Adjustments are used to modify employees' gross pay by an addition to, or a deduction from, their pay. Whether or not you can use the same adjustment for multiple employees depends on the accounts that you use. If you do not use separate accounts to track the adjustment amount for each employee, you can use the same adjustment. However, if you have different accounts for each employee, you must separate adjustments.
Common adjustments include:
- Additions — An amount or percentage added to an employee's pay, such as a Christmas bonus or receiving Social Security monies. The amount is distributed to a debit (Expense) account.
- Deductions — An amount or percentage deducted from an employee's pay, such as Health Insurance. The amount is distributed to a credit (Liability) account.
- Contributions — An amount or percentage that is neither added to nor deducted from an employee's pay, such as an employer's Tax Deferred Annuity. This is an employer contribution which is distributed to both a debit and a credit account because a contribution is an expense to the organization and a liability that must be paid.
- Group-Term Life Insurance — An amount that is neither added to nor deducted from an employee's pay. However, the amount is included as wages in boxes 1 (Wages, tips, other compensation), 3 (Social Security wages), and 5 (Medicare wages and tips) of the W-2. The amount is subject to social security, Medicare, and state withholdings. State withholdings are dependent on the state for which the W-2 is created. The amount is not subject to federal withholdings. This adjustment is used to track the cost of life insurance coverage over $50,000 provided to an employee. The adjustment is not assigned an amount until it is associated with the employee record and is not distributed to an account.
In Payroll Define Lists, you can: