What This Process Does

  • Allows to view or add Deduction Types.
  • A Deduction Type is assigned to each Deduction Description ID.
  • The Deduction Type determines whether a Deduction Description ID is Mandatory or Voluntary, what it shelters (taxes, garnishment and/or child support), and in what order it should compute compared with other Deduction Descriptions (i.e., the Computation Level).
  • RDA sets up the Deduction Type Masters, so users should not need to set up new Types (strongly recommend that you do not do so without discussing with an RDA Payroll representative); however, if needed, you can modify the Mandatory vs. Voluntary status, and Computation Level, with guidance from RDA; see Best Practices below.
  • Deduction reports in the Payroll module allow for ranging on Deduction Type.

Best Practices

  • We strongly recommend that you do not add a new Deduction Type, or change the tax shelter setup of existing Pay Types; please contact RDA if you believe there is a need to do so.
  • There are times when new Deduction Types need to be created to facilitate Pay Type setups that include/exclude from a Pay ID all deductions with a shared Deduction Type; RDA will help you determine whether you have a need for this, and will assist with the setup.
  • If a child support or garnishment deduction is not computing on all payrolls, and it needs to, one possible solution is to change the Deduction Type from Voluntary to Mandatory, so that it computes even when a Pay Type of “MANDATORY” is assigned to the Pay ID.
  • In the case of an employee having multiple child support/garnishment deductions, and there being a need to have those deductions compute in a certain order, the Computation Levels of the associated Deduction Types can be changed, if needed, to accommodate this.

Add Deduction Type 

  1. Go to HR → Payroll → Setup → Deductions → Deduction Types
FIELDSOpt.Rec.Req.Description
Deduction Type——♦Unique name (identification) for the Deduction Type
Mandatory Deductions
♦
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If flagged, the Deduction Type is considered mandatory, which means the associated Deduction Descriptions will compute on all Pay IDs
Computation Level
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—
♦
The order in which the associated Deduction Descriptions will compute, compared with other Deduction Descriptions; the lower the Computation Level, the higher the priority in the Compute; computation Levels sometimes factor into the setup of Pay Types, as a way of directing the system to not compute specified voluntary deductions on Pay IDs that are not standard (e.g., the third payroll of the month for biweekly pay frequencies); recommend to use other similar Deduction Types when adding Computation Levels on new Deduction Types
Description♦——Description of the Deduction Type
Shelter Federal Tax♦——If flagged, employees' taxable Federal wages are reduced by this Deduction Type; stated another way, the Deduction Type; stated another way, the Deduction Type computes before Federal tax computes on employees' wages
Shelter State Tax
♦
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If flagged, employees' taxable State wages are reduced by this Deduction Type; stated another way, the Deduction Type; stated another way, the Deduction Type computes before State tax computes on employees' wages
Shelter Garnishment
♦
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If flagged, employees' taxable Garnishment wages are reduced by this Deduction Type; stated another way, the Deduction Type; stated another way, the Deduction Type computes before Garnishment tax computes on employees' wages
Shelter Local Tax♦——If flagged, employees' taxable Local wages are reduced by this Deduction Type; stated another way, the Deduction Type; stated another way, the Deduction Type computes before Local tax computes on employees' wages
Shelter FICA Tax♦——If flagged, employees' taxable FICA wages are reduced by this Deduction Type; stated another way, the Deduction Type; stated another way, the Deduction Type computes before FICA tax computes on employees' wages
Shelter Medicare Tax♦——If flagged, employees' taxable Medicare wages are reduced by this Deduction Type; stated another way, the Deduction Type; stated another way, the Deduction Type computes before Medicare tax computes on employees' wages
Voluntary Deduction
♦
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If flagged, the Deduction Type is considered voluntary, which means the associated Deduction Descriptions will only compute when the Pay IDs Pay Type and the job's Gross ID include them
Shelter Child Support
♦
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If flagged, employees' taxable Child Support wages are reduced by this Deduction Type; stated another way, the Deduction Type; stated another way, the Deduction Type computes before Child Support computes on employees' wages
Shelter Unemployment♦——If flagged, employees' taxable Unemployment wages are reduced by this Deduction Type; stated another way, the Deduction Type; stated another way, the Deduction Type computes before Unemployment computes on employees' wages
Description 2♦——Optional additional description
Exclude from Benefit Statement——♦If customer creates benefit statements in RDA, this box should be checked if deductions with this deduction type should not be included on the benefit statement
ESS Direct Deposit
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Opt. = Optional  Rec. = Recommended  Req. = Required