Benefits and deductions impact employees' taxable earnings. Proper entry ensures that benefits and deductions are accurately reflected on Form W-2.
Types of Benefits
Benefits are compensation provided in addition to an employee's salary or hourly wages. Benefits available to add to an employee's pay with Wave's full-access payroll subscription include:
- Bonus
- Commission
- Allowance
- Expense reimbursement
- Dismissal pay
- Shareholder medical premiums, also known as the 2% Shareholder Health Insurance Benefit
To learn about a benefit, add a benefit to an employee, and Wave will list more information.
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is not supported through Wave’s payroll feature.
Types of Deductions
Deductions are funds taken from an employee’s paycheck for things like insurance, medical, or retirement plans. It is your responsibility to ensure that contributions do not exceed IRS contribution limits.
Deductions available to add to an employee's pay with Wave's full-access payroll subscription include:
- Roth 401(k) Employee Contribution
- Cafeteria Plan (Section 125)
- 401(k) contribution
- HSA Contribution
- FSA Dependent Care Contribution
- FSA Medical Contribution
- Simple IRA Employee contribution
To learn more about a deduction, add a deduction to an employee and review the information shown in Wave.
If an employee has been marked as a 2% shareholder, they cannot receive Section 125 or HSA contribution deductions.