Most employers who provide payroll for their employees withhold deductions from employees’ paychecks. There are times, however, when some deductions cannot be withheld for a variety of reasons.
In some cases, the employee does not have enough wages to cover the deductions assigned to him for a given payroll cycle. This may make it necessary to track and withhold these deductions in future paychecks. When it comes to tracking those deductions, Dynamics GP Payroll offers employers an automated way of tracking and then withholding the deductions—Deductions in Arrears. It is part of the Payroll Extensions functionality.
Turning on the Functionality
To use this functionality, you must install the Human Resources and Payroll Suite from the Dynamics GP media. While the title may be misleading, it includes four separate groups of functionality. One of these groups is Payroll Extensions. There is no additional charge for Payroll Extensions if you are licensed for Payroll.
Setting Up Deductions for Arrears Tracking
To set up deductions for Arrears Tracking, go to the HR & Payroll Area Page and select “Deductions” in the Setup menu.
The image below is the Deduction Setup window in Dynamics GP 2013; the image will be very similar in GP 2010. The three items circled fields pertain to arrears tracking. The settings on the setup window can be rolled down to employee deductions and will serve as the default settings when deductions are assigned to employees.
If you check this box, the system will enable tracking of amounts in arrears for this deduction. It does not mean the system will try to withhold the arrear amounts, but it does enable you to track the amounts in arrears in a window designed specifically for this purpose.
If you mark the “Allow Arrears” checkbox, you can choose this option, which is useful for the deductions that must be tracked, even if the employee did not receive a checkbox during a payroll cycle. For example, if an employee did not work in a pay cycle but you need to track the deduction amount that would have been withheld, you can mark this checkbox. Once payroll is run, the system will update a window with the amount of the deduction so it can be withheld from the employee’s next paycheck.
Collect When Possible
If you have tracked the deduction arrear amounts, this checkbox offers the system the ability to automatically withhold the arrear amounts on the next paycheck. There are two options with regards to this checkbox. If you mark the checkbox, the system will attempt to withhold deductions in arrears on any paycheck, regardless of the deduction normally being withheld. If you do not mark the checkbox, the system only will withhold deductions in arrears if the deduction already is being withheld.
For example, many companies have certain pay cycles when some deductions are not withheld. If you mark the checkbox, the system will try to withhold any arrears amounts even if the deduction is not being withheld. If you do not mark the checkbox, the deduction in arrears will not be withheld.
Calculating Mandatory Deductions
Mandatory arrears are calculated during the payroll process. If you want to track mandatory arrears, you must use this window during the payroll process. Therefore, if you have a payroll checklist, you will need to edit it to include this step.
To use this function, you first must print and post the checks for the cycle. The window requires that you provide a check date range to include the check dates posted, so you must already have posted your checks.
On the Payroll Transactions menu, select “Mandatory Arrears.”
This window is pretty large as GP windows go. Let’s walk through the screen to understand the fields.
Arrears Template ID – This option enables you to create templates for each deduction you want to use in this window. This field is new in GP 2013.
Check Date – You can enter a date range for check dates to include mandatory deductions. Note: The employee must not exist in a check run to have a mandatory deduction calculated. (After all, the purpose of mandatory deductions is to calculate deductions for employees who are not included in paychecks.)
Scrolling window – Once you enter a check date range, you will see the check runs included in the date range. Mark the dates for which mandatory deductions should be calculated.
Deduction Frequency – Select the frequency for withholding the deduction. This frequency must match the employees’ deduction code frequencies.
Deduction Code – Select the deduction code for which mandatory arrears will be calculated. You guessed it! You calculate mandatory deductions one deduction/frequency at a time.
Include $0.00 – By marking this option, you can include more data in the window below.
Employee scrolling window – Mark each employee for whom mandatory arrears should be calculated.
Calculate – Click this button to calculate the mandatory arrears.
Post – This button will create arrears transactions for all selected deductions in the bottom scrolling window.
Post Batches – This button works in conjunction with the Arrears Templates functionality; it enables you to select multiple templates and post them at once.
Viewing & Maintaining Deductions in Arrears
Go to the Payroll Cards menu and select “Arrears Transactions” on the list.
When you click the menu option, you will get the Arrear Transactions window.
Notice the transaction created for the employee used in the Mandatory Arrears window. You can see the INS1 deduction was created as an arrears transaction. There are fields for tracking the original amount, how much has been collected, an adjusted amount and how much is remaining. The status field shows if the arrears transaction is being processed. If there is a USER ID in the field, there is a payroll process active.
There is a “Go To” button on this window with links to two windows as shown below.
Deduction in Arrears Report
When you run the “Build Checks” process, the first available report is the Deductions in Arrears Build Report.
This report shows all the employees on the build and, for those employees with arrears transactions, the deductions in arrears with the amount remaining.
To help employers manage deductions not collected during a pay cycle, Dynamics GP provides arrears tracking. You can set options for each deduction. The Mandatory Arrears window enables you to calculate arrears for employees who miss a pay cycle. The system can automatically withhold deductions in arrears in future paychecks.