Entering and Editing Allowances/Additional Pay

 

If a payment is not taxable or more than three expense accounts are needed to allocate pay, then enter these into the Allowances File. Examples of allowances are a housing allowance or a car allowance.

 

• Click on the Data Setupbutton and select Allowances File.

Adding a New Allowance/Additional Pay

 

• Click on the Add button.
• Key in the Description.
• Select the default Frequency.
• Leave the Miscellaneous State Tax box blank.
• Determine if you need to Show Separately on W-2.

• The default is to Include in W-2 Wages.  If the allowance is not taxable, clear the boxes for taxable by tax type.
  
• Click on OK.

 

 

Common Features

 

After creating deductions/allowances they can be attached to the employee record.

Only one deduction or allowance needs to be set-up for each description if it has the same tax attributes; Amount or Frequency can be modified for each employee.

 

• Description – provide the name to identify the deduction/allowance.
  
  
• Frequency - click on the down arrow and choose the default frequency.  This can be changed on the employee's individual record. Remember that if you run an extra check for any reason that is not a normal pay date, or skip a pay date, it may effect the frequency and when it is applied. Frequencies available are:

(E) Every pay period

(O) Every other pay period

(A) First pay of the month

(B) Second pay of the month

(C) First pay of the calendar quarter

(D) End of the calendar quarter - defined as the 1st pay after the 15th of the month of the 3rd month of the calendar quarter (e.g. first pay after June 15th for the second calendar quarter)

 

• Show separately on W-2 - If the deduction/allowance needs to be reported in box 10, 12 or 14 of the W-2, choose the appropriate box. If box 12 is selected assign the appropriate letter code.  For more information on W-2s, see "Instructions for W-2 W-3" included under Tax Publications on the Payroll CD. If you are unsure whether a certain deduction/allowance needs to be shown separately, you will need to contact a tax consultant to ensure compliance.
  
  
• Include in W-2 Wages- If the allowance is not taxable remove the check mark from that tax in the section labeled “Include in W-2 Wages”. If an employee is marked as a minister, no Social Security or Medicare wages or withholdings will be shown on the W-2 regardless of how these boxes are marked. If you are unsure of the taxability of ANY deduction or allowance, be sure to contact a tax consultant immediately since incorrect taxation can cause serious issues with the IRS in the future.
  
  

 

Editing Allowances

 

You may edit allowance information at any time by clicking on the information to be edited and making your changes. 

 

To delete an entire allowance, click the square to the left of the name and click on the Delete button. The system will not allow you to delete an item if there have been pays posted in the current year that include money for this allowance.

 

Note: If you delete an allowance that has not been used in the current year but was used in prior years, you will lose the prior year history of that allowance since the identification label will no longer exist.