How to Set Up Voluntary Payroll Deductions In QuickBooks

Last Updated on December 15, 2020 by

Do you know about the voluntary payroll deductions in QuickBooks Online Payroll? Well, Pedily is here with the topic regarding the voluntary payroll deduction. This topic will be beneficial for them, who are new, and unknown about this deductions process of QuickBooks. So let’s begin the blog: 

Voluntary Payroll Deductions in QuickBooks

Generally, the voluntary payroll deductions in QuickBooks are the amounts that are subtracted from an employee’s final payments for covering the cost of things like employee-paid benefits that is the benefits that are provided to the employees offered by the employer, or a general deduction for say charitable donation. But always remember that deduction, and contribution is different from each other. Here in the below, we have given a little overview, by which you can easily distinguish the deduction, and contribution process.   

Difference Between Deduction and Contribution

Deduction	Contribution
A deduction is an amount that is paid by an employee and which is deducted from each paycheck. For example, if we say an employee and an employer can pay some part of their salary in the health insurance plan. Then, the employee paid portion will be known as the deduction.	A contribution is a money that is paid by the employee and this is used to count as the additional pay or the wages. For example, if we say an employee and an employer can pay some part of their salary in the health insurance plan. Then the portion paid by the employer will be known as a contribution.

What are the Types of Voluntary Deductions in QuickBooks

As you know that the voluntary deduction consists of medical, dental, and vision insurance premiums for both pre-tax and post-tax. The decoration is not a voluntary deduction. Now, below we will discuss which deductions are supported by the QuickBooks Online Payroll, it will include a category with its types:

• Health Insurance– Medical, Dental and Vision Insurance
• Retirement Plans– 401(k), SIMPLE 401(k), 403(b), SARSEP, SIMPLE IRA, Company only plan, Roth 401(k), Roth 403(b), and catch-ups.
• Health Saving Accounts (HSA) Plans– Taxable HSA and Pre Tax HSA
• Flexible Spending Accounts (FSA) Plans– Dependent Care FSA and Medical Expense FSA.
• Other Deductions– Cash Advance repayment, loan repayment, other after-tax deduction.

Procedures to Set Up a New Deduction Item for Employees

Now, add a deduction item for your employees. When a deduction is set up for one employee then this deduction item will appear as an option to select when adding a deduction to the rest of your employees.

Steps to Set Up New Deduction Item in QuickBooks Online Payroll

The steps are given below:

• First, you have to select workers and then click on employees.
• After this, you have to select the employee name.
• In this step, you have to click on the edit option which is present next to the Pay.
• Then, in section 5 you have to select +add a new deduction option or you can select +add deduction.
• Now in the deduction/contribution drop-down menu, you have to choose a new deduction/contribution.
• When you will choose that now you need to choose a deduction type and type from the small arrow icon present near it.
• Now, enter the provider’s name which is appearing on the paycheck.
• Then from the amount per pay period icon, you have to choose the $ amount or you can choose % of gross pay and then enter the $ amount or percentage. You have to do the same for the company contributed as applicable.
• At last, you have to click on ok and then click on done.

Steps to Set Up New Deduction Item in Intuit Online Payroll Enhanced

The steps are given below:

• First, you have to go to the employee and then select the employee name.
• After this, in the deduction and contribution section, you have to select the edit option.
• Now, from the deduction for benefit section, you have to select add a deduction.
• Then from the deduction drop-down menu, you have to select a new deduction option.
• In this step, you have to choose the category and its type.
• Then add a description which is appearing on a paycheck.
• Now, enter a $ amount or you can enter % of gross pay.
• At last, you have to click on the save option and then click on ok.

Procedure to Attach a Deduction Item to Employees

If you want to attach or assign a deduction item to the employee then you can add the same deduction which you are having for setting up to an employee to other employees by assigning it to them.

Steps to Attach a Deduction Item to Employees in QuickBooks Online Payroll

The steps are given below:

• First, you have to select workers and then click on employees.
• After this, you have to select an employee from the list.
• In this step, you have to click on the edit option which is present next to the Pay.
• Then, in section 5 you have to select +add a new deduction option or you can select +add deduction.
• Now in the deduction/contribution drop-down menu, you have to choose the existing deduction which you want to assign to your employee.
• Then from the amount per pay period icon, you have to choose the $ amount or you can choose % of gross pay and then enter the $ amount or percentage. You have to do the same for the company-paid contributed as applicable.
• At last, you have to click on ok and then click on done.

Steps to Attach a Deduction Item to Employees in Intuit Online Payroll Full Service

If this will be a new deduction for the Intuit Full Service Payroll customers, then you have to contact Intuit for setting up a deduction.

• First, you have to select the employees.
• After this, you have to select an employee from the list.
• Then you can see the deduction and contribution section, in that you have to click on the edit option.
• Now, you need to select the add new deduction or contribution option.
• In this step, in a new window, you have to select the name of the deduction you will like to add.
• Here as suitable, you need to define the per-pay period deduction and then the annual maximum for the deduction you are going to add. Then you have to do the same for your company contribution.
• At last, just click on done.

Steps to Attach a Deduction Item to Employees in Intuit Online Payroll Enhanced

Attach a deduction item to employees for Intuit Online Payroll Enhanced:

• First, you have to go to the employee.
• After this, in the deduction and contribution section, you have to select the edit option.
• Now, you have to select add a deduction.
• Then from the deduction drop-down menu, you have to select the existing deduction which is displayed there. And then you have to select a deduction for your employee.
• Here as suitable, you need to define the per-pay period deduction and then the annual maximum for the deduction you are going to add. Then you have to do the same for your company contribution.
• At last, you have to click on the save option and then click on ok.

Voluntary Deduction Guidelines of QuickBooks

Here are the guidelines for deductions, have a look:

Retirement Plan Deductions And Contributions

Now in this, there are many retirement plan contribution which is tax-deferred. So, this means that the employee’s wages are reduced by the amount of the contribution previously convinced taxes are calculated.

Cafeteria Plan/ Section 125 Plans and Flexible Spending Accounts

A cafeteria plan is known as the section 125 plans then your employees can pay medical, dental, and vision insurance premiums with the help of pretax paycheck deduction.

Here pretax deduction used to come out from the taxable wage item. They will not be deducted from the payment type wages. But for the deductions like the retirement plans, health insurance, health saving accounts (HSA) plans, or the flexible spending accounts (FSA) here your provider will be helping you for deciding the amount to be withheld, and also it determines the taxability.

Health Savings Account Contributions And Limits

An employee is eligible t set up a healthy saving account (HSA) only when they will satisfy all federal requirements which are participated in a high deductible health plan (HDHP). So, you and the employee both can able to contribute to their health saving account (HSA).

Last Words

Now we end this blog here, hope the information which is provided by Pedily is helpful to you. Here we have discussed how to set up voluntary Payroll deductions in QuickBooks, the difference between deduction and contribution, types of voluntary deduction (QuickBooks Online Payroll, Intuit Online Payroll Full Service, Intuit Online Payroll Enhanced), etc. Hope you like it, and still if in case, you face any problem then you can contact and take help from QuickBooks ProAdvisor and can get rid of your issues.