Some organizations have deductions that must be applied in a tiered manner based on the amount of income that the employee has earned. For example, the deduction rate in an IRS Tax Levy isn't applied until a certain annualized income level is earned by an employee.
Tier Sub-Tab Field Definitions
|Exemptions||Not used when configuring tiered deductions and should be left blank.|
|IsFixAmount||When checked, this indicates that a specific dollar amount will be deducted for this tier.|
|IsPercent||When checked, this indicates that a percentage of the income will be deducted for this tier.|
|IsLevy||When checked, this indicates that the entire amount between the Lower Limit and the Upper Limit will be deducted for this tier.|
|Deduction Rate||Sets the specific dollar amount or the percentage that determines the amount deducted for this tier.|
|Lower Limit||Sets the point at which the deduction for this tier will start.|
|Upper Limit||Sets the point at which the deduction for this tier will stop.|
Set Up a Tiered Transaction
Requirements for a Tiered Transaction
A tiered deduction transaction type has two requirements before it can be set up:
- The transaction type must already have been created and added to the system. For details on creating and configuring transaction types, see Transaction Type - Add / Edit Transaction Types.
- It must have a check in the Is Tiered box.
Tiered Transaction Setup Process
Important Note: Tiered transactions are configured using annualized amounts. If the transaction applies to an employee who is making $217.50 per weekly pay period, multiply that amount by 52 (the number of pay periods per year). The result, $11310.00, is the amount that the transaction should be based on.
- From the Start page, select Admin Tools from the Actions menu or click the Admin Tools shortcut button to open the Admin Tool Main window.
- Under Category, click System.
- Under Select, double-click Transaction Type to open the Transaction Type window.
- Click on the Tier sub-tab.
- Search for the desired transaction.
- Select the transaction in the grid.
- Add a check under the type of deduction to apply to this tier, e.g., IsFixAmount , IsPercent, or IsLevy.
- Enter a deduction rate, either as a dollar amount or a percentage, depending on the type of deduction it is.
- Enter the lower limit for this tier.
- Enter the upper limit for this tier.
- Press Tab on the keyboard to save your entries and move to the next row.
- Repeat the steps above until the desired tiers has been configured.
- Press the Tab key on the keyboard when finished to save the transaction.
Example of a Tiered Deduction
The following example further illustrates how a tiered transaction is configured:
No money should be deducted from this employee's income if they make less than $14,560 per year. IsFixAmount has been checked and a Deduction Rate of "$0.00", a Lower Limit of "$.00", and an Upper Limit of "$14,560.00" have been set for this tier.
The result will be that no money will be deducted if the employees income lies between $0 and $14,560.00.
$1000 should be deducted if the employee's income falls between $14,560.01 and $20,000.
IsFixAmount has been checked, "$1000.00" has been entered for the Deduction Rate, and the Lower Limit and Upper Limit have been set to "$14,560.01" and "$20,000" respectively.
If the employee earns over $20,000.01, 12.5% of all income should be deducted.
To achieve this result, IsPercent has been checked, the Deduction Rate has been set at as "12.5%, the Lower Limit has been set as "$20,000.01", and the Upper Limit has been set to "$999,999.99", effectively removing the limit.