Local Deduction Codes

The Local Deduction Codes (LDC) are used to set up and maintain a list of user-defined employee deductions such as insurance, child support, 401K plans, and local taxes. The codes are linked to a general ledger account and to one of the six deduction accumulators on the payroll check stub (Payroll > Properties > Misc Pays / Deds Tab). Up to twenty LDCs may be linked to a single employee.

Use the LDCs to set up local payroll tax deductions which may be applicable to a job site location and the LDC may then be linked to the specific job. As time card records are coded to the job, the system will automatically pick up the local tax deduction and add it to the employee's time card. LDCs cannot be used for employer only taxes.

	Local County, City, or School District Taxes
	Set Up a Local Deduction Code

Depending on the state(s) that your company does business in, your employees may be subject to various local taxes for city, county or school district tax. Each code should be linked to the proper state code. If the local tax has a reciprocal agreement with another agency, then the Reciprocal Agreement option must be enabled on both codes and an appropriate reciprocal percentage must be entered. Please refer to the document titled Understanding Local Tax Reciprocal Agreements in the Frequently Asked Questions section of the Payroll Manual for an example. Note: Only those deductions set up with a deduction type of 'Hourly' or '% of Gross' can be set up with the reciprocal option. AccuBuild will default all reciprocal agreements to 100%.

Note: If your company is located in New York, New Mexico or Indiana, or if you have employees that live or work in those states, then be sure to read the documentation in the Frequently Asked Questions section of the Payroll Manual in order to properly set up the Payroll system for the specific tax requirements for those states.

Each local tax code is then linked to the proper master file. Three local tax codes may be linked to each job. Twenty local tax codes may be linked to each employee and two local tax codes may be linked to your company's default payroll information. When calculating the local taxes, AccuBuild will look first to the job list, then to the employee's file, and then finally to your company's default information for the local tax code information. Note: If the job site and your company's office are located in the same city, then only link the local tax code to the company's payroll properties; DO NOT link the local tax code to the job.

Non-tax deductions for various garnishments can be set up using the local deduction codes as well. The benefits to setting up the deductions in this manner is the ability to list up to twenty local deductions on the Employee Information Screen, the ability to set annual cutoff limits for each deduction, and the detailed reporting on deductions which is available by employee name, collection agency and general ledger account.