Deduct Allowances from Regular Time

[angelines]

Our payroll system is set-up in such a way that the non-taxable allowances (travelling, meal, periodical) are included in the regular rate.

Is there a way to deduct a percent of the gross to show as the allowances before the tax is calculated? Or do you have to put the allowances as a separate earning, meaning we have to adjust our hourly rate?

Please assist. Thanks.

[shaunw]

We always recommend that you do not combine line items together, because its impossible to split them up again. For example if you want to know what you paid in travel at the end of year, if its all bundled together as "Regular Earnings" its impossible.

Having said that, you can create a deduct a percent from the gross earnings before taxes are calculated by simply creating a Employer Deduction Pay Stub Account called something like "Non-Taxable Allowances" then create a Tax / Deduction using a percent calculation that deposits whatever percent you specify to this account, since its an employer account, its not actually deducted from the employees pay of course. You can then edit your income tax / deduction entries and exclude this Non-Taxable Allowances account from the calculation.

[angelines]

Ok thanks, I'll try this and see how it works.

[angelines]

Hi,

How do you create allowances that are based on the amount of days employee has worked? For example: travelling allowance - there's a daily rate, how do I set it to check the amount of days employee has worked so it can multiply the rate by the number of days.

Thanks.

[shaunw]

That is usually handled as a premium policy. If you setup a Travel premium policy that pays the employee a minimum of 1hr and a maximum of 1hr of travel premium for each day they work, you can multiply that by specific rates of pay per employee or globally for all employees and it will appear on their pay stub. No Tax / Deduction is needed for this.

[angelines]

Ok, this is how our system is designed and what I'm trying to see if TimeTrex can do.

Regular hourly rate is $240
From this hourly rate there is a travel allowance at $630 daily

So let's say employee works 8 hours @ $240 = $1920
The $630 is already in the $1920
But before I can calculate income tax I need to deduct this $630 from $1920

Can TimeTrex do this?

Thanks.

[shaunw]

What if the employee works less than 8hrs in a day, like 3hrs, or an amount of time that is less than the travel allowance?

[angelines]

The same daily rate applies, once they come to work they will get that allowance as travelling.

[shaunw]

Unfortunately I don't understand what you require.

If the employee works for one hour, and their hourly rate is $240/hr and they get $630/day as a travel allowance, and the travel allowance is included in the hourly rate, you've just defined a impossibility.

If each item was split out on its own, it wouldn't be a problem to handle for example $100/hr for hours worked and $630/day for travel allowance as their own items. But by trying to combine them into a single item you run into problems like the above and increase the complexity by an order of magnitude if its possible at all. Not to mention that you want to then split the items up later for purposes of calculating taxes.

However if all items are split out on their own within TimeTrex, it would be possible to combine them together at the last step on their pay stub with a Tax / Deduction entry.

[angelines]

Ok, I will have to suggest that these items be split to avoid this problem. I realize that it will be a major issue. Thanks for your help, I really appreciate it.

[angelines]

Hi Shaun,

Is there a way that I can import the bonuses and sales from a csv file? Employees are paid a bonus of $25 for each sale they make. Can I put the sales amount in a csv file for each employee and import it into TimeTrex?

[shaunw]

v5.0.4 of TimeTrex which will be released later today supports importing Pay Stub Amendments which will allow you to do exactly what you want.