Setting Up Deductions

(USF) Select this button to access the Federal Distribution Destinations page where you can further define the deduction and the interface in which it should be included.

Enter a short description of the deduction. The short description that you enter here appears on the paycheck stubs by the check printing processes.

Enter a deduction priority number for the deduction code. The order in which the system takes deductions during pay calculation is based on the deduction priority number and the deduction classification. You define deduction classifications on the Deduction Table - Tax Class page. The lower the deduction priority number, the higher the priority of that deduction. For example, a deduction with a priority number of 20 is taken before a deduction with a priority number of 40.

PeopleSoft recommends that you give each deduction a unique deduction priority number, particularly with before-tax deductions. A possible exception is instances where you may want to establish a set of related deductions with equal deduction priorities. For example, if your company offers a flexible benefits program that requires each employee to choose only one of several health plans, you may want to assign the same deduction priority to all the available health plans.

Deductions can be included in special accumulators. If you assign a deduction to a special accumulator and that special accumulator is then used to calculate another deduction, the deduction priority of the first deduction must be less than the deduction priority of the deduction using the special accumulator.

Select a value from this field if the deduction is for a special process:

Bond: Select if the deduction is for purchasing Canada Payroll Savings plans.

Garnishment: Select if the deduction is for garnishments. This option initiates garnishment processing during payroll calculation.

Union Dues: Select if the deduction is for union dues. When you select this option, the system automatically displays the Union Code field.

This field appears only when you select Union Dues in the Special Processing field. Select the union code that is associated with the union for which this deduction applies. Union codes are maintained in the CAN/USA - Union table.

Select this option if you do not want a maximum amount specified for arrears payback. If you select this field, the system deducts as much money as possible from the employee's paycheck to pay back the arrears balance.

Select this option if you want the maximum arrears payback to be a flat rate. For example, if an employee has an arrears balance of 500 CAD and a flat maximum amount for payback specified at 100 CAD, only 100 CAD is deducted on each paycheck for the arrears balance until the total 500 CAD has been withheld. Note that this amount is in addition to any regular deductions.

Select this option if you want to have a percentage of a regular deduction withheld for the payback of the arrears balance. This is in addition to the withholding of the regular deduction. For example, an employee has a medical deduction of 100 CAD with an arrears balance of 500 CAD. You may want to have the system deduct the normal 100 CAD medical deduction and specify that 50 percent of that amount to apply to the arrears balance. This makes a total deduction of 150 CAD. To do this, you select this field, and enter .5 as the factor.

Select an applicable deduction subset ID.

Select to reduce net pay. An example is a monthly parking deduction.

Select to reduce net pay and taxable gross. One example is an employee contribution to a retirement program, such as a 401(k) plan.

Select to represent an employer contribution with no taxable implications (not subject to tax) to an employee benefit plan such as a health plan or retirement plan (U.S. only). This contribution has no direct payroll effect.

Select to represent an employer contribution for a before-tax deduction (not subject to federal tax) to an employee benefit plan. Currently only used for the before-tax matching contribution to savings plans.

Select to represent an employer contribution (subject to federal tax, U.S. only) on behalf of an employee, such as life insurance. This contribution increases taxable gross (for tax purposes), but does not increase total gross (for pay purposes). An example of a taxable benefit is the imputed income on employer paid group-term life insurance in excess of fifty thousand dollars.

Select to represent employer paid items that specifically affect Quebec income tax, such as contributions to employee dental and extended health plan benefits. The contribution increases Quebec provincial gross (for tax purposes), but does not increase total gross (for pay purposes).

Unlike the taxable benefit deduction classification (which automatically increases Canadian income taxes [CIT] taxable gross) QC taxable benefit deductions must be defined to add to Quebec income taxes (QIT) taxable gross on the Deduction Table - Tax Effect page.

Because you must assign each deduction classification a sales tax type, this is the system default value.

Select if the deduction code is subject to GST.

Select if the deduction code is subject to HST.

Select if the deduction code is subject to PST.

Select if the deduction code is subject to PSTI.

Select if the deduction code is subject to PPT.

Select a special accumulator code. Before you enter the code on this page, you must set up the special accumulator code on the Special Accumulator table.

Select a value that specifies whether the deduction code adds to or subtracts from the special accumulator balance.

The deduction classification specified on the Deduction Table - Tax Class page appears here.

The Canadian sales tax that is specified on the Deduction Table - Tax Class page appears here.

Select how the deduction should affect the taxable gross for FICA: Adds To, No Effect, and Subtracts.

Select how the deduction should affect the taxable gross for FUT: Adds To, No Effect, and Subtracts.

Enter the code for the system to use to define a taxable gross base different from federal when calculating state and local taxes. This code points to information in the Taxable Gross Definition table, which serves two purposes: 1) Indicates which federal taxable gross level (such as federal withholding tax [FWT], FICA, and FUT) is used as a base for state and local taxable gross. 2) Indicates how to adjust (add to or subtract from) the state and local base when it differs from the federal definition. This field is unavailable for entry unless you selected the Taxable Benefit option on the Deduction Table - Tax Class page.

Delivered Taxable Gross Comp ID values include:

125: Section 125 cafeteria plan.

401K: 401(k) savings plan.

401R: Employer 401(k) savings plan match.

ACT: Adult child taxability (see note below).

DPB: Domestic partner benefits

GTL: Group-term life.

HSA: Health savings account.

HSR: Health savings account employer contribution.

SSS or SSP: Same-sex spouse (see note below).

TIP: Reported tips for an employee.

For example, Pennsylvania does not consider 401(k) contributions as a reduction in state taxable wages. So the 401(k) deduction would be considered taxable for state withholding tax, but not federal withholding tax. To set this up, you first create a taxable gross component ID, such as 401K, on the Taxable Gross Definition table for Pennsylvania. You then enter 401K in the Taxable Gross Comp ID field on this page when defining the 401(k) deduction.

Click this link to access the Other Taxable Gross Components page where you can enter each taxable gross component ID to use for the deduction class. If you enter IDs on the secondary grid, the parent field can remain blank, or you can enter a value there and enter additional values on the secondary grid.

Select:

Add to GTL (add to group-term life): Select this value if you set up a regular or supplemental employee life plan that qualifies as a group-term plan.

Add to DPL (add to dependent life): Select this value if you set up a dependent life plan that qualifies as a group-term plan.

No Effect: This value is for other types of plans that do not qualify as group-term life plans.

This field is unavailable for entry unless you selected the Taxable Benefit option on the Deduction Table - Tax Class page. If the deduction classification is anything other than taxable benefit this field is unavailable for entry.

When you select the Taxable Benefit option on the Deduction Table - Tax Class page, this check box is selected by default, indicating that the taxable benefit portion of the deduction should be withheld. If you do not want the taxable benefit portion withheld, deselect this check box. This field is unavailable for entry unless you selected the Taxable Benefit option on the Deduction Table - Tax Class page.

If you want state income tax to be withheld for this earnings type, do not select this check box.

See (USA) Updating the Taxable Gross Definition Table.

(E&G) This field appears if the plan type is Pension Plan (plan 80). By default, this check box is not selected. Select the check box if the corresponding deductions are being classified as part of FICA credit that is used to calculate the Massachusetts state tax.

(USF) This field appears if the plan type is Thrift Savings (plan 42) or Retirement (plan 70).

(E&G) This field appears if the Deduction Classification is Before-Tax or Taxable Benefit. By default, this check box is not selected. Select the check box to reduce Form 1042-S reportable earnings or W-2 reportable earnings by the before-tax deduction amount or increase them by the taxable benefit deduction amount. If the employee receives both Form 1042-S and W-2 reportable earnings, the taxable benefit or before-tax deduction amount is prorated to adjust taxable wages associated with both types of earnings.

(E&G) This field appears if the plan type is Pension Plan (plan 80). By default, this check box is not selected. Select the check box if the corresponding deductions are being classified as part of FICA credit that is used to calculate the Massachusetts state tax.

(USF) This field appears if the plan type is Thrift Savings (plan 42) or Retirement (plan 70).

(E&G) This field appears if the Deduction Classification is Before-Tax or Taxable Benefit.By default, this check box is not selected. Select the check box to reduce Form 1042-S reportable earnings or W-2 reportable earnings by the before-tax deduction amount or increase them by the taxable benefit deduction amount. If the employee receives both Form 1042-S and W-2 reportable earnings, the taxable benefit or before-tax deduction amount is prorated to adjust taxable wages associated with both types of earnings.

(E&G) This field appears if the plan type is Pension Plan (plan 80). By default, this check box is not selected. Select the check box if the corresponding deductions are being classified as part of FICA credit that is used to calculate the Massachusetts state tax.

(USF) This field appears if the plan type is Thrift Savings (plan 42) or Retirement (plan 70).

(E&G) This field appears if the Deduction Classification is Before-Tax or Taxable Benefit. By default, this check box is not selected. Select the check box to reduce Form 1042-S reportable earnings or W-2 reportable earnings by the before-tax deduction amount or increase them by the taxable benefit deduction amount. If the employee receives both Form 1042-S and W-2 reportable earnings, the taxable benefit or before-tax deduction amount is prorated to adjust taxable wages associated with both types of earnings.

Select Adds To if the deduction affects Quebec taxable gross. If the deduction is not subject to QIT, select No Effect. If the deduction is eligible for reducing Quebec taxable gross, select Subtracts.

Select Adds To when deductions are subject to CPP contributions. If the deduction does not impact CPP contributions, select No Effect. If the deduction is eligible to reduce CPP contributions, select Subtracts.

Select Adds To when deductions are subject to QPP contributions. If the deduction does not impact QPP contributions, select No Effect. If the deduction is eligible to reduce QPP contributions, select Subtracts.

Select Adds To when deductions are subject to EI premiums. If the deduction does not impact EI premiums, select No Effect. If the deduction is eligible to reduce EI premiums, select Subtracts.

Select Adds To when deductions are subject to QPIP premiums. If the deduction does not impact QPIP premiums, select No Effect. If the deduction is eligible to reduce QPIP premiums, select Subtracts.

Taxable benefits should be defined as Adds To. Before-tax deductions should be defined as having No Effect. This field affects accumulated total employment income amounts, which are used for reporting, purposes. The Health Insurance Premium report (TAX102CN) is an example.

Affects accumulated total employment income amounts that are used for reporting purposes. The Health Insurance Premium report (TAX102CN) is an example. Define taxable benefits as Adds To. Define before-tax deductions as having No Effect. Values are Adds To, No Effect, and Subtracts.

Affects the accumulated taxable gross amount to establish separate income taxes to be reported on a T4A slip. Values are Adds To, No Effect, and Subtracts.

Affects the accumulated taxable gross amount to establish separate QIT to be reported on an RL-2 slip. When Effect on RL-2 Gross is set to Adds To or Subtracts, the system automatically sets Effect on QIT Gross to Adds To or Subtracts, respectively. Values are Adds To, No Effect, and Subtracts.

Affects an accumulated gross amount that is subject to Northwest Territories and Nunavut payroll tax. Values are Adds To, No Effect, and Subtracts.

Select this check box if you want a partial deduction to be taken during deduction processing when there is insufficient pay to take the entire amount. Do not select this option for garnishment deductions.

Select this check box to have the system transfer any uncollected amount for a deduction into an arrears balance. During subsequent payroll runs the system attempts to recover the balance in arrears from an employee's paycheck—up to the maximum controlled by the arrears payback amount on this table.

If you set up an arrears payback deduction (such as a company loan or a vacation advance) on the Earnings Table - Taxes page, this check box must be selected.

Select to take the deduction from any additional check that an employee might get in a single pay period. You may want to select this check box for deductions for savings plan contributions.

Select to indicate not to take the deduction from the paycheck of a terminated employee. If an employee's termination date is equal or prior to the pay period end date, the deduction will not be taken. For example, most health insurance plans are prepaid—premiums deducted for this month are used to provide coverage for next month. If employees no longer have health benefits after they are terminated, the deduction shouldn't be taken.

Enter an amount for any deductions that have a yearly limit. For example, there is a limit on the amount of before-tax portion 401(k) contributions an employee can make. For that deduction classification, enter the maximum contribution here, so the system will automatically stop after the deduction limit has been reached.

The value that you enter here remains valid for one calendar year. It resets to zero at the start of the new year.

Enter the general ledger liability account to which this deduction should be charged. At least one general ledger account must be entered for a deduction and a general ledger account is required for every deduction classification.

This check box appears only when the deduction class is an employer expense: Nontaxable Benefit, Nontaxable Btax Benefit (before tax), Taxable Benefit, and QC Taxable Benefit.

Select this check box to prevent the accounting entry from being generated from the GL Interface processes for the specified deduction/deduction class combination.

The Commitment Accounting Actuals Distribution process and PAYGL02.SQR, and the Commercial PAYGL01.SQR look at this check box, and when the check box is selected, suppresses accounting data.

The PAY705A SQR Deduction Classes report, reports the Suppress Posting to GL value for every deduction code/deduction.

This field appears for 4x Savings and 6x FSA plans when the deduction class is Nontaxable Benefit, Nontaxable Btax Benefit (before tax), and QC Taxable Benefit.

Specify how the employer matching/nonmatching contribution should be paid in situations of insufficient net pay:

• Full Employer Match:Pay the entire employer contribution.

• No Employer Match:Pay no employer contribution.

• Recalculated Employer Match: Recalculate the employer contribution based upon the actual employee contribution.

  When using the service step table to base the employer match, the full or a portion of the employer contribution is made.

  Note: A recalculated match is not a prorated or partial match. The system recalculates the employer contribution based upon the effective percent of the new employee contribution considering insufficient net pay. Effective percent is calculated as: calculated employee contribution divided by employee's eligible earnings.

Specify the pay frequency that you want to override for those deductions that are not deducted every pay period. Values prompt from the Frequency table: Annual, Biweekly, Daily, Monthly, Quarterly, Semimonthly, and Weekly. If you select a Weekly frequency, you can select the Fifth Pay Period option only if you have also selected the first, second, third, and fourth periods. Likewise, for a Biweekly frequency you can only select the Third Pay Period option if you have also selected the first and second. Because a deduction with a monthly frequency is always taken once a month, there is no override for that pay frequency on this page. Suppose that you have a semimonthly payroll, but health deductions should only come out of the last paycheck of the month. In this case, you would select a pay frequency of Semimonthly and take a deduction in the second pay period.

Select the appropriate period check boxes that you want the deduction to be taken in.