Withholdings

Overview

Withholdings mean a certain portion of employee paycheck that are held off or deducted by the employer. Withholdings are primarily used for deducting agreed amount out of employee paychecks. Within industry, it is also called Voluntary Deduction. There are multiple withholdings in payroll that can be differentiated on the basis of pre-tax withholdings (those deducted before taxes are calculated) and post-tax withholdings (those deducted after taxes are calculated). For example, pre-tax withholdings include 401k retirement funds, Section 125, etc. while as post-tax withholdings include 401k loan, other loans, etc.

Core allows you to define a list of withholdings that represent various types of withholding deductions used by your company. You can then assign these withholdings to the employees for their payroll depending on the withholding applicable to them, e.g., 401 (k) retirement funds, 401 (k) loans, child support, medical deduction, company loan, tax levy, etc. You can also add an employer-side contribution to the withholding that adds to the total amount being withheld.

Field Descriptions

Basic Tasks

Add Withholdings

View Reports

Advanced Tasks

Export Withholdings

 

Field Descriptions

Field Name Field Description
Payroll Lists > Withholdings > Add New Withholding >
Withholding Name of the withholding code or deduction. You can use a short alphanumeric name. A single withholding code cannot be used twice.
Description A brief description of the withholding.
Category Type of withholding, e.g., Loan Repayment, Health Insurance, Wage Garnishments, Section 401(k), etc. You can create a list of relevant categories from the Withholding Categories screen.
Frequency This sets the frequency or time interval for the withholdings. For example, it can be the first pay of the month, first and third pay periods, all pay periods, beginning of the year, etc.
Balances: Reset employee and company balances at the start of the calendar year Check this option if you want Core to reset the balances for maximum withholding and employer maximum at the start of every calendar year so that the withholding deduction and contribution are applicable as long as the amount withheld and total employer contribution, respectively, do not exceed these values in a calendar year. A calendar year is always from January 1 to December 31.
Reset employee and company balances at the start of the fiscal year Check this option if you want Core to reset the balances for maximum withholding and employer maximum at the start of every fiscal year so that the withholding deduction and contribution are applicable as long as the amount withheld and total employer contribution, respectively, do not exceed these values in a fiscal year. A fiscal year can start and end at any time during the year, as long as it comprises a full 12 months. 
Employee Withholding: Calculation

You can choose how Core calculates the withholding amount to be deducted from your employee paychecks. The Standard Amount or Percent is dependent on the withholding calculation method selected here.   

  • Dollar Amount: Core deducts the withholding amount in each pay period as a fixed amount specified as Standard Amount here.
  • Gross Amount x Percent: Core deducts the withholding amount in each pay period as a percentage of the gross pay amount calculated against the applicable pay items. You must enter the relevant Percent here.

Note: For withholdings of type Wage Garnishment, the calculation is: Disposable Wages x Percent

where Disposable Wages are wages after tax and deductions

Maximum Withholding

The maximum amount that you can withhold for an employee per year. If the total withholding amount deducted becomes equal to this amount, Core does not withhold any amount pertaining to this withholding after that, unless the balance is reset at the start of a calendar year by using that option. This amount is dependent on the year-to-date (YTD) deduction. If the deduction amount in the current pay period is more than this maximum withholding, then Core either decreases the deduction amount or stops the deduction, whichever is applicable.

Company Matching: Calculation

If this withholding has an employer-side contribution, you can choose how Core calculates that amount. The Standard Amount or Percent is dependent on the employer calculation method selected here.

  • Dollar Amount: Core takes the contribution amount in each pay period as a fixed amount specified as the Standard Amount here.

  • Gross Amount x Percent: Core takes the contribution amount in each pay period as a percentage of the pay amount calculated against the pay items applicable to an employee. You must enter the relevant Percent here.

Note: In case of withholdings of type wage garnishment, there is no company contribution required. 

Maximum Withholding

The maximum employer-side contribution applicable to this withholding per year. If the total employer contribution becomes equal to this amount, Core does not include the employer-side contribution to this withholding after that, unless the balance is reset at the start of a calendar year by using that option. For instance, if the company sets $10,000 as the limit, you can enter any value up to $10,000. Employer matching stops after hitting the maximum limit. This amount is dependent on the year-to-date deduction. If the deduction amount in the current pay period is more than the maximum withholding, then Core either decreases the deduction amount or stops deduction, whichever is applicable.

Check Withholding: Pay To

The agency to which you want to pay the withholdings, say Department of Labor or Department of Revenue.

Accounts

These are the accounts that get posted for expenses and liability related to withholdings. These are pre-filled from Global Settings by default, but can be changed here.

  • Employee Withholding Liability Account: Liability account that gets credited by the employee withholding amount.

  • Company Matching Liability Account: Liability account that gets credited by the employer withholding amount.

  • Employee Withholding Expense Account: Expense account that gets debited by the employee withholding amount.

  • Company Matching Expense Account: Expense account that gets debited by the employer withholding amount.

 

Add Withholdings

Core allows you to add multiple withholding codes for an employee and uses them to calculate the withholding deductions on paychecks.

To add a withholding:

  1. Open the Withholdings screen from the side menu > Lists > Payroll.
  2. Click Add on the right panel.
  3. On the Add New Withholding screen, enter the required information.
    • Withholding: Name of the withholding code or deduction. You can use a short alphanumeric name. A single withholding code cannot be used twice.
    • Description: A brief description of the withholding.
    • Category: Type of withholding, e.g., Loan Repayment, Health Insurance, Garnishments, Section 401(k), etc. You can create a list of relevant categories from the Withholding Categories screen.
    • Pay To: The agency to which you want to pay the withholdings, say Department of Labor or Department of Revenue.
  4. Enter other details for the withholding, if needed.

    • Employee Withholding: You can choose how Core calculates the withholding amount to be deducted from your employee paychecks. The Standard Amount or Percent is dependent on the withholding calculation method selected here.   
      • Dollar Amount: Core deducts the withholding amount in each pay period as a fixed amount specified as Standard Amount here.
      • Gross Amount x Percent: Core deducts the withholding amount in each pay period as a percentage of the gross pay amount calculated against the applicable pay items. You must enter the relevant Percent here.

      Note: For withholdings of type Wage Garnishment, the calculation is: Disposable Wages x Percent

      where Disposable Wages are wages after tax and deductions

    • Company Matching: If this withholding has an employer-side contribution, you can choose how Core calculates that amount. The Standard Amount or Percent is dependent on the employer calculation method selected here.
      • Dollar Amount: Core takes the contribution amount in each pay period as a fixed amount specified as the Standard Amount here.

      • Gross Amount x Percent: Core takes the contribution amount in each pay period as a percentage of the pay amount calculated against the pay items applicable to an employee. You must enter the relevant Percent here.

      Note: In case of withholdings of type wage garnishment, there is no company contribution required. 

    • Accounts:

      These are the accounts that get posted for expenses and liability related to withholdings. These are pre-filled from Global Settings by default, but can be changed here.

      • Employee Withholding Liability Account: Liability account that gets credited by the employee withholding amount.

      • Company Matching Liability Account: Liability account that gets credited by the employer withholding amount.

      • Employee Withholding Expense Account: Expense account that gets debited by the employee withholding amount.

      • Company Matching Expense Account: Expense account that gets debited by the employer withholding amount.

  5. Click Save & Done.

View Reports

To view a report:

    1. Open the Withholdings screen from the side menu > Lists > Payroll.

    2. In the list view, click More > View Reports.

    3. Select a report from the Report List dialog. It opens in the viewer.

    4. Preview the report and then choose to export or print it.

Export Withholdings

In Core, you can export the withholdings to the Comma Separated Values file format. Core exports data from all available columns and not just the columns visible in the grid.

To export withholding records to a .CSV file, watch this video or follow these steps:

    1. Open the Withholdings screen from the side menu > Lists > Payroll.

    2. In the list view, click More > Export as CSV.

    3. A .csv export file is created and saved on your system at the default download location, say your desktop. Click to open the spreadsheet.

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