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Post-Tax Deductions And Garnishments

Square online payroll services allows you to set up recurring deductions from an employee’s post-tax income. This feature makes it easy for you to stay on top of things like wage garnishments and cash advance deductions.

How Do Post-Tax Deductions Work?

Deductions are created and assigned to an individual employee from their profile in your online payroll dashboard. Once a deduction is set up, we’ll deduct the indicated amount from each paycheck and leave it in your bank account. For wage garnishments, you’ll be responsible for making payments to the appropriate government agency after each pay cycle.

Create A Deduction

  1. Log in to your Square Dashboard, click Team, and select an employee.

  2. Scroll to the Deductions section of the employee’s profile > click Add Post-Tax Deduction.

  3. Select or create a deduction type.

  4. Select whether the deduction will be based on a percentage or fixed dollar amount of the employee’s disposable income.

  5. If applicable, specify the total amount that should be deducted for this garnishment in the Stop Deducting At field. Once the total amount of deductions meet this amount, the final deduction will be capped to match the limit and the deduction will be automatically removed from future paychecks.

  6. Click Save.

Paying Employees With Deductions

When you run payroll or send an off-cycle payment for an employee with a deduction, you’ll see an additional Adjustments screen after entering hours and earnings. From this screen, deductions can be viewed and edited as needed.

  1. Log in to the Payroll section of your online Square Dashboard or the Square Team App > select Pay Employees > Regular Payroll or Off-Cycle Payment.

  2. Enter your employees’ hours and earnings > select Continue.

  3. From the Adjustments screen, you’ll see active deductions highlighted in blue under the Deductions column. Edits can be made by selecting on the amount highlighted in blue and selecting Save.

  4. Continue running payroll until you select Confirm Withdrawal for the pay run.

If the deduction amount exceeds the limit, the deduction will be reduced until it meets the limit. If the deduction exceeds the employee’s net pay, you’ll need to reduce the deduction amount until net pay is greater than or equal to $0.

How To Stop Deductions

If you’ve created a deduction with a limit, it will automatically stop deducting from your employee’s paychecks once the set limit has been met. Deductions can also be manually deactivated at any time.

To manually deactivate a deduction:

  1. Navigate to the Team tab and click on the employee’s profile > select the deduction.

  2. Click Deactivate.

Deactivating a deduction will set the Stop Deducting At amount equal to the Deducted To Date amount.

If you need to reactivate a deduction:

  1. Select the deduction from your employee’s profile in the Team tab.

  2. Increase the Stop Deducting At amount.

  3. Click Save.