Learn how to add deductions your employee needs to pay each payday in QuickBooks Online Payroll and QuickBooks Desktop Payroll.
Payroll isn’t just about paycheques anymore. Sometimes employees need to pay for things like health insurance, retirement contributions, uniforms, tools, or dues. Maybe you gave your employee an advance on their paycheque and they need to pay it back.
You can set up these benefits or deductions in QuickBooks Payroll. They’ll come out of your employee’s pay each payday.
Voluntary payroll deductions are amounts subtracted from an employee's net pay to cover the cost of things such as employee-paid benefits offered by the employer, or general deductions like a charitable donation.
Note: Pre-tax deductions must come out of a taxable wage item. They will not deduct from a reimbursement type wage.
For deductions such as retirement plans and private health insurance, your provider can help you decide on the amount to be withheld and determine the taxability.
Deduction vs Contribution
A deduction is an amount paid by an employee and deducted from each paycheque. A contribution is paid by the employer and often counts as additional pay or wages.
For example, an employee and an employer might pay some part of the cost for a health insurance plan. The employee-paid portion is called a deduction. The portion paid by the employer is called a contribution.
Learn about the types of voluntary deductions
Voluntary payroll deductions include medical, dental, and vision insurance premiums (both pre-tax and post-tax).
The chart below explains which deductions are supported in QuickBooks Online Payroll.
For the taxability of each deduction, see Supported pay types and deductions explained, for more details.
|Health Insurance||Private Health Care|
|Retirement Plans||RRSP, RPP|
|Other Deductions||Cash Advance Repayment, Loan Repayment, Charitable Donation, Union Dues, Other After-Tax Deductions|
Set up a deduction item and assign it to employees
In QuickBooks Payroll, you can set up pre-tax or after-tax deduction items. If you aren’t sure how the deduction is taxed, talk to your plan administrator or an accountant. You can use the steps below to set up general deductions like uniforms, tools, commuter benefits, or miscellaneous.
Add a deduction item for your employees. Once a deduction is set up for one employee, this deduction item appears as an option to select when adding a deduction to the rest of your employees.
To set up other general deduction items, select your product below.
|Note: Not sure which payroll service you have? Here's how to find your payroll service.|
Edit a payroll deduction item
If you want to change the employee’s deduction info such as amount, percentage, or its description, follow the steps for your product.
Delete a payroll deduction item
Follow the steps for your product if you wish to remove a payroll deduction item.