Drake Accounting - Deductions and Benefits Overview

Article #: 19026

Last Updated: September 01, 2026

 

Tags: Drake AccountingDASPayroll Benefits Deductions

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Overview

Deductions and benefits control amounts withheld from employee pay, employer-paid amounts added to pay, and how those amounts flow to payroll checks, the general ledger, and Forms W-2. Setup occurs in two stages: define employer templates at Employees > Deductions & Benefits, then assign items to each employee at Employees > Employee Setup.

Important  Employer template changes do not automatically update employees when you click Save. Click Save And Apply All to push template changes to all assigned employees, or update employees individually in Employee Setup.

Watch the Deductions and Benefits video for a demonstration.

Before You Begin

Complete the following setup before entering deductions and benefits:

  1. Firm > Rates and Withholding Setup - Federal, state, and locality rates. See Drake Accounting - Set Up Rates and Withholdings.

  2. Client > Edit > Client Setup - Client payroll information.

  3. Employees > Employee Setup - Employee payroll information for each employee who will receive pay.

If using the bookkeeping function, set up the Chart of Accounts before assigning an Account on benefits and deductions.

How Deductions and Benefits Work

Concept Description
Employer template The master list of benefits and deductions defined at Employees > Deductions & Benefits
Employee assignment The subset of templates assigned to each employee at Employees > Employee Setup
Benefit An amount paid by the employer for the employee, set up on the Benefits tab (employer health insurance contribution, housing allowance, vehicle lease)
Deduction An amount withheld from the employee's pay (health premium, 401(k) deferral, garnishment)
Matching Benefit Links a deduction to a benefit so the employee deduction amount follows the benefit amount on the check
WH. Code Classifies a deduction for Form W-2 and state reporting
Priority Controls the order deductions are taken when gross pay does not cover all deductions

Set Up Employer Templates

Benefits

  1. Go to Employees > Deductions & Benefits and select the Benefits tab.

  2. Set up each employer benefit (name, amount, taxing options, W-2 boxes).

  3. Click Save after each benefit.

See Drake Accounting - Entering Payroll Benefits for field-by-field instructions.

Deductions

  1. On the Deductions tab, set up each employee deduction.

  2. Assign a Matching Benefit if the employee deduction should follow an employer benefit amount.

  3. Assign a WH. Code if the deduction requires special W-2 or state reporting.

  4. Click Save after each deduction.

See Drake Accounting - Entering Payroll Deductions, Drake Accounting - Match Benefit and Deduction , and Drake Accounting - Withholding Code Setup.

Assign Templates to Employees

  1. Go to Employees > Employee Setup.

  2. Select the employee.

  3. On the Benefits tab, move benefits from Available Benefit Name to Employee Benefit Name.

  4. On the Deductions tab, move deductions from Available Deduction Name to Employee Deduction Name.

  5. Adjust Amount, Ceiling, and Priority as needed.

  6. Click Save.

Note  Assigning a matched benefit automatically assigns the linked deduction, and vice versa.

Apply Template Changes to Employees

When you edit a template at Employees > Deductions & Benefits:

  • Save - Saves the template only. Does not change employee records.

  • Save And Apply All - Saves the template and updates all employees who have the item assigned. Only Amount and/or Ceiling fields marked under When applying benefit, update employee or When applying deduction, update employee are pushed to employees.

To update a single employee, use Employee Setup and press F3 to revert an amount or ceiling to the current template default.

Caution  Save And Apply All overrides custom employee amounts for the fields you marked to update.

Process Payroll and Verify

  1. Go to Employees > Payroll > Live or ATF.

  2. Enter the check for the employee.

  3. Verify benefit amounts on the check.

  4. Verify deduction amounts. Matched deductions follow the linked benefit and may not be editable.

  5. Save the check.

Note  Changes to templates or employee assignments do not affect payroll that has already been processed.

Common Setup Scenarios

Health insurance (employer pays + employee premium)

  1. Set up the employer health insurance benefit on the Benefits tab.

  2. Set up the employee premium deduction on the Deductions tab.

  3. Select the benefit as Matching Benefit on the deduction.

  4. Assign both to the employee in Employee Setup (assigning the benefit adds the deduction automatically).

See Drake Accounting - Match Benefit and Deduction .

401(k) employee deferral and employer match

401(k) does not use Matching Benefit for the employer match.

  1. Set up the employee deferral as a deduction on the Deductions tab with WH. Code 401K.

  2. Assign the deduction to employees in Employee Setup.

  3. Configure employer matching at Employees > Options > Payroll Options tab under Employer 401(k) Match Options.

Note The employer 401(k) match is calculated from Payroll Options. It does not appear on the check or stub; it posts to transactions and the 401(k) Listing report.

See Drake Accounting - 401(k) Plan Setup and Drake Accounting - 401(k) Matching.

State disability insurance (SDI)

  1. Confirm state rates at Firm > Rates and Withholding Setup.

  2. Set up the SDI deduction with WH. Code Disability Insurance.

  3. Assign the deduction to employees in the applicable state.

See Drake Accounting - State Disability Insurance, Drake Accounting - Setting up SDI and SDRs, and Drake Accounting - CA SDI Deduction.

Garnishment or child support

  1. Set up the deduction on the Deductions tab.

  2. Select WH. Code Garnishment.

  3. Enter Disposable Income WH Limit (percent) as applicable.

  4. Assign to the employee and set Priority if multiple deductions apply.

Troubleshooting Quick Reference

Symptom First steps
Deduction or benefit not on the check Verify the item is assigned to the employee in Employee Setup. Process new payroll; template changes do not affect existing checks.
Deduction amount does not match benefit Verify Matching Benefit is set on the Deductions tab. See Drake Accounting - Match Benefit and Deduction.
Employee amounts differ from template Press F3 in Employee Setup to revert to template defaults, or click Save And Apply All at the employer level.
Save And Apply All is grayed out Correct validation errors on the form. See Drake Accounting - Save or Save and Apply All Button Grayed Out.
Setup Review shows deduction or benefit warnings Open the linked KB article from the validator message. Common topics: SUTA, SDI, withholding codes, and template matching.
Taxable wages do not match gross wages Review Post-Tax Deduction settings on the Deductions tab. See Drake Accounting - 941 Line 2 and Gross Wages Do Not Match .