This tutorial shows how to set up Severance Pay inside Payroll Mate® software.
Severance pay is an agreement between an employer and an employee (or the employee’s representative) sometimes granted to employees upon termination of employment. There is no requirement in the Fair Labor Standards Act (FLSA) for severance pay. Severance earnings are taxable payments to an employee that are separate from regular wages. The amounts are included in the wage base and used to calculate percentage-driven deductions such as 401(k). https://www.irs.gov/publications/p957
Summary of Steps
This is just a summary; please click “Download Tutorial” for detailed instructions with screenshots.
- Click → Company from shortcuts
- Click → Income Categories
- Click → Add
- Enter Title for income
- Select Pay Type from dropdown menu
- Review/Edit Taxes or Deductions applied as needed
- Click → OK
You will need to apply the severance pay income to each employee as needed
- Click → Employees from shortcuts
- Select an employee from the list
- Click → Edit
- The Modify Employee Wizard will open, Click → Next until you are on the Incomes page
- Checkmark to select Severance Pay income and enter pay rate as applicable, Click → Next until you reach the end of the wizard
- Click → Finish to save
- Repeat employee steps for each applicable employee