How to Set Up an Employee Wage Advance Repayment Deduction

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  • Published on Oct 14, 2026
  • 2 minute(s) read
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When an employer advances money to an employee and needs to recover it through paycheck deductions, this is handled in R365 Payroll as a post-tax deduction on the employee record. Setting it up correctly ensures the deduction does not reduce the employee's taxable wages and stops automatically once the wage advance balance is repaid.

Symptoms

  • An employer loaned an employee money and wants to deduct a fixed amount per paycheck until repaid

  • A user needs to set up a recurring deduction that does not affect federal or state taxable wages

  • A user wants the deduction to stop automatically after a total repayment amount is reached

Steps to Resolve

Step 1 — Navigate to the Employee Record

  1. Open the Workforce app.

  2. Under Employees, click Employees.

  3. Click the employee's row to open the employee record.

Step 2 — Open the Deductions Section

  1. Click the Payroll tab on the employee record.

  2. Scroll until you find either a Deductions or Benefits & Deduction section:

    1. If you see a Deductions section, each Company the employee is associated with will be shown. Next to the correct Company, click the pencil icon.

    2. If you see a Benefits & Deductions section, click the + Add Deduction button.

Step 3 — Add the Loan Repayment Deduction

  1. If the Add Benefit or Deduction Type field is not available, click the + New button to reveal it.

  2. In the Add Benefit or Deduction Type field, select or search for the post-tax deduction that you wish to use, such as Loan Replacement or Other Post Tax Deduction.

Do not use a garnishment type or a pre-tax deduction — loan repayments must be post-tax to avoid reducing taxable wages.

  1. In the Apply To selection, choose the application that you’d like. Applications targeting Payroll Payments will only apply to On-Cycle Pay Runs, while applications targeting Payments will apply to both On & Off-Cycle Pay Runs.

  2. In the EE Deduction field, enter the fixed dollar amount to deduct each paycheck (for example ‘300.00’).

  3. In the Effective Date field, choose any date within the pay period that the deduction should begin applying to.

  4. In the End Deduction section, select Once total amount is paid, then enter the total deduction amount in the Total Amount Owed field just below.

  5. Determine if you’d like Carry over unpaid balances to be enabled and make your selection.

  6. Click Add Benefit to save and apply to any open or future payments.

Step 4 — Verify on the Next Payroll Run

  1. Open the Payroll app.

  2. Click Payroll Hub.

  3. Open the current payroll batch.

  4. Locate the employee and confirm the deduction appears in their pay details.

  5. Confirm that the deduction is listed as a post-tax item so that taxable wages are unaffected.