Drake Accounting^®: How do I enter payroll deductions?

All deductions must first be entered for the employer and then assigned to the employee (as necessary). A deduction cannot be deleted from the employer’s list if it is set up for one or more employees or has been applied on a paycheck for any employee. Unlimited deductions can be set up for the employer.

Watch the Deductions and Benefits video for a demonstration.

Employer Set Up

Unlimited deductions can be set up for the employer. To do so:

From the side menu, select Employees > Deductions & Benefits.
On the Deductions tab, click the New button at the top-left. A blank row is added to the Deductions grid, and the Other Properties section is activated.
Complete the following deduction information, as necessary:
- Deduction Name - Enter the name of the deduction (not the name of an employee). This appears as the name of the deduction on the pay stub.
- Account - (if using the bookkeeping function) Click the drop list to access the postable Chart of Accounts list.
- Amount - Enter the deduction amount.
  - Format the number as dollars and cents, if needed.
  - If the deduction is based on a percentage, enter the amount as a decimal value less than 1 with unlimited decimal places.
- Ceiling - Enter the maximum yearly deduction.
  NOTE: When the employee reaches the ceiling amount for the year, Drake Accounting discontinues this deduction for that employee.
- State
  - For multi-location employees, select the specific state to which this deduction applies.
  - When choosing a specific state, the deduction will apply to payroll in that state only.
  - Select <ALL> to have the deduction apply to payroll in all states.
Complete the following information for Other Properties, as necessary:
- Based On - Select Dollars/Cents or Percent.
  - If Based on Hours Worked is selected, the deduction is calculated by multiplying the Hours Worked (located at Employees > Payroll > Live or AFT) by the deduction Amount.
  - If Based on Hours Worked is not selected, the deduction is calculated by multiplying the total Gross Pay (located at Employees > Payroll > Live or AFT) by the deduction Amount.
- Deduct After Tax - If any box is selected, the deduction is subject to the specified withholding type.
- Exempt From - If any box is selected, the deduction is subject to the specified withholding type.
- Apply to - Apply the deduction to the specified box on the employee's Form W-2.
- W-2 Box 12 - Indicate the code to be used on box 12 of the employee's Form W-2 during W-2 processing.
- Matching Benefit - Select the applicable benefit (established on the Benefits tab) that the deduction amount will match.
- WH. Code (withholding code) - Dictate where the data appears on the employee's Form W-2. This selection also impacts how data flows to other forms, as well as reports and payroll calculations.
- Gross Income WH Limit (percent) - Limit the deduction from exceeding a certain percentage when deducted from wages. For example, this field can be used for child support, which has a limit of 50 - 65% of disposable income. For garnishments, it can be 25% or less of disposable income. Other deductions are applied to gross wages. For details, see the US DOL.
Click Save after entering each deduction. Choose Reset to revert all information for the current deduction to its previously saved state.

NOTE: Clicking Save And Apply All updates the amount and/or ceiling setting for each employee who has the corresponding deduction assigned to them.
Add additional deductions as necessary, clicking Exit when finished.

Employee Set Up

Go to Employees > Employee Setup.
Select the employee for whom to apply deductions, then select the Deductions tab.
Select the applicable Available Deduction Name and click the right arrow to assign the deduction to the employee. The deduction is displayed as Employee Deduction Name.
- Double-click the Priority, Amount, or Ceiling to make edits, if necessary.
  - Priority determines the order in which deductions will be subtracted from gross pay. Priority may be used in a short week when gross pay does not cover all deductions.
Once you add all desired deductions, click Save.

NOTE: To delete a deduction from the employee's list, select the applicable Employee Deduction Name and click the left arrow to move it back to Available Deduction Name. Save when finished.

At the bottom-right are check boxes for Amount and Ceiling. If marked, pressing F3 reverts the deduction amount and/or ceiling to the default figure, established at Employees > Deductions & Benefits > Deductions tab.

Editing Deductions

To edit a deduction that has already been set up:

Go to Employees > Deductions & Benefits.
On the Deductions tab, choose the appropriate deduction.
Make necessary changes. Note that it is possible to edit multiple deductions before saving.
Select Save to return to the Client Selector.

NOTE: Changes are not automatically applied to employees. To apply the deduction changes to all employees currently set up with the deduction, choose Save And Apply All.

To update the deduction assigned to employees on a per-employee basis:

Go to Employees > Employee Setup.
Select the employee to update.
Select the Deductions tab followed by the appropriate deduction.
With the deduction selected, you can:
- Press F3 to update the default amount and/or ceiling to that established at Employees > Deductions & Benefits > Deductions tab.
- Manually enter the new amount for the employee.
Click Save to return to the employee list. Repeat this process for all employees requiring updates.

NOTE: Changes made under Deductions & Benefits and/or Employee Setup will not affect existing payroll.

Entering Payroll Deductions (DAS)