Payroll Deduction Calculations

HRO Option

Preview Code

Description

Fixed Amount

0

Set dollar amount.

Percentage of Gross Pay

1

If coding on a positive earning coding, this calculates percent of adjusted gross.

Example:  
Percent of positive earning codes, less negative earning codes.

If used for a negative earning code, the code calculates on a percent of total gross.  

Example:  
Percent of all positive earning codes only.

Note:
Positive earnings are the worker's wages.  Examples include Regular, Vacation, Holiday, and Bonus.  

Negative earnings are items that reduce taxable wages. The amounts are deducted from the employee's net pay, but they factor in to tax calculations. Examples include S125, 401k, and FSA deductions.
 

Percentage of Net Pay

2

Percent of net to be withheld before deductions are taken.

Percentage of Net Pay (after deductions)

3

Percent of net to be withheld after deductions are taken.

Federal Garnishment

4

If a 4 is selected, a special calculation is completed.

Pay Period Maximum field (F5) = Maximum % of Disposable Income to garnish; if left zero, it will automatically garnish 25% of Disposable Income, if the income is greater than the pay period federal limits. Pay Period Federal limits are calculated by taking the Federal Minimum wage (which is currently $5.15) multiplied by 30 hours per week. For example, a biweekly client's federal limits will be calculated by taking $5.15 multiplied by 60 hours (it's 60 hours because their frequency is biweekly) and if that employee's disposable income is greater than that amount the garnishment deduction will be deducted from the employee.

Annual Maximum field (F5) = % of Gross; Used only if garnishing the lesser of % of Gross or Maximum % (see above) of Disposable; If Not This Method, Leave This Field 0, Do Not Use As Annual Max.

Disposable Income = Gross before 401k/s125/annuities less taxes Option to use % of Disposable Income less deduction code set; Deduction code must be set up with the earning code set letter as the second character; ex. 1A where A = Earn Set.

Flat Amount-Child Support Garnishment

5

If a 5 is selected, a special calculation is completed.

Pay Period Maximum field (F5) = Maximum % of Disposable Income to garnish.

Disposable Income = Gross before 401k/s125/annuities less taxes Option to use % of Disposable Income less deduction code set; Deduction code must be set up with the earning code set letter as the second character; for example, 1A when A = Earn Set.

Washington L & I

6

Washington State L & I.

Fixed Net Pay

9

Amount of net pay the employee receives after this deduction is withheld.  This calculation is useful to deduct everything except a protected amount.

Example:  
Certain garnishments require this.