Managing Employee Deductions

Deductions in AccuArk cover everything from tax withholdings and retirement contributions to insurance premiums and garnishments. Like benefits, deductions are managed in two stages: define the types, then assign them to employees.

Step 1: Create Deduction Types

Navigate to Employees → Deductions → Deduction Types to set up your organization's deduction catalog. Click Add New and complete the following fields:

• Name — A clear label such as Federal Income Tax, 401k Contribution, or Health Insurance Premium.
• Category — Choose from Tax, Insurance, Retirement, Legal, Company, Perks, or Other. Categories group deductions in reports and on employee profiles.
• Description — An optional note explaining the deduction's purpose or legal basis.
• Default Amount — The standard deduction value. This can be a flat dollar amount or a percentage, depending on the is_percentage flag.
• Is Percentage — Check this flag if the default amount represents a percentage of gross pay rather than a fixed dollar amount.
• Pre-Tax — Check this flag if the deduction should be applied before tax calculations. Pre-tax deductions reduce the employee's taxable income. Common examples include 401k contributions and health savings account deposits. Post-tax deductions are applied after tax calculations and include items such as Roth IRA contributions and wage garnishments.
• Location — Assign to a specific location or leave as organization-wide.
• Status — Active or Inactive.

Step 2: Assign Deductions to Employees

Open an employee record from Employees → Employee List, then click the Deductions tab. Click Add Deduction and configure:

• Deduction Type — Select from your created types.
• Amount — Pre-filled from the type default but adjustable per employee. Enter a dollar value or percentage depending on the type configuration.
• Frequency — How often the deduction is applied: Per Pay Period, Weekly, Bi-Weekly, Semi-Monthly, Monthly, Quarterly, Yearly, or One-Time. AccuArk matches the frequency to the salary record's payment period when calculating totals.
• Start Date — When the deduction takes effect.
• End Date — Optional. Use this for time-limited deductions such as a loan repayment that ends after a set number of periods.

Pre-Tax vs. Post-Tax

Understanding the difference is important for accurate payroll:

• Pre-tax deductions are subtracted from gross pay before income tax is calculated. This lowers the employee's taxable income. A 401k contribution of $500 on a $5,000 gross pay means taxes are calculated on $4,500.
• Post-tax deductions are subtracted after tax calculations. The employee's taxable income is unaffected. Roth IRA contributions and court-ordered garnishments are typical post-tax deductions.

Deduction Status

Each assigned deduction carries one of three statuses:

• Active — Currently in effect and included in salary record calculations.
• Inactive — Paused. The deduction remains on file but is excluded from new salary records.
• Completed — The deduction has fulfilled its term (e.g., a one-time deduction that has been applied or a loan that has been fully repaid).

Active deductions auto-populate into salary records when a new payroll entry is created, ensuring consistent and accurate calculations every pay period.