Check Codes

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About Codes

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Check Codes are used to define how employees' earnings are grouped for gross-to-net and payroll processing during payroll time entry and for auto-pay record creation.

The way that Check Codes group earnings affects the taxation of those earnings. Whether all earnings are grouped by a particular check code, or earnings are assigned different check codes, taxation is affected by how earnings are grouped by check code. During payroll time entry, each row of earnings requires a Check Code selection.

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.