Company Deductions & Income
Other Income or Deduction(s)
PRO-PAY allows up to 18 user-defined (I)ncome, (D)eduction, or (M)emo entries. In rows 1-18 you may define each as follows:
Description:
First column – enter a user-defined description for an (I)ncome, (D)eduction, or (M)emo item.
Second column – enter an I for income, D for deduction, or M for memo.
If you indicated I for Income, that amount will be added to the Gross Income. Check the applicable boxes if that income is not subject to a particular tax. Check all the boxes if it is excluded from all taxes (e.g., Unaccountable Reimbursement), but must show as part of gross income on the W-2. For example, an employee receives $200 per week for auto allowance, but is not required by the employer to provide expense receipts.
If it is a straight Deduction from Net Pay after taxes have been calculated, then enter a D. Do not check any of the boxes that affect taxability of this item. At the Employee set-up screen, enter a positive amount or percent under “Employee Deductions”. For example: ADVANCES, UNIFORMS, LOANS, and so on.
A NEGATIVE DEDUCTION may be used for NONTAXABLE REIMBURSEMENTS.
For example, a sales person submits expense receipts each week and receives reimbursements for the same amount(s). In this case, you enter D in column 2 and a negative amount when you set up the employee’s deductions. This amount will not be added to the Gross Income on the W-2 form.
A MEMO item is neither added nor deducted from the Gross or Net pay. However, it is fully taxable unless all boxes have been checked. In order to exempt this item from any or all taxes, check the applicable box(es). This may be used for a variety of NON-CASH items received by the employee, including but not limited to meals, lodging, company automobile, or any other taxable or non-taxable fringe benefits and third party Payments.
W-2 Box 13,14,11,10
If you want this item to appear on the employee’s W-2 form, enter the appropriate code for W-2 Box 13, 14, 11, and 10.
Check If Used:
If you check this box, the program will allow you to enter a value every time you enter payroll.
For Example: If the employer pays car allowance to most of its employees, check this box so that you are prompted each pay date to enter a car allowance amount for each employee or leave it blank.
If you set up an amount for each employee, under Employee Deductions, that amount is calculated automatically each pay date.
Pre-Tax Deduction
To use any of these fields for a Pre-Tax deduction (such as an employee’s contribution to a 401-K plan), do the following:
1) Enter the description (e.g., “401-K”).
2) Enter a “D” for deduction.
3) Check the applicable box(es) to exclude that amount from Taxable Income.
4) Enter the appropriate letter (A through T) in W-2 box 13 column.
Third Party Sick Pay
To use any of these fields for Third Party Sick pay do the following:
1) Enter the description (e.g., “Sick Pay”).
2) Enter “M” for Memo in the second column.
3) Check any applicable boxes indicating which taxes this item is excluded from.
4) Enter a code “J” in W-2 Box Code so that it will print in box 13 on the W-2 form.
Dependent Care Benefits
1) Enter the description (e.g., “Child Care”)
2) Enter “I” for Income if the money is paid directly to the employee as a reimbursement from the employer. Check any applicable boxes if this amount is to be excluded from certain taxes.
3) Enter “D” for Deduction if the money is paid to a child care facility by the employer on behalf of the employee. Check any applicable boxes if this amount is to be excluded from certain taxes.
4) Enter “M” for Memo if the money is paid to a child care facility by a third party.
5)Enter a code “1” in the W-2 Code Box so that it will print in box 10 on the W-2 form.
Non-qualified plans
Enter a code “2” in the W-2 Code Box so that it will print in box 11 on the W-2 form.
W2 form Box 14 – Other
Enter a code “3” for any other items that you want to be shown in box 14 of the W-2 form.
