Declining balance deductions function a bit differently than its permanent and/or temporary/variable counterparts. The deduction has an 'opening balance' which continues to deduct automatically every pay period until the balance is zero, and will look across payroll years. Some examples include garnishments and employee loans or advances.

This article will explain the definition and provide examples of declining balance deductions. For more information on temporary payroll categories, please refer to https://go.helpdesk.paymatesoftware.com/wiki/spaces/CUSTKB/pages/2494687.

Creating a Declining Balance Deduction Payroll Category

1. Go to Payroll > Payroll Setup > Payroll Categories. 

2. Click the "+ New" button to create a new payroll category. 

3. Select the 'Permanent Deduction' classification. 

4. One of the dropdown fields at the top of the page is "Basis". By default, it's set to 'Salary', but you will want to change this to 'Declining Balance'.
   

5. Enter the required fields, such as "Code" and "Name". 

6. Enter the additional fields as required.

7. On the right-side of the setup page, identify which taxes this deduction payroll category should deduct before.

8. Click the save button to save your changes. When saving the payroll category, the system will ask you if you want to add it to all employees. 

Tip: Ensure that you enable your new payroll category in the first step of the payroll wizard (Select Pay Period) when processing your next pay run. By default, new payroll categories are inactive in this step. 

Assigning the Declining Balance Deduction Payroll Category to Employees and Setting the Balance

Note: When adding a new payroll category, the system will ask you if you want to add it to all employees.

1. Go to Payroll > Payroll Employees > Assign Payroll Category. 

2. Select the employee to whom you want to add the declining balance to. 

3. If you haven't yet assigned Click "+ Add" and select the declining balance deduction payroll category. If you've already assigned the declining balance deduction payroll category when you created it, find the payroll category in the assigned list and click the 'edit' button. 

4. Enter the required fields.

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   1. "Amount" refers to the amount that will be deducted each pay. 

   2. "Opening Amount" refers to the amount that was already paid prior to January 1. The system will take the opening amount + year-to-date amount (paid) until it reaches the 'declining balance'. In the above screenshot, $75.00 will be deducted every pay from Pamela's paycard until it reaches $500.00 (i.e. for weekly pay periods, that will be about 7 pay periods - $75.00 for the first 6 pay periods, but $50.00 in the 7th pay period). 

   3. "Declining Balance" refers to the full balance that should be deducted (i.e. the maximum to deduct for the employee). 

5. Click "Save" to save your changes.