Deducting from an Employee’s Paycheck: When Can it Be Done?

After calculating gross wages for an employee is accomplished, much more difficult decisions have to 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!

Of course, everyone knows that payroll deducts for federal and state taxes. However, how much input does the employee have concerning these deductions? Which taxes are mandatory, which are a courtesy and which one the employee controls will be explained during this CPE 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 CE webinar. 

Major topics covered in this CPE/CE course:

• 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 have to cover that right?
• Breakage—you broke it so you have to pay for it, legal or not
• Overpayments—the employee was overpaid so you can just take the money back, or can you?
• Advanced vacation pays—the employee knows the vacation hours were advanced so we can take them back when the employee quits, can’t we?
• Loans to employees: what terms can be set while the employee is still active and what can be taken when the employee terminates
• Employee purchases—active employees and terminated employees
• Anti-wage theft laws and the states

Handling deductions is a complex task that payroll must get right every time for every payroll check. Failure to deduct the proper amount of 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!

In this CPE/CE course we will discuss these topics and much more as we learn what you can and cannot deduct from an employee’s paycheck.