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Level 1

Including cash tips in the employees simple ira deduction calculation

Is it possible to setup a 3% simple IRA deduction for an employee and have their reported cash tips be included in the 3% calculation?

3 Comments
Community Champion

Including cash tips in the employees simple ira deduction calculation

Yes, it is possible.

 

Set up the employee so the tips are listed first by default on the paychecks and then the deductions listed after will include the tips amount in the gross for calculation:

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As seen above, the IRA is calculated as 3% of $10,000, including the $2,000 in tips.

QuickBooks Team

Including cash tips in the employees simple ira deduction calculation

Thanks for reaching out to the Community, DaltonT.
 

You can include any payroll items in an employee's Simple IRA deduction.
 

Here's how:
1. From your top menu bar, go to Lists, Payroll Item List, Payroll Item, New, Custom Setup, then Next.
2. Choose Deduction.
3. Enter a name for the item in your Enter name for deduction field.
4. In your Liability account drop-down menu, pick a liability account that will be used for tracking purposes.
5. Input the appropriate tax tracking-type classification that matches your plan type.
6. Put a checkmark next to any item(s) in your Payroll Item column that you'd like to be calculated after this deduction is taken.
7. On the Calculate Based on Quantity screen, choose Neither.
8. If a Gross vs net window displays, you'll need to specify whether the deduction is gross (percentage of an employee's gross earnings) or net (fixed dollar amount). If your calculation varies from one employee to another, you'll need to set up separate items.
9. When the same deduction rate/amount applies to all or most employees, enter it into the field at the top of the Limit Type window. Your annual deduction limit (if any) should be entered in the lower area, only if it's limit is the same for all or most employees. If the deduction amount is different for some workers, you can access their profiles and edit their amounts. Select Finish when you're done setting up your retirement plan deduction.
 

You'll be able to find more details about setting up deductions in the following resource: Set up a payroll item for retirement benefits (401(K), Simple IRA, etc.)
 

If there's any other questions, please feel more than welcome to post a reply. Have a great day!

Community Champion

Including cash tips in the employees simple ira deduction calculation

@ZackE 

The OP didn't ask how to set up a payroll item.

 

 

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