Payroll Deductions in 2024: What Can and Cannot be Deducted from an Employee’s Wages

Description

After calculating gross wages for an employee is accomplished, much more difficult decisions must be made.  What must an employer deduct from an employee’s wages? What can be deducted legally? What can never be deducted? These questions and more must be answered correctly before processing that paycheck. And if this is the employee’s final check…the rules may change! Handling deductions is a complex task that payroll must get right every time for every payroll check.  Failure to deduct the proper taxes could result in penalties on the employer from the IRS but making an illegal deduction for a fringe benefit or for collecting an overpayment can get the employer a visit from the federal Department of Labor auditor, the state department of labor auditor or both! Sometimes the federal government will allow the deduction but that certain state won’t.

Of course, everyone knows that payroll deducts for federal and state taxes. However, how much input does the employee have concerning these deductions? This will be answered in this webinar. Which taxes are mandatory, which are a courtesy and which ones the employee controls will be explained during this webinar.   If the IRS or the state wants payroll to collect for back taxes; how is that processed?  What does payroll do if a “payday loan” deduction is received as opposed to a creditor garnishment? Which ones must we honor and why. We will discuss this during this webinar.

Fringe benefits are a normal part of payroll for most employees.  Deducting for voluntary fringe benefits such as health insurance or group term life can usually be an easy task.  But what about health insurance under a medical support order?  Does that change how it is processed by payroll? We will discuss processing voluntary and involuntary health insurance deductions.

Areas Covered

• Taxes—which are mandatory, which are a courtesy, and which ones the employee controls
• Child support—the limits but not beyond
• Tax levies—federal and state
• Creditor garnishments—how many can you honor and how often
• Voluntary wage assignments for “payday loans”—when are they required to be honored
• Handling fringe benefits such as health insurance or group term life
• Uniforms—when the employer pays for it and when the employee furnishes it
• Meals—when they become part of the employee’s wages
• Lodging—when it is part of the employee’s wages and when is it a perk
• Shortages—the employee came up short, so they must cover that right?