Lesson 3.8: Master Adjustments

Beyond standard salaries and taxes, most payrolls involve additional additions and deductions. In FastFund Payroll, these items are managed in the Master Adjustments table. FastFund categorizes every adjustment into one of three specific types:

1. Deductions: Amounts withheld from an employee’s paycheck, other than taxes. Common examples include group health insurance premiums, union dues, garnishments, or employee charitable donations.
2. Other Income: Payments to employees that are not part of their normal salaries or wages, such as travel allowances, bonuses paid outside of normal wages, or expense reimbursements.
3. Contributions: Payroll items that are not added to or deducted from an employee’s net pay, but are considered a benefit for tax purposes. Examples include the employer’s matching portion of a pension plan, workers’ compensation tracking, or the value of personal use of a company car.

[INSERT SCREENSHOT: The ‘Master Adjustments’ list window displaying existing adjustments like Health Insurance, Retirement Contribution, and Travel Reimbursement]

How to Create a Master Adjustment Because FastFund Payroll is fully integrated with FastFund Accounting, you must link each adjustment to the proper general ledger account to ensure accurate financial reporting.

1. From the horizontal Main Menu, select Lists.
2. Under the DATA section in the vertical task menu, click on Master Adjustments.
3. Click the New + icon to open the adjustment entry screen.
4. Enter a Name for the adjustment and select the Type (Deduction, Other Income, or Contribution).
5. Select the Liability Account. If the adjustment is a Contribution, you must also select an Expense Account.

Defining the Calculation Method FastFund provides flexible calculation methods to match your specific policies:

• Basis: Choose either Amount (a flat monetary value) or Percentage (a percentage of the employee’s pay).
• Calculation: If you select Amount, you must define how it is calculated. Selecting Period applies a fixed amount every pay period. Selecting Hours multiplies the dollar amount by the exact number of hours the employee worked.
• Limit: You can establish a global annual maximum for the adjustment. For instance, if an employee’s maximum health insurance deduction is $1,040 a year, enter 1040.00. Once the employee reaches this limit during the calendar year, FastFund will automatically stop withholding the deduction.

[INSERT SCREENSHOT: The ‘Add new Adjustment’ window showing fields for Type, Basis, Calculation, Limit, and the Tax Exemptions grid]

W-2 Reporting Many adjustments must be reported on the employee’s year-end W-2. The Master Adjustments screen includes a W2 Reporting drop-down menu that contains all official IRS codes for Box 12 (such as Code E for Section 403(b) deferrals) and Box 14.

Tax Exemptions (Pre-Tax vs. Post-Tax) The Tax Exemptions grid at the bottom of the window dictates whether an adjustment is treated as pre-tax or post-tax.

• Pre-Tax: If an adjustment (like a 403(b) contribution or certain health premiums) reduces the employee’s taxable income, check the Exempt box next to the applicable taxes (e.g., FIT, SIT, Medicare). FastFund will deduct the adjustment amount before calculating those specific taxes.
• Post-Tax: If an adjustment (like union dues or a garnishment) does not affect taxable income, leave the tax boxes unchecked. FastFund will deduct the amount from the net pay after all taxes are calculated.

Important Security Rule: Once an adjustment has been used in a posted payroll batch, its Tax Exempt status is permanently locked to protect historical data integrity. If an adjustment’s tax status was set up incorrectly, you cannot edit it. You must mark the old adjustment as Inactive and create a brand new one.