.svg){kind=logo}
Deductions
Payroll deductions are both required and optional deductions from an employee’s pay cheque.
Deductions are amounts withheld from an employee's gross pay before they receive their net pay. These deductions are typically categorized into two main groups: mandatory deductions and voluntary deductions.
Mandatory Deductions
These include
- Federal Taxes: Federal income tax withholding is a mandatory deduction based on the employee's income and filing status. The amount withheld is determined by the IRS's withholding tables.
- State and Local Taxes: Depending on the employee's location, state and local income taxes may also be withheld from their paycheck. Additionally, Social Security and Medicare taxes are mandated by federal law.
- Fringe Benefits: While not directly withheld from the employee's paycheck, employer-sponsored benefits like health insurance, dental insurance, and retirement contributions can reduce the employee's taxable income,effectively lowering their net pay.
Voluntary Deductions
Voluntary deductions are optional withholdings that employees can choose to have deducted from their paychecks. These deductions are typically used for specific purposes, such as:
- Health Savings Account (HSA) Contributions: Contributions to an HSA can be used to pay for qualified medical expenses.
- Dependent Care FSA Contributions: Contributions to a dependent care FSA can be used to pay for child or elder care expenses.
- Retirement Plan Contributions: Employees may choose to contribute additional amounts to their retirement plans beyond the mandatory contributions.
- Charitable Donations: Employees can donate to charities through payroll deductions.
Considerations for Remote Work
Remote work can introduce additional factors that may impact deductions:
- State and Local Taxes: The state and local taxes withheld from an employee's paycheck may depend on their work location, not necessarily the company's headquarters. This can be particularly relevant for remote workers who frequently work from different locations.
- International Tax Implications: Employees working remotely in foreign countries may face unique tax considerations. It's important to consult with tax professionals to ensure compliance with both domestic and international tax laws.
Manage Payroll with RemotePass
RemotePass simplifies the complexities of payroll management for remote workers. Our platform automates payroll calculations, ensures compliance with tax regulations, and provides accurate reporting. With RemotePass, you can focus on growing your business while we handle the payroll details.
Contents
Mandatory Deductions
Voluntary Deductions
Considerations for Remote Work
Manage Payroll with RemotePass
Need help onboarding international talent?
Try RemotePassRelated Glossaries
Wage
A wage is a fixed payment for services rendered.
W2
A W2 is a tax form used in the United States to report an employee’s annual wages and the taxes withheld from their paycheck.
FX
The FX stands for Foreign Exchange (FX) Market.
Related Articles
All You Need to Know About Working as an Independent Contractor in Poland
Working as an Independent Contractor in Poland
Hear what teams love
about using RemotePass.
RemotePass has been very helpful as it streamlines the payment process to our consultants, with a simple 2 to 3 clicks the job is done. It is effortless and straightforward to use. The most important thing is that It eliminates any compliance risks we might face, and the lengthy verification process. Overall the system is excellent, and I would recommend it to other organizations.
The product has been incredibly a game-changer for us as we scaled our team globally. Creating a great first impression when onboarding remote teams. Everything centralized in one place. Love it!
Our work with RemotePass is a partnership based on trust and credibility we are proud to have. With RemotePass services, onboarding and payroll for our global team is well managed and our employees feel safe and cared for.
I was instantly impressed with the UI/UX of the RemotePass platform, it is incredibly user-friendly and the feedback I have received from the remote workers has been excellent. Having supplied contract and remote staff to clients in the Middle East for several years, I have been used to a very manual and labor-heavy process when it comes to payroll and compliance. After one demonstration from the team at RemotePass I switched from using an existing supplier, as I get better value and service using this platform.
Love it! It has been an essential tool for us, the perks of having everything at the point of my fingers. Using RemotePass has been super efficient. The platform is user-friendly and fast, and communication with customer service is truly a "gold standard".
Working with RemotePass has been extremely easy and effortless. The customer support team are second to none - always quick to respond, always helping with desire and delivering perhaps some of the best customer service we have ever encountered. Onboarding new contractors and employees is quick and easy, and we are happy to recommend RemotePass to others
RemotePass has hands down been one of the best (useful and easy to use) platforms I've worked with in the past few years!
RemotePass has been a great success partner for Amwal, it truly enabled us to be international talent friendly. Attracting top talent without the hassle of thinking how we would hire and pay abroad.
RemotePass has really helped us take the pain out of managing salary payments, contract managements, and admin work with our remote teams. They feel much more in control and more connected because of it.
RemotePass is a game-changer for us. It has made managing our remote teams effortless and has greatly improved the process of hiring, managing and collaborating with our team remotely. Highly recommended
We’re delighted to express our satisfaction regarding our collaboration with RemotePass. Their cutting-edge cloud-based platform has revolutionized our workforce and hiring procedures, enabling us to enhance efficiency and effectiveness in managing everything. It serves as a comprehensive solution that has greatly simplified our operations, making remote work effortless.
RemotePass has been so efficient for us as we have at least 60% of our team being remote. Especially for tracking if everyone has been paid out or if they have reimbursements, we don't have to manually do it one by one anymore. It's also really good since we are in compliance with each and every single one of our remote teams' place of residence.
Brilliant service. We love and we'd be using it for the years to come. Also great customer success management as well!
We love the entire system you guys have built, it's user-friendly and in particular we love the automated notifications part. Employees are automatically informed about the payment status and they receive the payment in a couple of hours after they get notified vs. manually asking us. Thanks for your ongoing support
Using RemotePass has been an absolute game-changer for our operations - knowing that we have a reliable partner on our side even in complex regions efficiently (this has previously been a big headache for us), allows our teams to focus exclusively on client service and product delivery
We were looking for a simple and affordable product and RemotePass more than delivered. RemotePass helped us streamline and manage our remote teams. RemotePass understood us as a company and provided us the support and confidence that we are compliant with regulations, our remote teams have excellent support, and that we made the right choice
.svg)
