Grosssing Up Payroll to reflect manual payroll checks

I'm really confused doing this process. I recategorized the 3 checks into the asset account. I went to payroll items and set up an employee loan item (it only allows me to do that as other item). Then I check on the net/gross  calculation but I can't figure out what the heck I'm doing wrong. It keeps wanting to use the main payroll item instead of the loan that I set up and at the botton of the screen it doesn't equal zero like you mentioned. I've searched the help section but it's not real clear either. Thank you in advance for your help.

Your paycheck will look something like this.

Top left:

Regular pay item(s) and a value that is grossed up wages.

Let all taxes calculate. Net Paycheck is the total given out in 2011.

Now select, in the middle left:

Deduction item that has no tax tracking (NONE, not Other) and is a Net Pay deduction and is linked to the same Other Asset account. This is the Repayment item. This gets the Net Paycheck value.

This paycheck now = $0.

You need to give Pay, let taxes calculate, then deduct the amount that is "funds already paid out" to avoid paying them out again.

Now you have YTD wages, taxes, withholding, etc.

But no further payout of funds.

And the Loan account balance should = $0, so reconcile it.

You create a paycheck, entering as Pay the amounts that should have been Taxable Compensation.

You allow taxes to calculate and be withheld.

This results in a Net paycheck.

We don't want a Net paycheck. We arleady gave them the funds.

We want no further payout.

So, you use a net pay deduction item on the paycheck, to avoid paying out on a paycheck the same Net Pay that reflects the amount already given to them and not run through payroll.

Here:

I hand you a $100 bill as a bonus.

I create a year end paycheck. I gross up the wages, to be $100 plus whatever is required; to end, after all taxes calculate, with a Net Paycheck of $100.

But, wait: I already gave the $100 to you!

I write the $100 as an employee loan (other asset)

So, on the paycheck, I use a Net Pay, None tax tracking, Deduction item. This is -$100 and this payroll deduction item links to the Other Asset account.

Now, the paycheck total Net Pay (takehome) = $0.

Now, the taxes are calculated.

Now, the Other Asset account is $0 ($100 out and $100 recaptured). Reconcile it.