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Set up voluntary deductions in QuickBooks Online Core Payroll

by Intuit•12• Updated 2 months ago

Learn how to add deductions your employee needs to pay each payday in QuickBooks Online Core Payroll. Core Payroll supports two types of deductions: after-tax deductions and loan repayments.

This article is for customers who use QuickBooks Online Core Payroll.

After-tax deductions vs loan repayments

After-tax deductions are subtracted from an employee’s pay after statutory deductions like tax, National Insurance, and student loans have been deducted. These deductions need to have written consent from the employee or should be part of the employee’s contract. Examples of after-tax deductions include: 

  • Recovering accidental overpayment of wages
  • Repaying a liability such as shortfall 
  • Buying company shares
  • Union fees

Loan repayments are commonly used for loan deductions like rail tickets and are not subject to taxation.

Setting up deduction items

When you add a deduction item for one employee, it becomes available as an option when you add a deduction for other employees.

  1. Follow this link to complete the steps in product Open this link in a new window
  2. Select your employee.
  3. Next to Workplace pension, loan & other deductions, select Edit.
  4. Select + Add deduction/contribution.
  5. Select an existing Deduction/contribution. Or, to add a new deduction:
    1. Select an appropriate option from Deduction/contribution type â–Ľ dropdown.
    2. Select an appropriate option from Type â–Ľ dropdown.
    3. Add a Description. This is the deduction or plan name, which will show on payslips.
    4. In the Employee deduction section, select either Flat amount or Percent of gross pay from Calculated as â–Ľ dropdown. This is how your deduction is calculated.
    5. Select Save.
  6. Select Done.

If you ever need to make changes to a deduction item or remove it completely, follow these steps:

  1. Follow this link to complete the steps in product Open this link in a new window
  2. Select your employee.
  3. Next to Workplace pension, loan & other deductions, select Edit.
  4. To edit a deduction item:
    1. Select Edit ✎ next to the deduction you want to modify.
    2. Edit the information as needed.
    3. Select Save, then select Done.
  5. To delete a deduction item:
    1. Select the delete icon Trash can next to the deduction you want to remove.
    2. Select Delete, then select Done.


More help

Looking for guidance on navigating QuickBooks Online Core Payroll? Check out this resource page with how-to guides to help you.