First, before you apply any employee deductions you must receive employee authorization to deduct items such as health insurance, dues, child support, 401K, etc. The employer is then responsible for deducting these amounts from the employees check.
Payroll Filing Status:
The employees income tax filing status is reported, such as single, married, head of household or married filing separately.
Total Gross Pay & Allowances:
Your employees total gross pay for the period without any deductions. Your employees are allowed to claim allowances to decreased their Federal withholding. The Quickbooks payroll deductions online calculator is a tool you may want to check out to determine your allowances. Each allowance is $4,000 in deductions for the employee. It is up to the employee to determine the number of allowances they have and how many they want to report, this is tied to the number of dependents they have.
Payroll Deductions Video:
Calculating Pension plan withholdings using Quickbooks – 401k and 403B
Quickbooks makes it easy to enter deductions for employee 401ks and 403Bs. These are tax deferred retirement accounts that will lower their tax withholdings. These types of deductions are limited to 80% because of FICA taxes. Also, quickbooks provides continuous updates of the max contribution amounts. Currently, the max contribution for 401k and 403b is $18,000 a year if you’re under the age of 50 and 24k if you’re over 50 yrs old.
The 2016 trial provides a free Quickbooks payroll deductions online calculator for 2016 & 2017 that computes all of your payroll numbers for you.
To see how easy it is to enter this information feel free to give the free Quickbooks trial a spin!
Health Insurance and Other pre-tax Deductions
Employees health insurance premiums will be deducted from their paycheck. These amounts are not part of FICA or employee Medicare taxes. You will also enter any deductions that is applied with pretax income but will be taxable per FICA and Medicare.
The Quickbooks online version will perform all of these calculations for you and makes it a life saver for small businesses out there.