How to Set Up Money Types
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.
See Also: How To Set Up Hours Types
To add a new Money Type:
There are two places to add a new money type: in the setup payroll wizard, and in the payroll settings page of your software.
To add a money type after you are out of the payroll wizard go to Settings > Payroll Settings > Add Hours and Money.
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.
Money Type Fields
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:
⚠️ This advanced feature should be used with caution. Please consult your accountant if you have any questions about this.
Advanced options allow you to customize taxable income settings and are not an available option in the payroll setup wizard, but you will be able to edit an existing money type later in your software payroll settings.
This feature shouldn’t be used to make an employee exempt from taxes–that would be handled differently. Please check our help articles on how to make an employee exempt from taxes, or a company exempt from taxes.
- To customize the taxable income setting for specific federal, state, or local taxes, click the “Advanced Options” link under the check box 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 to the employee’s record if needed after you have saved your new money type. For example, if you always pay $50 on each pay date, adding a default amount on the employee pay info section will have that amount automatically populate on your payroll entry screen when running payroll.
To add a custom amount to the employee go to Payroll > Employee List > Select employee name > Pay Info. Add your custom amount and click save.
Frequently Used: Checking the box will have this money type show 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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