Withholding Types

How Deltek calculates a given withholding and how a withholding affects taxable wages depends on Configuration settings, including the withholding types that you specify.

In Configuration, you specify:

• Whether or not to exclude 401K and/or Cafeteria 125 contributions, as specified on the Payroll Withholding Setup form.
• Whether or not to deduct other pay amounts before calculating withholding, as specified on the Payroll Withholding Setup dialog box.
• User-defined instructions for determining tax calculations per withholding, as set on the Payroll Withholding Setup dialog box.

You also specify the Withholding Type, on the Payroll Withholding Setup form. Withholding types are standard in Deltek. You can delete withholding codes created from any withholding type.

Withholding Type	Description
Federal	Deltek calculates the federal tax withholding according to tax tables based on those that appear in IRS publications. These tax tables are based on an employee’s wages, filing status, and exemptions. By default the Payroll application includes federal tax withholding and current federal tax tables. If tax tables change, Deltek notifies you when the new tax tables are available.
FICA-HI	Deltek calculates the FICA-HI (Medicare) withholding for the pay period by multiplying the employee’s gross pay for the pay period by the FICA-HI percentage. If you select this type, Deltek recommends that you select the System method from the Method field. The System method uses an internal Deltek table to obtain the employee’s and employer’s percentage. The Payroll application ships with the current year’s FICA-HI percentage.
FICA-OASDI	Deltek calculates the FICA-OASDI (Old Age and Survivor Disability Insurance, Social Security) withholding for the pay period by multiplying the employee’s gross pay for the pay period by the FICA-OASDI percentage. When the employee’s year-to-date gross pay reaches the FICA-OASDI wage base, no more FICA-OASDI tax is withheld. If you select this type, Deltek recommends that you select the System method from the Method field. The System method uses an internal Deltek table to obtain the employee’s and employer’s percentage and a wage base for each employer and employee component. The Payroll application ships with the current year’s FICA-OASDI percentage and FICA-OASDI limit already in place.
State	Deltek calculates state tax according tax tables based on IRS publications, similar to the way Deltek calculates federal withholding. If your state does not have a state tax, you do not need to set up a state tax withholding.
Local	Deltek provides local tax tables. If an employee is subject to a local tax other than those built into Deltek, you can set up a local tax withholding that withholds a fixed amount or a percentage of gross pay each pay period. If this is the case, you select Other from the Type field, select Amount, Percent, or None as the withholding Method, and manually enter the amount or percent to withhold from employee pay. Be sure that Local is selected in the Box to include on W2 field, to ensure that this withholding prints in the appropriate box on the W2 form.
401(k)	A 401(k) is a tax-deferred compensation plan in which contributions are not taxed until they are withdrawn (usually after retirement). Deltek deducts a 401(k) contribution from an employee’s gross pay before calculating federal and most state and local tax withholdings. Any 401(k) amount withheld is automatically printed on the W-2 Form.
Cafeteria	A 125/Cafeteria withholding allows an employee to select from a menu of benefits. The 125/Cafeteria withholding works the same way as the 401(k) withholding, except 125/Cafeteria plans are not subject to FICA withholdings. Some states do not allow 401(k) and/or 125/Cafeteria contributions to be deducted from gross pay for the purpose of calculating state income tax. If your state belongs to this group, Deltek calculates the state tax before deducting 401(k) and 125/Cafeteria contributions.
Other	Any other tax/non-tax withholdings, including medical insurance, charities, and savings plans, are listed as other withholdings. You can specify a fixed amount or a percentage of the employee’s gross wages to be withheld each pay period. You can use the Additional Deductions from Wages grid on the Payroll Withholding Setup dialog box to determine how any withholding affects taxable wages. You can also create a user-defined withholding and establish your own rules for how the withholding affects taxable wages. For example, if you need a withholding that is subject to state tax but not subject to federal tax, set up a user-defined withholding. You would typically select Other as the Withholding Type for these types of company-specific withholdings.