Post-Tax Deductions for Payroll

Post-tax deductions are applied after calculating the tax on an employee’s wage. Garnishments are considered a type of post-tax deduction.

Post-tax deductions might include:

• Repaying a loan from an employer
• Collecting employee union dues
• Collecting charitable contributions
• Collecting a child support garnishment
• Collecting a federal tax lien

Arcoro Payroll offers two types of post-tax deductions: child support garnishments and deductions. These two types have different configuration requirements:

• Child support deductions are for child support garnishments only.
• Deductions are for everything else: non-garnishment deductions and non-child support garnishments. 

This resource will cover how to create and maintain Deductions, while child support deductions are covered here.

Setting Up a Post Tax Deduction for an Employee

In Payroll, navigate to the People section tab and select the employee for whom you need to set up the deduction. Select the Deductions tab.

IMPORTANT: The Benefits tab is used for setting up pre-tax benefit deductions, while the Deductions tab is for all post-tax deductions. The exception to this is Roth retirement deductions, which should be set up under the Benefits tab.

1. Click Add Deduction.
2. Input the requested fields to ensure a complete deduction setup.
   • Deduction (required) - Each unique deduction will create a new column for reporting and check stub line. Use a consistent description across employees to combine amounts for reporting. (ie use "Loan" for all employees rather than "Loan" and "Loans" as this will create two separate reporting columns.
   • Total Amount (optional) – enter the total goal for the deduction.
     • Example: total amount of a loan owed by employee
   • Annual Limit (optional) – used to designate an annual limit to be deducted each year. This resets every calendar year.
   • Amount (optional): the per pay period amount to deduct.
   • Percent (optional): the per pay period percent of total gross wages to deduct.
   • Start Date (required) - the date when the deduction amount should start being calculated. If the start date falls within the pay period being processed for payroll, the deduction will be applied.
   • End Date (optional) - for deductions that apply on an ongoing basis, do not set the effective end date.
3. Click the green checkmark ✓ to Save.

One-Time Post-tax Deduction Example

Set both the start date and end date to the pay date in which the deduction should be applied. Enter the same amount in the amount and total amount fields to apply the full deduction to a single payroll. In the example below, this employee will have $50 deducted one time on the 2/7/25 pay date.

Deduction Sequence in the Event of Insufficient Net Pay

Arcoro will apply post-tax deductions in ascending order by the deduction’s date of creation. Any deductions that result in a negative employee net pay will be skipped and a warning will be added to the impacted payroll item in the payroll.

Deleting Post-Tax Deductions

Deleting a post-tax deduction will remove it forever. Post-tax deductions should only be deleted if they were created by mistake. If a deduction should no longer be applied to payroll, enter an end date to inactivate it.

How to add a Garnishment (Non-Child Support)

In Payroll, navigate to the People section tab and select the employee for whom you need to set up the garnishment. Non-Child Support Garnishments can be added under the Benefits & Deductions tab.

1. Click Add Child Support
2. Input the requested fields to ensure complete deduction setup.
   • Description (required) – Use the Description field to specify the type of garnishment (e.g., Federal Levy, Bankruptcy, Student Loan) Each unique description will create a new column for reporting and check stub line.
   • Total Amount (optional) – If applicable, enter the total goal for the deduction.
   • Annual Limit (optional) – used to designate an annual limit to be deducted each year. This resets every calendar year.
   • Amount (optional): Depending on the notice, enter the per pay period amount to deduct
   • Percent (optional): Depending on the notice, enter the per pay period percent of total gross wages to deduct.
   • Start Date (required) - the date when the deduction amount should start being calculated. If the start date falls within the pay period being processed for payroll, the deduction will be applied.
   • End Date (optional) - for deductions that apply on an ongoing basis, do not set the effective end date.
3. Click the green checkmark ✓ to Save.

NOTE: Non-Child Support Garnishments cannot be remitted by Check, our payroll partner. The Employer will be responsible for submitting these amounts to the garnishing agency.

Overriding Post-tax Deductions for a Single Payroll

There are certain situations in which an employer will want to change the amount deducted for a post-tax deduction for one payroll only, without affecting the amount that is deducted on future payrolls. The deduction override feature in payroll can be used to accomplish this for any post-tax deduction, allowing for one-time modifications to deduction amounts at payroll and payroll item create/update time.