Payroll Deductions are anything that is taken from an employee's pay, whether is be pre or post-tax, other than payroll taxes themselves. The application has many pre-built, customizable deductions that you can add to your account. Common deductions are 401(k) contributions, medical insurance premiums, IRA contributions, advances, and uniform expenses. Depending on the type of deduction you choose to add, you will be given the ability to customize that deduction exactly how you need to.
On the Payroll Deductions page, deductions you have previously created are listed out on the left side of the page. Employers can create new deductions with custom names by clicking the green +Add button on the page. Once you create a deduction, you will need to activate it for each employee that will utilize that deduction. All deductions are available for use for all employees once they are created. However, you have complete control over who has which deductions, as well as some employee specific customizations that you may need to do.
Example: 401k Setup. The Employer Match section allows for a two-tiered match. If the company contributes to the employee's 401K regardless if the employee themselves contribute then you can ignore the match section and fill in the percentage under "Nonelective Contribution."
Add new Deduction Screen.
Deduction Types Explained:
Standard deduction - a non-tax exempt deduction.
401k Retirement - pre-taxed Retirement deduction, reduces federal and state taxable wages by the amount of contribution.
403B Retirement - pre-taxed Retirement deduction, reduces federal and state taxable wages by the amount of contribution.
457 Retirement - pre-taxed Retirement deduction, reduces federal and state taxable wages by the amount of contribution.
Roth 401k Retirement - post-taxed Retirement deduction.
Roth 403B Retirement - post-taxed Retirement deduction.
FSA - pre-taxed Flexible Spending Account deduction, commonly used for medical expenses.
HSA Health Savings - pre-taxed deduction, funds roll over and accumulate year to year if not spent.
Simple IRA Retirement - taxed Retirement deduction, reduces federal and state taxable wages by the amount of contribution.
Section 125 - pre-taxed deduction that reduces taxable income.
Section 132 -pre-taxed deduction for transportation reimbursement costs.
If you're not ready to sign up for OnPay, you might want to try our free payroll calculator to see how these deductions are applied.