Deductions_exceed_gross

Deductions exceed gross

Issue

I used the Calculate Payroll routine and the Calculate Payroll Report has a message that says, "Deductions exceed gross" for one employee. What does that mean and how do I fix it?

Calculate payroll report

 

Explanation

When an employee's deductions exceed their gross pay on a payroll check, it means that the total amount of deductions (such as taxes, benefits, retirement contributions, garnishments, and so on) is larger than the employee's earnings for that pay period. This situation can occur for a few reasons:

  • Wage garnishments. If the employee has a wage garnishment, such as for child support, student loans, or tax levies, it could be more than the gross pay, leaving the employee with no net pay (or a negative amount). 

  • Benefit deductions. For employees with substantial benefit premiums (health insurance, life insurance, retirement contributions), if these deductions are higher than the gross earnings, it could result in no net pay or a negative payroll check. 

  • Incorrect payroll setup or errors. This might happen due to payroll errors, such as incorrectly applied deductions or overestimated amounts. Sometimes, this can happen if there is a mistake in data entry or in incorrect deduction was applied. 

  • Loan repayment or other debts. If an employee has taken out a loan from the employer (for example, an advance) or if there are other repayment obligations, these deductions might exceed their earnings for a particular pay period. 

  • Negative net pay due to retroactive adjustments. In some cases, payroll adjustments (such as correcting past overpayments) can result in a situation where the deductions for the current period exceed the earnings. 


Solution

If deductions exceed gross pay, the payroll clerk should immediately investigate the cause and correct any errors. It might also result in the employee receiving no payroll check for that period, or in some cases, even being asked to pay the balance if the negative net pay is due to an error or advance repayment. 

 

 

 

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