Payroll Deduction or Employer Expense Setup

This process will add a new employee deduction or employer expense that can then be added to the employee's deductions. The settings selected affect how payroll is processed. If you have any questions regarding setup, please contact the Horizon Help Desk.

NAVIGATION: MAINTAIN menu > Deduction/Benefit Master

Enter the new Deduction Code (this can be an employee or employer expense code, or both), i.e., HI.
Enter a Description for the deduction/expense, i.e., Health Insurance
Enter the Check Description that you want to appear on the employee pay stub, i.e., Health Ins.

Parameters

TYPE: Select the Type of deduction/expense you are entering. This will be one of the following:
1. Employee Only
2. Employer Only
3. Employee and Employer
AUTO PRINT: An Auto Print option can be selected to determine the frequency that the deduction report will print at the end of payroll processing.
1. For example, if you select E – Every Pay, a deduction report will print after you are finished processing payroll each time.
2. If you do not want a report to print for the deduction, select “Undefined” or "N - No Auto Print".
CATEGORY: The category entered here will determine how the deduction/benefit is processed when the Check Processing program is run and how it is reported in certain reports. Some of the options include Local Tax, PA Local Worksite, LST, Unemployement or Voluntary Deduction Priorities. Selecting the proper category is extremely important for the accurate processing of payroll.
1. Local Tax - select to show this as a local tax, not to be used for PA Local Tax.
2. LST Tax - used to set reporting options for PA LST tax. PA LST electronic reporting will not function unless this is selected.
3. PA Local Worksite - used to set processing options for PA local tax withholding and reporting. PA Local Earning Income Tax withholding and reporting will not function for this deduction unless this is selected.
4. Unemployment Tax - select this option if this is an unemployment tax.
5. Child Support - select this option for all child support deductions only. It will be given first priority in the net pay calculation. Additional setup may be needed in the employee master.
  1. Go to Maintain>>Employee Master
  2. On the Deductions/Expenses tab, select the appropriate deduction code and press the Advanced button.
  3. Select the proper CS Max Percent from the drop down menu based on the support order.
6. Voluntary Deduction Priority - used to set processing options for employee deductions that can be excluded if the employee's net wages will not cover this deduction.
  1. Select one of these options for deductions like Credit Union, Christmas Club, United Way Donation, US Saving Bonds or any other withholding that is not required by law or a contractual agreement to be withheld.
  2. Select Priority 1 to Priority 4 to set withholding parameters; with 1 as the most important and 4 as the least important to withhold.
  3. For example: If an employee has several voluntary deductions with different priority levels, the program will look at the employee's net pay before withholding voluntary deductions to determine if there is enough net pay to withhold all of the voluntary deductions.
    1. If there is not enough net pay for all, the Priority 1 deductions will be withhold first. then Priority 2 deductions, followed by 3 and 4.
    2. When there are more than one voluntary deduction with the same priority level, the program will process them in alphabetical order.
    3. When the program finds a deduction that is greater than the net pay, the program will reduce the deduction for this pay only, to a lesser amount or to zero. The program will attempt to leave a final net pay no less than $10.00. After the current pay has posted, the deductions will be reactivated and the process will be repeated for the next pay.
    4. Warning: Once the payroll has calculated the reduced deductions are saved. To reset the deductions for this pay, use the Quick Calculation button in Time Card Entry to view the deduction amounts and reset if needed.
STATUS: Select the proper status.
Mandatory - Check the Mandatory box if the deduction/expense you are creating should always be withheld from an employee's pay. These are the items that should not be excluded from special or bonus pays, such as Local Taxes, Unemployment Tax, etc.
1. Do not check mark any deduction or benefit that you would exclude from a special pay such as 401K or Health insurance premiums, or any deduction based on a set dollar amount for the period.
The Employee W2 Box Code and Employer W-2 Box Code are typically only used for pension plan type deductions, Employer paid Health Insurance (Box12) or Section125/Cafeteria Plan deductions (Box 14). This box will be left blank for deductions that are not reported on the W2.
1. Box 12 codes letter code. A box number and code may be entered in the following formats for box 12, i.e., 12E or 12DD
  1. A - Uncollected Social Security or Railroad Retirement Tax Act on Tips
  2. AA - Roth Contributions under 401(k)
  3. B - Uncollected Medicare Tax on Tips
  4. BB - Roth Contributions under 403(b)
  5. C - Taxable Cost of Group-Term Life over $50,000
  6. D - Elective deferrals under section 401(k) cash or deferred arrangement (plan)
  7. DD - Cost of Employer Health Coverage
  8. E - Elective deferrals under a section 403(b) salary reduction agreement
  9. EE - Roth Contributions under 457(b)
  10. FF - Qual Small Employer Health Reimb Arrangements (Qualified Small Employer Health Reimbursement Arrangements
  11. F - Elective deferrals under a section 408 (k)(6) salary reduction SEP
  12. G - Elective deferrals 457 (b)
  13. H - Elective deferrals 501(c)
  14. J - Non taxable sick pay
  15. K - 20% Excise on excess golden parachute payments
  16. L - Substantiated employee business expense reimbursements
  17. M - Uncollected social security or RRTA tax on taxable cost of group-term life insurance over $50,000 (for former employees)
  18. N - Uncollected Medicare tax on taxable cost of group-term life insurance over $50,000 (for former employees)
  19. P - Excludable moving expense reimbursements paid directly to employee
  20. R - Employer contributions to an Archer/LTC ins
  21. S - Salary reduction under 408(P) Simple
  22. T - Adoption benefits
  23. V - Income from the exercise of non statutory stock options
  24. W - Employer Contributions to HSA
  25. Y - Deferrals under a section 409A
  26. Z - Income under a section 409A
2. Box 14 codes are 14 with a user entered two character code of their choice. Blank spaces are not allowed and a dash should not be used as one of the two characters. Example for box 14: 14IN

Defaults Tab

The DGR Code is used in rare circumstances for advanced calculations when certain earnings codes should not be included in the calculation of the deduction. Please consult your Horizon Support Representative for questions regarding DGR Codes.
Group may be left blank. If this deduction is part of a group of deductions, then enter a grouping code of your own choosing for all of the deductions.
1. For example, enter a group code of "Local" on all local tax deductions or "MEDINS" on medical insurance deductions. The group will have a subtotal on the payroll summary. Deduction reports may also be run by group rather than individual deductions.
Check Group may be left blank or if this deduction should be combined with similar deductions as one amount on employee check stubs, then enter a check group classification of your own choosing for several similar deductions. The check group classification is used to create one line on employee checks from many deduction codes.
1. Example: John has three insurance deductions which can be printed as a one line total on his pay check stub by putting in a Check Group Classification of "Insure" for all of the deduction codes.
Select the appropriate Deduction Cycle and Federal and State Taxable codes for this deduction or expense from the drop down list.
1. Deduction Cycles control when the deduction will be taken (from which pay or pays in the month)
2. Federal and State Taxable codes control whether the deduction is taxable or non taxable to federal, state or local governments
Deduction Calculations for Employee and Employer at the bottom of the Defaults tab are used to determine how the deduction or expense will be figured when calculating payroll. You will use one or both of these calculations as necessary based on the Deduction Type selected under Parameters. Also, note that these are default calculations and can be changed for each employee in the Employee Master.
1. If either the Employee or Employer calculation is dimmed/unavailable, information may not be entered in that section.
2. Enter the amount of the deduction or expense and select the type from the drop down list. The type can either be a Dollar Amount, Percentage, or be based on Hours or Net Pay.
3. The Maximum amount is used to set a limit on the amount of deduction or expense that can be taken, and must be a dollar amount. Maximums are generally used to place limits on repayment of employee loans or advances, or to set limits for deductions like the Emergency Services Tax.
4. Maximums can also be used to limit the Employer Expense.
  1. For example, if you are calculating employer expense for FUTA tax, you would put a maximum amount of $56 ($7,000 wage limit X .008.)
5. Check “Retain Max at Year End” for any deduction whose maximum is considered on a year to year basis.
  1. For example, EMST has a maximum of $52 per year. You should check the box, so that all YTD totals will be eliminated and the maximum will be reset to $52.
  2. Maximum’s that have all “9”s are automatically retained/reset.
  3. Deductions, whose maximum is set as a lifetime maximum such as an employee loan, should not be checked.
  4. When the payroll year is closed, the program will compare each employee’s YTD deductions for the year being closed and reduce the previous maximum to create a new maximum. For example, if the maximum is $400 and during 2008 $300 was withheld, the new maximum for the new payroll year will be $100 ($400-$300.) Again, these types of deductions should not be checked in the “Retain Maximum” box in the Deduction Master.
When you are finished setting up the calculations, click the General Ledger Account Information Tab

General Ledger Account Information Tab

Check the “Use Master Distribution Process for Withholding Amount" box if you want the withholdings for this deduction to be allocated to accounts based on the PR Distribution Master. Most users will leave this checkbox blank.
Select the appropriate general ledger accounts to credit or debit using the browse button(s). Depending on the type of deduction you are setting up as indicated under the Parameters above, the Employee or Employer segment may not be accessible. Fill in all applicable accounts.
If you are using the AP Wizard to print or record your tax and deduction checks during payroll processing, continue to the “Accounts Payable Interface” tab. Before entering any information on the Accounts Payable Interface tab, you should make sure you have a Recurring AP Entry in the Financial module established to handle this deduction.
If you are not entering information in the Accounts Payable Interface tab, proceed to the Work Site Address tab if the Category selected for the deduction was PA Local Worksite. If the Category was not PA Local WorkSite, press Save or Apply and you are done and may close the program or enter another deduction or benefit code.

Accounts Payable Interface Tab

If you use the Horizon Financials Management software, the AP Wizard will process the AP voucher/automatic payment in Financials. There are three options to setup payments. This setup will add an additional step to the Process Payroll Wizard. You can review the payment information and print checks before posting payroll.

Select the appropriate Vendor Number using the Browse buttons.
Recurring Entry Number should be left as 0.
Select the appropriate AP Recurring Frequency from the drop down list. Usually this should be Code Payroll (Every Pay).
Payment Frequency should be left blank.
Select the Processing Mode of Auto Payment/Check Process for use with the AP Wizard during Payroll Processing.
Check the box if this is for an electronic payment.
Check # can be left blank to allow system to enter the next Electronic.
Your Account Number (Check) with the Vendor may be entered, if applicable.

Pull Liability Amounts into Recurring Accounts Payable

This setup will make an AP voucher in the Financials program that you can process during your next check run.

Select the appropriate Vendor Number using the Browse buttons.
Recurring Entry Number select the AP recurring # that has been setup for this payment.
Select the appropriate AP Recurring Frequency from the drop down list.
Payment Frequency should be left blank.
Select Standard Process from the list.
Electronic payment leave unchecked.
Check # can be left blank.
Your Account Number (Check) with the Vendor may be entered, if applicable.

Manually Enter an AP voucher for payment in Financials

Leave all fields in this area blank.
You will need to manually enter an AP voucher to record the payment of your payroll liabilities.

Work Site Address Tab

If the Category selected was PA Local Worksite, then enter the Site Name and Address information in this area.
Phone numbers may be entered for informational purposes, but are not used by the program.

Work Site Setup Tab

If the selected Category was PA Local Worksite, then enter the Federal Name, ID, Municipality, County, PSD Code and Local Account information here.

GL Benefit Distribution

Employer paid benefits may also need the expense account distribution setup. See Benefit GL Expense Distribution Setup
When you are finished, press SAVE or APPLY.

12/2023

NEED MORE HELP? Submit a ticket to the Help Desk or call (814) 535-7810 or (800) 889-3388