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    Set up voluntary payroll deductions

    Article ID: 2000574

    Overview

    This article describes the types of voluntary payroll deductions we support for Intuit Online Payroll customers.

    Expected Outcome

    You'll understand the types of deductions we support. You'll be able to create deductions and assign them to your employees.

    Assumptions

    Your business offers voluntary payroll deductions (such as retirement and insurance plans) to your employees.

    Details

    Please note that this article describes setting up the deduction for payroll tracking purposes only. While the item will appear in payroll reports and check stubs, Intuit does not actually transmit funds to any third parties. All deductions must be transmitted to your appropriate third party outside of the payroll system.

    Types of deductions

    Voluntary payroll deductions include medical, dental, and vision insurance premiums (both pretax and post-tax); retirement plans; flexible spending accounts (including dependent care FSA and medical expense FSA); and cash advance or loan repayments. (Notice that garnishments are not voluntary deductions.)

     
    We support payroll deductions for the retirement plans most used by small businesses: 401(k), 403(b), Simple 401(k), Simple IRA 408(p), and SAR SEP 408(k). In addition, we support the catchup provisions of each of these plans. Catchup allows a higher contribution limit for employees aged 50 and over.
     

    We track all the information needed to calculate payroll deductions and complete reporting on all applicable forms.

     

    This document explains how to set up your voluntary deductions in our payroll service. You can also set up company (employer) contributions to your employees' insurance or retirement plans.

    Supported deductions

    Category Taxability Types
    Health Insurance
    Taxable
    or Pretax
    Medical Insurance, Dental Insurance, Vision Insurance
    Retirement Plans Varies*401(k), SIMPLE 401(k), 403(b) , SARSEP, SIMPLE IRA, Company-only plan, Roth 401(k), Roth 403(b), and catch-ups
    FSA PlansPretax Dependent Care FSA** and Medical Expense FSA
    HSA Plans
    Taxable
    or Pretax
    Taxable HSA and Pretax HSA
    Other Deductions Taxable
    Cash Advance Repayment, Loan Repayment, other after-tax deduction
     
    * All retirement plans except Roth plans are exempt from income taxes and subject to other payroll taxes. Roth plans are subject to all payroll taxes.
    ** We don't support the Dependent Care FSA in Pennsylvania.

    Setting up deductions

    In most cases, you'll create ongoing deductions for all or some of your employees. Occasionally, you may wish to set up a one-time deduction for an individual employee. For that situation, refer to the section "Setting up a one-time deduction" below.

    In general, setting up voluntary payroll deductions is a two-step process:

    • Define deductions at the company level.
    • Assign deductions to each employee as applicable.

    Intuit Online Payroll

    To define payroll deductions at the company level:

    1. Click Setup.

    2. Click Deductions in the submenu.

    3. Click Add a New Deduction/Contribution.

    4. Select a deduction category from the dropdown. (If you select the Health Insurance category, you'll specify the taxability when assigning the deduction to the first employee.)

    5. Select a deduction type from the dropdown. (If you do not see a type you need, contact us.)

    6. Enter a description (up to 36 characters) that helps you identify this deduction when you set up employees. This description appears on your pay stubs. For retirement plans, we automatically enter the maximum amount allowed by federal regulations. See the Retirement plans, taxes, and contribution limits section that follows.

    7. Click OK.

    For more information, see the Related Articles section.

     

    QuickBooks Online Payroll

    1. Click Employees tab from the left pane and click the employee's name.

    2. Click the pencil icon beside Pay.

    3. Scroll down and click Add a new deduction tab.

    4. Select the deduction type and category.

    5. Enter the description or name of the provider.

    6. Enter the amount.

    7. Click Done.

    Assigning deductions to employees

    As you set up each employee, you specify their deductions and the amount to withhold from each paycheck for the deduction. You can add a deduction to the setup of an employee at any time.
     
    Intuit Online Payroll
     
    1. Click Employees.
     

    2. Click the employee's name.

    3. In the Deductions & Contributions section, click Edit.

    4. Click Add a Deduction.

    5. In the popup window:

    6. Select the deduction from the dropdown.

    7. If assigning a Health Insurance deduction for the first time, select Taxable Insurance Premium or Pretax Insurance Premium.

    8. Select % of Gross Pay or $ Amount from the Amount dropdown. If using the same amount for every paycheck, enter the amount in the box. If varying the amount by paycheck, leave the box blank. (You'll enter the amount when creating the employee's paycheck.)

    9. Enter an annual maximum amount (optional). (This will be prefilled for some deduction types.)

    10. Click Save.

    11. Click OK.

     

    Quickbooks Online Payroll 

    1. Click Employees tab from the left pane and select the employee's name.

    2. Click the pencil icon beside Pay.

    3. Scroll down and click the Add a new deduction tab.

    4. Select the deduction type and category.

    5. Enter the name of the provider.

    6. Enter the amount.

    7. Enter annual maximum, if applicable.

    8. If assigning a Health Insurance deduction for the first time, select Taxable Insurance Premium or Pretax Insurance Premium.

    9. Click Done.

     

    Setting up a one-time deduction

    Occasionally, you may wish to set up a one-time deduction for an individual employee instead of an ongoing deduction for a group of employees. Follow these steps:

    1. Click Employees.

    2. Click the employee's name.

    3. In the Deductions & Contributions section, click Edit.

    4. Click Add a Deduction.

    5. Click the Deduction drop-down arrow and select New Deduction. (If you don't see the Deduction drop-down arrow, go to the next step.)

    6. Select the category and type that most closely match the one-time deduction.

    7. Enter the description or the name of the provider.

    8. Choose $ Amount, and enter a value of 0.

    9. Click Save.

    10. Click OK.

     

    QuickBooks Online Payroll

    1. Click Employees tab from the left pane and click on the employee's name.

    2. Click on the pencil icon beside Pay.

    3. Scroll down and click on Add a new deduction tab.

    4. Select the type deduction ( deduction/contribution or Garnishment).

    5. Select the category.

    6. Enter the name of the provider.

    7. Enter the amount.

    8. Click Done.

     

    Retirement plans, taxes, and contribution limits

    Federal and state tax laws permit certain retirement plan contributions to be made pretax. The employee's wages are reduced by the amount of the contribution before certain taxes are calculated. As a result, the employee pays less tax. For example, contributions made by your employees to a 401(k) plan are not subject to federal income tax, although they are subject to Social Security, Medicare, and federal unemployment taxes. State laws vary as to whether retirement plan contributions are subject to state income tax, state unemployment tax, or other state taxes.
     
    Note: After-tax Roth 401(k) and 403(b) are not available as company contributions through our service because the entire contribution should be paid and reported separately through the provider, and not through the same account as the employee after-tax deduction funds. For more information, see IRS Retirement Plans FAQs on Designated Roth Accounts.
     
    Each kind of plan limits the amount an employee can contribute in a year, with higher limits for employees age 50 and older (called catchup plans). We automatically enforce these limits. If you have employees eligible for the catchup provision of your retirement plan, you should create two deduction types in our payroll service, one for the regular plan and one for the catchup provision. For example, if your business has a SIMPLE IRA, you would set up both a SIMPLE IRA deduction and a SIMPLE IRA catchup deduction. An employee who will reach age 50 on any day in the current calendar year is eligible for the higher limit, so you should set up a catchup deduction right away and assign that employee to it now (don t wait until the birthday).
     
    For contributions you make as an employer, check your retirement plan for limits. We do not set these values.
     
    For employee contribution limits, see article 2000072.

    Cafeteria plans (Section 125 plans) and flexible spending accounts

    • If you have a cafeteria plan (also known as a Section 125 plan), your employees can pay medical, dental, and vision insurance premiums with pretax paycheck deductions.
    • The amounts deducted are exempt from federal income tax, Social Security, Medicare and federal unemployment taxes. State laws vary as to whether contributions to a cafeteria plan are subject to state income tax, state unemployment tax, or other state taxes.
    • We also support dependent care and medical expense flexible spending accounts. We use the law of your state when calculating these deductions.

    Health savings account contributions and limits

    An employee is eligible to set up a health savings account (HSA) if they satisfy all federal requirements, such as participating in a high-deductible health plan (HDHP). Both you and the employee can contribute to their HSA.
     
    The HSA contribution limits for 2015 are:
    • $3,350 self
    • $6,650 family
    The HSA contribution limits for 2014 are:
    • $3,300 self
    • $6,550 family
    Additional amounts for catchup (age 55 or older) are:
    • 2009-2014 - $1,000

    Employee portions of state disability insurance (SDI or TDI) for California, Hawaii, New Jersey, New York, and Rhode Island

    Contact Payroll Support for assistance.

    Top Answers

    Resources

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