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Process Gross to Net

When a pay run is processed, the payroll engine automatically completes gross-to-net processing.

After all time entry and adjustments are entered, the payroll process is ready to begin.

ross-to-net processing calculates gross wages (all wages worked), minus employee pre-tax deductions, minus employee-paid taxes, minus employee post-tax deductions, resulting in the net (final) payment amount.

The system value to perform annual tax adjustments is $0.01.

During gross-to-net processing, as taxes and deductions process, the final net amount to pay is reduced. For instance, in some cases, the net pay may only equal 60% of the gross figure. In such a case, even if the effected employee requested 50% of his/her pay to be distributed to checking and 50% to be distributed to savings, the actual dollars may be only 30% of the effected employee's gross pay, after all tax levies, garnishments, taxes, and deductions are subtracted from the employee's gross pay.

Gross-To-Net Processing

Processing a Payroll to Gross To Net

• For deductions, the "Process Sequence" number determines the order in which funds are subtracted from available wages.
• Taxes are processed in order by type and within the type by Process Sequence number.

When the gross-to-net completes, payroll registers can be reviewed. 

Automatic Gross-To-Net Processing

Gross-to-net processes through ten pre-defined processing steps.

1. Initialize work files and reset accumulators. Work files are temporary files created by the system to calculate the current payroll.
2. Begin with earnings and calculate all wages for time records to preliminary gross-to-net.
3. Check for and process any Guarantee pays. System reserves guaranteed amount and processes any tax levies or garnishments for Disposable Wage Accumulator (reserving the guaranteed amount, and processing any tax levies or garnishments for the Disposable Wage Accumulator).
4. Process pre-tax deductions.
5. Process pre-tax arrears.
6. Process all Taxes. Taxes process in the following order by category, and within each of the following categories by sequence number before processing taxes in the next category:

1. FICA
2. MEDICARE
3. FUTA
4. SDIS
5. SUI
6. FIT
7. SIT
8. LOCALS

Note:  If at this point the disposable wage accumulator amount is zero, the system can be set to ignore deductions or to keep track of deductions to process for payment when funds are available.

7. Process deductions.
8. Process deduction arrears.

Note:  A maximum amount can be defined to increment additional deduction amounts taken over time until arrears are paid.

9. Add back the amount reserved in the guarantee-pay step to the disposable wage accumulator if any pay was reserved.
10. Process net pay distributions to check or direct deposit.

Popular Payroll Gross-to-Net Verification Reports

The following three reports are the most popular payroll gross-to-net verification reports.

• PAY00029, Pay Run Task Warning Message Report
• PAY00009, Time Entry Detail Report
• REG00003, Pay Run Register Detail Report

If there are errors or corrections to be made, click the "Reset" button to reset the entire payroll process.  At this point, make any and all corrections needed.  Once the corrections are made, return to the Pay Run Task Manager and process the gross-to-net again.