Deduction Calculation Methods

Two calculation methods are available when creating a new deduction or benefit — Fixed Amount and Percentage.

When you select one of these methods, the corresponding calculation method fields will be displayed in the Employee Information and Employer Information sections at the bottom of the Deduction Details window.

• Fixed Amount: Use this method to deduct a specific amount from the employee's wages. This method is generally used for health insurance and other benefits.

• Percentage: Use this method to subtract a percentage of the employee's wages.

• Employee percentage deductions are based on paid wages; employer-side percentage deductions are based on earned wages.

• You specify the base on which the percentage will be calculated: gross wages, federal taxable income, state taxable income, Medicare wages, FICA wages, or disposable income.

Additional calculation methods

You will see two other types of calculation method in the Manage Deductions window that are not available when creating a new deduction or benefit. They are

• Withholding: Used for system deductions — federal & state withholding, Medicare, and Earned Income Credit

• Direct Deposit: Used to enter direct deposit bank information for the employee.

Return to Add a Deduction or Benefit

Return to Manage Deductions Overview