What This Process Does

  • Using a separate job will allow payment of the advance to the employee and then automate the repayment of the advance as wages, thus reducing taxable wages.
  • Expense for the advance will be decreased as the advance is paid back.


Best Practices

  • The advance and repayment of wages needs to be handled properly in order to tax and expense the employee's advance payment and reduce taxable wages and expense when paid back.
  • Following are two different methods to handle the advance and repayment.


Method 1: Add New Job for the Advance

  • Add a separate job to pay the advance amount.
  • The Position ID can be the same as the employee's primary job. The Gross ID should be one with a profile of Mandatory w/DD and a Pay Frequency (Number of Pays) of 1; for example REG-01, or, a unique Gross ID could be created exclusively for ADVANCE.
  • Use the Salary rate and enter the total amount of the advance in the Misc Salary field on the job.
  • When this job is selected via Pay Jobs in Mass, the full amount of the advance will automatically be pulled in.
  • Recommend paying the advance pay in a separate payroll from the employee's regular salary.
  • After the advance has been paid, change the Gross ID on the job to one with a profile of Mandatory w/DD and a Pay Frequency of 12 (or whatever the pay frequency will be for the repayment of the advance; for example REG-12, or, if using a unique Gross ID exclusively for the advance, change the pay frequency on the Gross ID).
  • Change the Misc Salary to a negative amount; this will result in the repayment being pulled into the payroll automatically during the Pay Jobs in Mass.
  • When the advance has been repaid in full, be sure to inactivate the advance job.


Method 2: Advance Rate and Repay Deduction

  • Use an Advance Rate set up as Base Pay with Use Units to pay the employee the advance amount on their primary job (must then add the Advance rate to the applicable Gross IDs).
  • All taxes would apply to the Advance rate.
  • Recommend paying Advance pay in a separate payroll than regular salary.
  • Repay deduction will be added to the employee the first pay following the advance.
  • The key fields for setup of Repay Advance Deduction is below:


FIELDSOpt.Rec.Req.Description
Deduction Deduction ID——♦Type in ADVANCE-REPAY
Deduction Type——♦Click on Load and select ADVANCE-REPAY; Must use this type in order for the taxable wages and expense to be handled correctly
Vendor ID——♦Select the organization as the Vendor
Compute Type——♦Click on drop-down and select Flat Amount
Opt. = Optional  Rec. = Recommended  Req. = Required



Flags Tab

  • Select the following booleans ONLY: Active, Use Limits, Reduce Net.
  • Include all Rate Types by selecting booleans for Base Pay, Overtime, Supplemental.
  • Select to Block: Nothing
  • No deduction account is required on the ADVANCE-REPAY deduction.
  • NOTE: If other voluntary deductions such as VRS are set as a percentage of Gross (versus percentage of Retirement Salary), then Block Advance needs to be set on those deductions.


For the Employee

  • Add ADVANCE-REPAY deduction to the employee.
  • Enter a deduction amount in the Adjustment /Additional Amount field.
  • Add a deduction limit which is the total amount paid in the Advance; the deduction will stop once the limit has been met, then should be set as inactive.


What This Does

  • The ADVANCE-REPAY deduction is designed to reduce taxable wages.
  • The expense will be reduced by the ADVANCE-REPAY deduction amounts.
  • If it's found that the employee paid back too much to the Advance and needs to be refunded, a new payroll should be run to pay the employee, compute taxes for the amount and add the expense; The Refund Deduction process will not work with the ADVANCE-REPAY deduction