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

deductions on employee paycheck CPE Course

2 Credits


Subject Area


Webinar Qualifies For

2 CPE credit of Taxes for all CPAs

2 CE credit of Federal Tax for Enrolled Agents ( IRS Approved : GEHNZ ) (Approval No. GEHNZ-T-00717-21-S)

2 CE credit of Federal Tax Subjects for California Tax Professionals (CTEC Approved - 6273) (Approval No. 6273-CE-0672)

2 CE credit of Annual Filing Season program (AFSP)( IRS Approved : GEHNZ )

2 CPE credit for Certified Management Accountants (CMA)

2 CPE credit for Certified Internal Auditors (CIA)

2 CPE credit for Internal Audit Practitioner (IAP)

2 CPE credit for Qualification in Internal Audit Leadership (QIAL)

2 CE credit of Federal Tax for Oregon Tax Preparers (Approval No. GEHNZ-T-00717-21-S)

2 CE credit of Federal Tax for Maryland Tax Preparers (Approval No. GEHNZ-T-00717-21-S)

2 General Educational credit for Tax Professionals / Bookkeepers / Accountants

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Before starting this self study program, please go through the instructional document.


  • Types of deductions
    4 mins
  • State income tax
    16 mins
  • Allowable disposable income
    27 mins
  • Deducting for fringe benefits
    39 mins
  • Deducting for breakage or shortage
    61 mins
  • Deducting for advanced vacation
    85 mins

Course Description

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 control 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.

Learning Objectives

  • To explore which taxes are mandatory, which are a courtesy, and which one the employee controls.
  • To recognize when federal and state wage and hour laws permit recouping overpayments to employees.
  • To analyze the limits that govern deducting for child support, tax levies, and creditor garnishments as opposed to voluntary wage assignments.
  • To identify the rules and regulations for deducting for cash shortages and breakages.

Who Should Attend?

  • Accountant
  • Accounting Firm
  • Accounting Managers
  • Business Owner
  • Business Student
  • Certified Public Accountant
  • Chartered Professional Accountant
  • CPA (Industry)
  • CPA - Mid Size Firm
  • CPA - Small Firm
  • CPA in Business
  • Senior Accountant
  • Staff of Accounting Firm
  • Young CPA