Create a zero net paycheck

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1. Add an Other Earnings pay type to the employee's profile.
   • Set the amount to 0 or leave the $ field blank.
   • Rename it as Taxable offset. Or create your own name.
2. Set up a retirement plan deductions. Set the deduction amount to zero.
3. Use the Gross up formula to determine the gross pay amount.
4. Go to Payroll, then Employees.
5. Select Run payroll.
6. Choose an employee and pay period.
7. Zero out the employee's regular pay or salary:
   • Enter 0 for regular pay hours.
   • Select the salary amount. Select Skip salary this time only then Apply.
8. Select the Taxable offset box, enter the amount determined by using the gross up formula. Make sure that the other pay types are 0.
9. Select Actions ⋮ then Edit paycheck.
10. In the Employee taxes section, you can zero out Federal Income Tax and State Income Tax. (Optional)
11. In the Employee deductions section, enter the retirement plan amount.
12. Adjust the Taxable offset amount as needed to get the 0.00 net pay amount.
13. Once the net pay is zero, select Save.
14. Select Preview payroll, then Submit payroll.
15. Select Close.

If your employees have enough wages, they can put their entire paycheck toward their retirement contribution. If they don’t, you can create a retirement paycheck-only if they’ll contribute to retirement with personal money to cover the full retirement contribution. 

Step 1. Set up a retirement plan deduction item.

Step 2. Set up a retirement offset deduction item

You only have to do this step if your employee doesn’t have enough wage and will use personal money to cover the full retirement contribution. 

1. Go to Lists, then Payroll Item List.
2. Select Payroll Item ▼ dropdown, then New.
3. Select Custom Setup, then Next.
4. Select Deduction, then Next.
5. Enter the name of the deduction item such as 401(k) Retirement Offset.
6. In the Agency for employee-paid liability window, select the account you want to use to track the item.
7. Select Next.
8. Select None from the Tax tracking type ▼ dropdown, then select Next three times.
9. Select net pay in the Gross vs. net window, then Next.
10. Select Finish.

Step 3. Create and run your employee’s paycheck

If an employee has enough wages to cover the full retirement contribution.

1. Create and run payroll.
2. In the Enter Payroll Information window, select Open Paycheck Detail.
3. In the Earnings Item section, select the Earning item, Rate and Hours (for hourly employees). 
4. In the Other Payroll Items section, select the Retirement plan deduction item, created in Step 1.
5. Adjust Retirement Deduction item’s amount until the Net amount is $0.00
6. Select Save & Close, then Create Paychecks. 
7. Select Send Payroll Data (if applicable).

If your employees don't have enough wage and will contribute to retirement with personal money, they can write a check back with the amount they want to go to the retirement plan. Then, you need to create a retirement paycheck-only.

1. Create a retirement paycheck-only.
2. In the Enter Payroll Information window, select Open Paycheck Detail.
3. Clear all the items in the Earnings section. 
4. In the Other Payroll Items section, select the Retirement plan deduction item, created in Step 1, and the amount they’ll contribute.
5. On the next line, in the Other Payroll Items section, select the Retirement OFFSET Item, created in Step 2, then enter retirement amount as POSITIVE in the Rate column.
   NOTE: You’ll be prompted with the message "Deductions are normally entered as a negative number, are you sure you want to have a positive number?" Select Yes.
6. Select Save & Close, then Create Paychecks. 
7. Select Send Payroll Data (if applicable).

1. Add an Other Earnings pay type to the employee's profile.
2. Use the gross up formula to determine the gross pay amount.
3. Go to Payroll, then Employees.
4. Select Run payroll.
5. Choose an employee and pay schedule.
6. Zero out the employee's regular pay or salary:
   • Enter 0 for regular pay hours.
   • Select the salary amount. Select Skip salary this time only then Apply.
7. Select the Other earning box and enter the amount determined by using the gross up formula. Make sure that the other pay types are 0.
8. Select Actions ⋮ then Edit paycheck.
9. Zero out all unwanted deductions.
10. Add an amount for Federal Income tax or State Income tax.
11. Adjust the Other earning amount as needed to get the 0.00 net pay amount.
12. Once the net pay is zero, select Save.
13. Select Preview payroll, then Submit payroll.
14. Select Close.

If there are enough wages to cover the full Income Tax Amount:

1. Create and run payroll.
2. In the Enter Payroll Information window, select Open Paycheck Detail.
3. In the Earnings Item section, select the Earning item, Rate and Hours (for hourly employees). 
4. In the Employee Summary section, adjust the Federal or State Income tax until the Net is $0.00
5. Select Save & Close then Create Paychecks.
6. Select Send Payroll Data (if applicable).

If there are NOT enough wages to cover the full Income Tax Amount:

Step 1. Set up a Tax Offset Addition Item

You need to create a tax offset addition item because you can’t create a paycheck with a negative net amount. This serves as an employee advance that you’ll need to collect on the next paycheck. Check out, Set up and repay employee advances to learn how to claim back the amount advanced. 

1. Go to Lists, then Payroll Item List.
2. Select Payroll Item ▼ dropdown, then New.
3. Select Custom Setup, then Next.
4. Select Addition, then Next.
5. Enter the name of the Addition item such as SIT or FIT Offset, then Next. 
6. Select the Expense Account you want to use to track the item, then Next.
7. Select None from the Tax tracking type ▼ dropdown, then select Next three times.
8. Select net pay in the Gross vs. net window, then Next.
9. Select Finish.

Step 2. Create and run payroll

1. Create and run payroll.
2. In the Enter Payroll Information window, select Open Paycheck Detail.
3. In the Earnings Item section, select the Earning item, Rate and Hours (for hourly employees). 
4. In the Employee Summary section adjust the amount you’re reporting for Federal or State Income tax. 
5. In the Other Payroll Items section, select the Tax Offset item and adjust the amount until the Net is $0.00
6. Select Save & Close, then Create Paychecks. 
7. Select Send Payroll Data (if applicable).

1. Set up an after-tax deduction for the "out" part and an Other Earnings pay type for the "in" part. Set the after-tax deduction amount to 0.00. Leave the other earnings amount blank.
2. Go to Payroll, then Employees.
3. Select Run payroll.
4. In the Other Earnings box, enter the amount the employee received.
5. Select Actions ⋮ then Edit paycheck.
6. In the Employee deductions section, enter the same amount as the current net pay in the other after-tax box.
7. Select Save.
8. Select Preview Payroll. Then select Submit payroll.

There are two ways to track gifts made to an employee. You can track it as: 

• Compensation if you want it to show on Boxes 1, 3, 5 of the W-2.
• Fringe Benefit if you want it to show on Boxes 1, 3, and 5, reported in Box 14 of the W-2.

Step 1. Create an Addition Item

1. Go to Lists, then Payroll Item List.
2. Select Payroll Item ▼ dropdown, then New.
3. Select Custom Setup, then Next.
4. Select Addition, then Next.
5. Enter the name of the Addition item such as Gift Card Pay. Select Next.
6. Select the Expense Account where you want to track the item, then Next. 
7. In the Tax tracking type window, select:
   • Compensation if you want it to show on Boxes 1, 3, 5 of the W-2.
   • Fringe Benefit if you want it to show on Boxes 1, 3, and 5, reported in Box 14 of the W-2.
8. Select Next three times, then Finish.

Step 2. Create a deduction item offset item

This will remove the gift amount out of the paycheck that the employee has already received.

1. Go to Lists, then Payroll Item List.
2. Select Payroll Item ▼ dropdown, then New.
3. Select Custom Setup, then Next.
4. Select Deduction, then Next.
5. Enter the name of the deduction item such as Gift Card Offset. Select Next twice.
6. Select None from the Tax tracking type ▼ dropdown, then select Next three times.
7. Select net pay in the Gross vs. net window, then Next.
8. Select Finish.

Step 3. Create a gift card-paycheck only

1. Create your employee’s paycheck.
2. In the Enter Payroll Information window, select Open Paycheck Detail.
3. Clear all the items in the Earnings section.
4. In the Other Earnings section, select the Gift Card Addition item, created in Step 1. Then, enter the gift amount your employee received in the Rate column.
5. On the next line, in the Other Earnings section, select the Deduction Offset item, created in Step 2,  then enter the net amount in the Rate column.
6. Select Save & Close, then Create Paychecks. 
7. Select Send Payroll Data (if applicable).