How to add severance pay to pay type

Hey there wanghueiying,

Welcome to the QuickBooks Community! Thanks for reaching out to us here. Making sure you're able to add additional pay types correctly in QuickBooks is important. I would be happy to provide some information. 

In order to add severance pay, you will need to create a pay type. Here is how:

1- Head to the Payroll tab

2- Select Employees

3- Click on the employee you wish to add the Pay type for

4- Scroll down until you see Pay type, click Edit

5- Under Common Pay types, click on +Another Taxable Benefits in Cash type

6- Enter the name of the Pay type ( in your case it would be Severance)

7- Click save

That's all there is to it! You have now successfully created a Pay type! If you have any other questions, feel free to reach out to us here.

Severance should not be insurable or pensionable and should go in box 67 only.  How do you get this part set up?

Hello NancyChappel. Thanks for chiming in on this thread. I'll be happy to assist and provide more info. It's important to note that QuickBooks adheres to the rates set by the Canada Revenue Agency. However, if you'd like to edit your T4, you'll have to contact our payroll support team for further assistance. Feel free to ask other questions. I'm here to steer you in the right direction. 

Once I’ve added the severance pay, the employee that I’m trying to pay hadn’t been on the payroll for well over a year? Do I have to rehire her to be able to at out her severance? 
thanks 

Eric 

Hello Eric. Welcome to the thread. The employee will need to be active in order to successfully process the severance pay. Here's how to change an employee’s status to active:

1. Select Payroll, then Employees from the left-side menu.
2. Select the Active Employees ▼ dropdown.
3. Select All Employees.
4. Select the Employee Name, then select Edit in the Employment details section.
5. Change their Status.
6. Complete any additional necessary fields.
7. Select Done when finished.. 

Let me know if this info helps. I'll be a message away in case you need anything else. 

Hey All,

Do we have instructions for setting up severance payments in QuickBooks Desktop? I’ve been unable to configure it correctly.

When I attempt to set up severance pay, the system only gives me the options to add wages, additions, deductions, company contributions, and other taxes. My understanding is that severance should not be reported on Box 14—only on Box 66 or 67. Also, it should be exempt from CPP and EI contributions, with only federal and provincial taxes applied.

Any advice on how to configure this correctly?

Thanks in advance!

Hi 19911,

Thanks for joining us here.  To ensure you're on the right track with your QuickBooks payroll goals, I encourage you to reach out to an accounting professional.  They'll be able to provide the best course of action, in keeping with government guidelines.  If you don't have an accountant, we can help you locate a ProAdvisor in your local area.

Feel free to reach out again, if you have any other questions.  We would be glad to assist!

This is a very frustrating response from Intuit, as it is not an accounting issue but a systems issue. An accountant will advise exactly what the poster has said - that it is non-pensionable and non-insurable and is mapping to the wrong T4 box in QBO Payroll online using the available pay types currently available. We need Intuit to create a pay type which allows for this, so to say that the system is following CRA guidelines is inaccurate. Please fix the system by adding the appropriate pay type so a manual workaround is not required. 

Hey Trish,

Thanks so much for your response. However, I agree with my fellow colleague’s post. This is not an accounting question, as I know how it should be reported. The issue is how to create this type of payment in QB Desktop, which is what I need to understand, since this version doesn't have the same features as the online version.

We definitely need more support and guidance for Desktop users.

Thanks,