Payroll Garnishments and Tax Levy Setup in Microsoft Dynamics AX
Microsoft Dynamics AX 2012 R3 and R2* can be setup with mandatory payroll deductions for garnishments (i.e. child support order) and tax levies.
In AX 2102 R3 and R2* setup can be performed using the same forms and controls utilized to setup payroll benefits. This simplifies data entry. Then one can setup disposable income requirements by specifying percentage-based limits and other data to make sure garnishment or levy does not overly reduce a worker’s net pay below the minimum for federal and applicable state, or local authorities. In addition, setup can be entered for the lifetime maximum percentage amount allowed to deduct from wages.
*If using R2 highly recommended that you apply hotfix for Garnishment enhancement which can be found in Life Cycle Service Issue search.
To setup mandatory payroll garnishments and tax levies complete the following steps:
1. Setup disposable income definitions by navigating to Payroll>Setup> Benefits>Disposable income definition.
- To add a definition click ‘New’ then enter the name and description for the disposable income definition or add to the Benefits listed for an existing disposable income definition.
Note: Because disposable income definitions are typically defined for each state, consider using the two-letter state abbreviation as the first two letters of the name of each disposable income definition. (i.e. OH for Ohio)
- In ‘Reduce total wages by the following earnings’ section click the Add select an earning code that represents the earnings that have been identified by the state as being exempt from disposable income. When total wages are calculated, earning lines that are designated by the earning code are excluded from Garnishment or tax levy.
Repeat this step to add more earning codes.
- In the ‘Reduce disposable income by deductions for the following benefits’ click the Add select benefit setup for Garnishment or tax levy (I.e. FamSO Family Support order) that has been identified by the state as being exempt from disposable income. When total wages are calculated, deductions for the selected benefits are excluded.
2. Setup benefit elements
- Navigate to Payroll>Setup>Benefits>Benefit elements.
- Open form.
- On Types tab click new to add new type.
- Enter the name and description of the garnishment benefit type. (I.e. Garnishment). In the Concurrent enrollment column, select multiple enrollments per type. This is required so that you can enroll a worker in more than one garnishment benefit or more than one tax levy benefit at the same time.
- Select payroll category Garnishment. The payroll category makes sure that the benefit follows the processing requirements that are defined by the government for garnishments or tax levies. The payroll category also determines which settings are available in the Plans area of this form. Settings that don’t apply to the selected payroll category aren’t available.
- Repeat benefit type setup for Tax levy with category Tax levy or Administrative Fees with category standard.
3. Setup benefit plans
- Select ‘Plans’ tab in Benefits elements form.
- Click New to add Benefit Plan. Enter Plan (I.e. Support order), Description, and Type as Garnishment, for Payroll impact select Deduction only.
- On Tax rule fax tab select ‘Pretax basis’ as None.
- On Payroll details tab select ‘Lock pay statement’ if you want to prevent pay statement lines with garnishment from being changed. Select payment type where garnishment should be included.
- On ‘Accounting’ tab select Main account where garnishment amounts should accumulate until paid to appropriate party.
- Repeat similar setup for Tax levy making appropriate selections.
4. Setup benefit options
- On options tab of Benefit elements form click ‘New’ to create a benefit option. Enter the name and description. (i.e. 01 Garnishment/Child support).
Note: When you create the benefit options for garnishments, create a set of numbered options for garnishments and tax levies. For example, you might create options 01, 02, and 03. By numbering the options in this manner, you can see the order in garnishments are to be applied.
- Dependent coverage and beneficiary designations don’t apply to garnishments so do not select ‘Allow dependent coverage’ or ‘Allow beneficiary designations’.
- Repeat to set up additional benefit options for Tax levies.
Next steps are to enroll employees in garnishment.