How to Set Up Money Types in Patriot's Payroll Software

Payroll Help

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How to Set Up Money Types

Need to customize a money type for certain payments with special tax rules, such as a housing allowance?? Sign up for our Beta release now!

What are money types?

Money Types are payments made to employees in addition to their regular wages. Examples of Money Types are Bonus, Commission, or Severance payments.

Click the Add New link. A set of blank fields will appear.

See Also:  How To Set Up Hours Types

To manage your Money Types after you have completed the wizard:

  • Settings > Payroll > Hours & Money Types. You can mark a type Frequently Used right from this list without needing to edit the money type.

As you set up your company in the wizard, you may customize your list of Money Types, depending on how your company uses them, and add an unlimited number of new ones if needed. The Money Types are listed alphabetically by description. To mark a type “Frequently Used,” check the box. Frequently used Money Types will always appear in your Payroll Entry Sheet to pay your employees by default.

To add a new Money Type:

Name: This is the long-word description for the money type that will appear on paychecks and in reports throughout the system. It can be up to 20 characters.

Include as Taxable Income: If the money paid should be included in taxable income, keep this box checked. If the money is not taxable, uncheck this box. See What Types of Income Are Taxable? for more information.

  • Advanced Options: Customize taxable income settings (This is a beta feature! Sign up here!)
  • To customize the taxable income setting for specific federal, state, or local taxes,  click the “Advanced Options” link under the checkbox labeled  “Include as Taxable Income.”
  • When a money type has the  “Include as Taxable Income” checked, all taxes will be checked by default. You can filter and search for taxes in each section for easy selections. Each section also includes a check/uncheck all checkbox at the top. Uncheck any federal, state, or local taxes as needed.  
  • ⚠️When new taxes are added in a jurisdiction, the software will automatically add them as a selection for customization and will be included as taxable income by default unless the money type is not taxable at all. 
  • You are responsible for ensuring you are setting up money types accurately. Please contact your accountant if you have any questions.

Repeating:  If this money type can be used for paying employees a set additional dollar amount each payroll in addition to their regular pay, check this box.  For more details, see How to add Repeating Dollar Payments in Payroll.

Default Repeating Amount:  If you have checked the “Repeating” box above, you can set an optional flat dollar amount for all employees who are paid this money type. You can add a custom amount on the employee’s record if needed.

Frequently Used:  Check the box to always have this money type appear in payrolls by default.

W-2 Box: This only needs filling in for certain money types. See the dropdown for the list of options. If the money type does not fit in any of these categories, leave this field blank. The money will be included in the appropriate box on the W-2. For further instructions, see IRS Instructions for Form W-2.

W-2 Label:  The available selections will depend on what was selected in the W-2 Box Number field. Only complete if the W-2 Box Number field is filled. NOTE: If you change the W-2 box number or W-2 label, the W-2 form only shows the box number and/or label that is current at the time of W-2 printing. If you are removing a box number, the W-2 will not show a box number or label for this money type.

Include When Calculating Overtime:  Check this box if this money type is a “non-discretionary” payment, meaning it is an expected part of the employee’s wages and tied to the employee’s performance.  Non-discretionary payments are to be included when calculating overtime. If this money type is used for “discretionary” payments not tied to performance, such as a gift or holiday bonus, keep the box unchecked.  Discretionary payments are not included when calculating overtime. For more details, see Including Bonuses and Commissions in Overtime.

Report Sick Pay Benefits (3rd Party Sick Pay): Only check if this money type will be used to update an employee’s wage file with taxable or non-taxable sick pay benefits paid to an employee by a third party (such as an insurance company.) If this box is checked, Box 13 on the employee’s W-2 will be checked, showing the employee received sick pay benefits from a third party as required by the IRS. Otherwise, leave this box unchecked. Do not check if an employee is enrolled in a sick pay plan but did not actually receive sick pay benefits. For more details, see the help article How To Set Up Third Party Sick Pay Reporting.  For further instructions, see IRS Instructions for Form W-2.

When viewing all of your money types, the “3PSP” column (3rd party sick pay) will indicate if you have checked this box for your money type.

[RELATED ARTICLE: Understanding Tax Forms: What Is a W-2?]

To edit an existing Money Type:

Click the Money Type name you want to edit. Keep the “Active?” box checked to use this money type on the Payroll Entry sheet. If you uncheck it, this type will not appear on the Payroll Entry sheet, but will be available for reporting. Make your changes, and click either Save or Cancel.

To delete an existing Money Type:

Click the “Delete” trashcan icon in the row of the Money Type you want to delete. If you do not see a Delete trashcan icon in that row, this Money has already been used in a payroll and cannot be deleted. Click either OK or Cancel.

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