Defining add-to-net deductions

Add-to-Net deductions represent amounts that are added to employee net pay. For example, you can use add-to-net deductions to reimburse employees for expenses or to apply earned income credits to employee pay.

You often use add-to-net deductions when you add a one-time deduction. One-time deductions

  1. Access Deduction (PR05.1).
  2. Define deduction code and description. Use the following guidelines to enter field values:
    Deduction

    The code that represents the deduction.

    (Description)

    The description of the deduction.

    Payment Description

    The description of this deduction that prints on payments

    Note: If you assign a deduction class to this deduction code, the payment description on the deduction class overrides this payment description.
  3. Select how you want Payroll to calculate the deduction in the Calculation Type field.
    If the deduction is a Select
    Flat amount Flat Amount.
    Percent of employee pay Percent.
    Earned Income Credit Tax.
  4. Define pay information. Use the following guidelines to enter field values:
    Pay Class

    Determines if you want the application to calculate the deduction on pay associated with a specific pay class.

    Currency

    Determines the currency you want Payroll to use to calculate the deduction.

    If the company uses one currency, the company currency defaults to this field.

    If the company uses multiple currencies, the process level currency defaults to this field.

    Note: The employee currency and deduction currency must match for you to be able to assign the deduction to the employee.
    Note: The calculation type you selected determines if the Amount -or- Percent field is an amount or a percent.
  5. Type the flat amount or percent you want to add to net in the Amount -or- Percent field.
  6. Select Add-to-Net in the Adjust Pay field.
  7. If you want to include this deduction in a deduction class, select the deduction class in the Deduction Class field.
  8. Define deduction processing options. Use the following guidelines to enter field values:
    Priority

    The number that represents the order in which Payroll takes the deduction within the category of other deductions.

    Cycles

    Select the deduction cycles in which Payroll takes the deduction.

  9. If you want Payroll to automatically assign this deduction to certain employees, select the deduction required code in the Required Code field.
    Note: When calculating earnings and deductions, Payroll verifies the effective date to ensure that the deduction must be taken.
  10. Type the beginning date or the date range that the deduction is in effect in the Effective Date fields.
  11. Type the deduction accrual account in the Accrual Account field.
  12. If this is a tax deduction, define tax information. Use the following guidelines to enter field values:
    Country Code

    The country code you want to use to calculate the deduction.

    Tax Status

    Select 2 for Earned Income Credit.

    Self Adjust Tax

    Determines whether or not Payroll verifies the year-to-date taxable wages multiplied by the rate to determine the year-to-date tax and makes necessary adjustments. This field defaults to Yes.

    Caution: 
    If the rate changes in mid-year and this field is set to Yes or if you change this field from No to Yes in mid year, Payroll makes adjustments to the whole year-to-date, which results in large adjustment amounts.

Related Reports and Inquiries

To Use
List deductions Deduction Listing (PR205)
Related topics