14.0.0 and newer:
If you have a deduction based on disposable wages you will need to make it a Fixed % Apply to Disposable Wages. This basic setup is subtracting all deductions required by law (we automatically include: Federal, State, local, SS and Med) from the Employee’s gross earnings.
There are certain rules and situations on what is to be included or not included (for example tips are not included for disposable earnings and state unemployment or disability tax is included). Deduction and Additional Income setup both have a check box where you can tell the program if it should be included in the calculation of disposable wages. It is titled ” Include in Disposable Wages Calculations”.
We have not set up every situation, so you will need to research what all needs to be included in Disposable Wages for your companies situation.
13.0.0 and older:
‘Disposable’ earnings are the employees total earnings less any mandatory deductions required by law, i.e. federal, state or local taxes. This type of deduction is most often used for deductions such as garnishments and/or child support payments.
The Payroll program is not set up to calculate this on its own.
For a salaried employee, you can set up a deduction as a fixed amount and insert that amount into their deduction rate. The rate would have to be calculated by hand, first. The only time the rate would have to be changed would be if the employee’s salary changed.
For an hourly employee, the deduction will need to be set up as a variable calculation and the amount inserted into the deduction in the calculate pay screen for every payroll.