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Check Codes
Details
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.
- 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.