for Pay items using the Tipped wages special type.

This field enables you to specify a default alternative minimum wage rate to be added for the client's new tipped employees. You can override this amount for individual employees in the Employee Payroll Item Settings dialog. For more information, see Specifying an alternative minimum wage amount for tipped employees.

This section applies only to deductions. (For information on pay item special types, refer to the Calculation section above.)

  • None
  • Retirement/Cafeteria plan. Choosing the Retirement/Cafeteria plan from the drop-down list allows the application to automatically determine and maintain the taxability and deduction limits for this specific plan. If an employee has more than one type of IRA plan, the application will automatically apply the appropriate limit across both plans.
  • Garnishment. Specify the exact type of plan or garnishment by choosing it from the drop-down list (Chapter 13 bankruptcy, Child support; Creditor garnishment; Defaulted student loan; Federal levy; Other). For more information about each garnishment type, see Garnishment overview.

Mark this checkbox if you want to generate payroll checks automatically for employees with standard wages or salaries.

This section is displayed only when the current payroll item is a pay item. Use this section to specify the appropriate wage type, Regular or Supplemental, for the pay item. When the wage type is Regular, you have the option to specify if overtime and double time wages are supplemental. For California clients you can specify the wage type as Bonus. For New York clients you can specify the wage type as Other. For further information about supplemental wages, see IRS Publication 15.

This section is displayed only when the current payroll item is a pay item. The fields are available only when the calculation type is Hourly rate or Salary - Hours sensitive.

The Overtime and Double time fields default to 1.5000 and 2.0000 respectively, but can be modified here. The multiplier rates specified here will be applied to all new employee records and employee templates to which you add this payroll item. Modifying the multiplier rates here will not affect the multiplier rates that are assigned to existing employees or employee templates. The modifier rates can be changed for individual employees or employee templates in the Employee Payroll Item Settings dialog.

If you select an option from the FUTA exempt payments drop-down list, the application will enter the amount and mark the checkbox for the selected description on Line 4 of Form 940.

  • Dependent care
  • Fringe benefits
  • Group term life insurance
  • Other
  • Retirement/Pension

This section is available only when the current payroll item is a deduction item or an employer contribution item.

If there are limits on the Retirement/Cafeteria plan deduction or the employer contribution item, select if they are month-to-date, per check, perpetual, or year-to-date, then specify the amount or percent as applicable.

For Retirement/Cafeteria plan deductions:

  • If the deduction item is set up with retirement special types 401(k), Roth 401(k), 403(b), Roth 403(b), 457 or Simple 408(p), the Do not apply catch-up limit checkbox is available. Mark this checkbox to specify that the retirement plan catch-up contribution limit increase should not be applied to the selected deduction item for any employees, regardless of their age. For more information, see Customizing settings for employee retirement catch-up contributions and limits.
  • If the deduction item is set up with retirement special types 401(k), 403(b), 457, or Simple 408(p), the Subtract cafeteria 125 deduction before calculating checkbox is available. When this checkbox is marked and the item is set up to calculate based on a percent of gross pay, the application will subtract any Section 125 special type deduction items from the employee's gross pay before calculating the deduction item.

For Garnishments, the Maximum % of disposable income field defaults to the appropriate percentage per garnishment rules for all types. This field is grayed out for all garnishment types except Other, for which you can specify a different limit. In addition, for Other type garnishments, you can choose to specify a limit of the lesser of: the maximum percent of the employee's disposable income or the amount by which the employee's disposable income exceeds thirty times the federal or state minimum wage.

For employer contributions:

  • If you mark the Subject to Health Savings Account limit checkbox, the application includes the amounts that are associated with this item along with the amounts associated with any deduction item that is set up with a special type of Health Savings Account (HSA), when honoring the HSA limits for an employee. This is needed to track the employer contribution amounts to the HSA plan, because the pre-tax limit consists of both employee and employer contributions.

    Note: If the employer stops contributing to the HSA policy mid-year, and any contributions have been made during the year, you will need to keep the contribution item active for the employees (with the contribution amount changed to $0.00) for the remainder of the year, so that the application can accurately observe the limit.

  • If you mark the Subtract cafeteria 125 deduction before calculating checkbox, and the employee contribution item is set up to calculate based on a percent of gross pay, the application will subtract any Section 125 special type deduction items from the employee's gross pay before calculating the employer contribution.

Mark the checkboxes for additional W-2 box codes to assign to this payroll item. The standard boxes will be populated based on the taxability of the payroll item.

Select the default General Ledger account number in the Liability or Expense field to be assigned to this payroll item. The General Ledger account number you select here is used as the default account when the payroll item is activated for an employee, but you can override that account number at the employee level if you require separate accounts for each of the employee's location/department distributions.

This section is displayed only when the current payroll item is a deduction item.

  • Plan type. This option is available only for deduction items with a special type of Retirement/Cafeteria plan: Health Savings Account. The plan type that you specify here will be applied to all new employee records and employee templates that use this payroll item. To modify the plan type for existing employee records or templates, you need to make the change in the Employee Payroll Item Settings dialog.
  • Health insurance. Mark this checkbox to indicate that the deduction item is a health insurance deduction. When this checkbox (and the related Dependent coverage offered checkbox) are marked, the health insurance indicators and corresponding start date for the deduction are automatically used in new hire files for states that require them.
    • Dependent coverage offered. If dependent coverage is offered through the health insurance plan, mark this checkbox.

Specify your exclusion preferences for the selected payroll item. Note that different options are available for different types of payroll items.

  • Premium wages. Mark this checkbox if you want the application to assume no overtime or doubletime multipliers in the calculation of this payroll item (if it uses the Hourly rate - Total hours or the Percent of gross pay calculation type). This would be useful for a union pay item or any other pay item that must be calculated based on original hours and overtime hours and cannot be calculated at an overtime multiplier rate.
  • Gross pay presentation. Mark this checkbox to exclude the payroll item from gross pay presentation.
  • Net pay. Mark this checkbox to exclude the payroll item from net pay.
  • Garnishment disposable income. Mark this checkbox to exclude the payroll item from the basis for garnishment disposable income. This exclusion affects both child support and creditor deduction garnishment. For more information about garnishment, review the Garnishment overview.
  • Weighted average overtime calculation. Mark this checkbox to exclude the pay item from weighted average overtime calculations. For more information, see the Weighted average overtime (WAOT) calculation overview.
  • Accruable benefits. You can choose to exclude a pay item from none, all, or selected accruable benefit calculations that use the Per hour worked method. If you choose Selected from the drop-down list, the Ellipsis button becomes active. Click it to open the Accruable Benefit Exclusion Details dialog, where you can choose the Per hour worked method accruable benefits for which the payroll item should be excluded from calculation.
  • Pay items. You can choose to exclude none, all, or selected pay items from the basis for calculation of the selected payroll item if it uses the Percent of gross pay or the Hourly rate - Total hours only calculation type. If you choose Selected from the drop-down list, the Ellipsis button becomes active. Click it to open the Payroll Item Exclusions dialog.
  • Workers' compensation. You can choose to exclude this payroll item from none, all, or selected workers' compensation calculations. If you choose Selected from the drop-down list, the Ellipsis button becomes active. Click it to open the Workers Compensation Exclusion Details dialog, where you can choose the jurisdictions for which the payroll item is exempt.

This section is available only if the currently selected client has a payroll schedule set up in the Payroll Schedules dialog to use the Import > Time Clock time entry method.

Time Clock Import ID. If your client provides time clock files in ASCII format, enter the two-digit time clock ID. This ID must match the ID that the client is using in their time clock software for this payroll item.

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Related topics

Creating and adding payroll items for your client

Graduated table - employer contribution example

Garnishment overview

Calculating supplemental wages using On-Demand payroll entry

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