Check Codes

Business Scenario

Normally, regular pay and vacation pay paid in advance is paid on a REG or REGULAR check code. However, putting an employee's advanced pay on the same REGULAR check (code) causes the employee's annualized income to fall into a higher tax bracket percentage.

In such a case, create a second Check Code for the advance vacation pay. When Payroll is processed and an employee is paid a VACATION check in addition to a REGULAR check, each check is taxed separately.

If a payroll run is considered a bonus run, you may want to select BONUS Check as the default Check Code when entering time. For a regular payroll run, organizations usually use a REGULAR or REG check code for most pay.

SUPRATE check codes

To tax an individual employee check at supplemental withholding rates without processing a separate payroll, pay those earnings on a check code beginning with SUPRATE. That check code can be SUPRATE, or SUPRATE1, SUPRATE2, and so on, if those check codes exist in the system.

Earnings assigned to any check code beginning with SUPRATE will be taxed at the supplemental rate automatically, and all withholding will be taxed at the supplemental rate.

Using supplemental withholding rates applies the supplemental federal withholding rate and per state supplemental withholding rates.

The SUPRATE feature was added in version 5.5.102.

Functions of Check Codes

Check Codes are used during time entry to define the type of check an earning will be paid on and an additional deduction will be applied to, as well as grouping earnings together to impact taxation of those earnings for the type of check. Defining earnings with multiple Check Codes permits multiple checks for the same employee during a payroll run.

Select a Check Code to indicate the type of check for an earning: Use check codes to define how employees’ earnings are grouped for processing. A Check Code can be selected for per row of earnings on the pay entry spreadsheet. The Check Code also appears on the Employee Auto Pay Detail for the selected earning and in the Auto Pay records created with the Wizard and in the Employee Guarantee Pay Detail (for GAWs). Typically, an organization will define Auto Pays with the Check Code that your organization considers regular pay.
Enter Additional Deductions: To add an additional Deduction to a payroll run—one that has not been previously setup on the Employee’s Deduction record—select a Deduction Code, enter the Percentage or Amount to be deducted and select the Check Code to which it is going to be applied.
Check Codes Impact Taxation: Since the system annualizes earnings for tax calculations, grouping all earnings into a single check code may result in taxes calculated at a higher tax-bracket percentage. Earnings can be paid on separate checks (different check codes) to avoid over-taxation resulting from the system’s annualized tax calculation. The payroll Check Codes Table has a Payroll Days value that identifies the number of days to tax the check when standard payroll taxation does not suffice.

Check Code and Minimum Wage: Minimum Wage Calculations become available when the Average Hours calculated by Check Code and State Code for an employee result in less than the Minimum Wage.
Manual Checks and Check Codes: Begin the process of creating a manual check on the detailed Pay Entry. Select the same Check Code for every earning that you need to pay with a manual check to group earnings on a manual check. If you have selected more than one check code on this Time Entry record, you will need to place a checkmark in the [X] column for an earning record that has the check code that you wish to create a manual check for.
Check Codes and Reporting: Check codes add additional reporting data for reports such as the Time Entry Summary Pay Code Report, which groups payroll data by Earnings Code.
Time Overrides and Check Codes: Deductions can also be overridden based on check code. You can override Deductions and Taxes for a specific Check Code by making the desired selections on the Check Overrides screen.