Other Income or Deduction(s) #
Overview #
ProPay allows users to define up to 22 additional income or deduction entries. This feature provides flexibility in managing various types of employee compensation and deductions. This knowledge base article will guide you through the process of setting up and using these additional entries effectively.
Table of Contents #
- Defining Income or Deduction Entries
- Types of Entries
- Setting Up After-Tax Deductions
- Setting Up Pre-Tax Deductions
- Using MEMO Items
- Understanding Gross Pay and Taxable Gross
- Special Entries
- Troubleshooting
- Feedback
Defining Income or Deduction Entries #
To define an income or deduction entry:
- Navigate to the appropriate section in ProPay.
- In the first column, enter a user-defined description for the item.
- In the second column, enter:
- (I) for income
- (D) for deduction
- (M) for MEMO
Types of Entries #
Income (I) #
- Added to the Gross Pay
- Check applicable boxes if the income is not subject to particular taxes
Deduction (D) #
Two types:
- After-tax Deductions (e.g., advances, union dues, loans)
- Pre-tax Deductions (e.g., 401(k), cafeteria plans)
MEMO (M) #
- Added to employee’s Gross Pay for tax purposes only
- Automatically deducted from NET pay
Setting Up After-Tax Deductions #
- Enter the description (e.g., “Union Dues”)
- Enter “D” for deduction
- Do not check any of the tax exclusion boxes
Setting Up Pre-Tax Deductions #
- Enter the description (e.g., “401-K”)
- Enter “D” for deduction
- Check applicable boxes to exclude the amount from Taxable Income
- Enter the appropriate letter (A through T) in W-2 box 12 column
Using MEMO Items #
MEMO items are used for:
- Non-cash items received by the employee (e.g., meals, lodging, company automobile)
- Taxable or Non-Taxable fringe benefits
- Third Party Payments
- Employer’s contributions to deferred compensation plans
To set up a MEMO item:
- Enter the description
- Enter “M” for MEMO
- Check applicable boxes to exempt from specific taxes, if necessary
Understanding Gross Pay and Taxable Gross #
- Gross Pay: Everything the company pays on behalf of the employee, including non-cash fringe benefits
- Taxable Gross: Gross subject to taxes
Note: Gross Pay does not appear on tax forms or filings, while Taxable Gross appears on W-2s, 941s, and state filings.
Special Entries #
SUI Gross Adjustment #
Use this field to adjust the GROSS Wages reported on state quarterly Unemployment returns.
W-2 Box Entries #
Enter appropriate codes for W-2 Boxes 12, 14, 11, or 10 as needed.
Third Party Sick Pay #
Follow specific instructions for setting up Taxable and Non-Taxable Third Party Sick Pay.
COBRA Premium Assistance Payments #
Set up as a MEMO item with specific tax exclusions and W-2 box coding.
Troubleshooting #
If you encounter issues while setting up or using these features:
- Double-check the entry type (I, D, or M) is correct for your intended purpose
- Verify tax exclusion boxes are checked appropriately
- Ensure W-2 box codes are entered correctly if applicable
- Review the employee’s pay stub to confirm the entry is calculated as expected
If problems persist, consult the ProPay help menu or contact customer support.
Feedback #
We value your input on this knowledge base article. If you have suggestions for improvement or encounter any issues not addressed here, please contact our support team through the ProPay software help menu or visit our website at https://www.Paysoft.com.