Payroll Post Notes: Payroll Tax or W-2 Adjustments

Jennifer Maroney — Tue, 16 Dec 2008 11:05:00 GMT

In the Verify Employee Information post, we discussed how to verify the information on your W-2s, but what do you do if a box value is incorrect? Well, that's what I wanted to talk to you about today.

If you find the error before the employee receives the check, void the check, delete the calculation, correct the tax settings, and recalculate payroll. However, if you find the error after the employee receives the check, you must either make an adjustment on the employee's next check or make the correction using an historic entry.

Determine the type and amount of the adjustment and correct the source of the error:
1. Determine what to adjust and by how much. Use the following items to determine if you need to adjust any amounts:
  - Payroll Register
  - W-2s
2. Check the pay types, benefits, and deductions in Configuration and on the employee's record to determine where the problem originated.
3. If applicable, correct the pay types, benefits, and deductions in Configuration or on the employee's record.

Create the records for the adjustment:

Create the non-cash benefit in Configuration. The description should indicate this record is used for an adjustment.
For example: ADJ-FEDERAL, ADJ-SUTA, ADJ-NO FLAGS.

Here is a table of common tax adjustments to help with the process:

Adjustment:	Non-Cash Benefit Positive Amount	Non-Cash Benefit Negative Amount	Adjustment	Next Check or Historical Check?	Solution Number
Increase Social Security (FICA) withholding	Social Security tax: Withhold tax	None	Gross subject to Social Security (FICA)	Next payroll check	BB318902
Increase Social Security (FICA) taxable wages	Social Security tax: Report earnings only - no withholding	None	Gross subject to Social Security (FICA)	Either	BB351986
Decrease Social Security (FICA) withholding	None	Social Security tax: Report earnings only - no withholding	Gross subject to Social Security (FICA)	Next payroll check	BB318902
Decrease Social Security (FICA) taxable wages	None	Social Security tax: Report earnings only - no withholding	Gross subject to Social Security (FICA)	Either	BB351986
Increase Federal taxable wages	Federal: Report earnings only - no withholding or Withhold tax	None	Gross subject to Federal	Either	BB318905
Decrease Federal taxable wages	None	Federal: Report earnings only - no withholding or Withhold tax	Gross subject to Federal	Either	BB318905
Increase SUTA tax withholdings	SUTA: Subject to SUTA	None	Gross subject to SUTA	Next Payroll Check	BB318906
Increase W-2 Box 9, 10, 11, 12, or 14	Mark the Include amounts for this benefit in W-2 box checkbox and select the appropriate box number (9, 10, 11, 12, or 14)	None	Amount of increase	Either	BB318907
Decrease W-2 Box 9, 10, 11, 12, or 14	None	Mark the Include amounts for this benefit in W-2 box checkbox and select the appropriate box number (9, 10, 11, 12, or 14)	Amount of decrease	Either	BB318907
Increase Federal tax withholding	None	None	Amount of increase	Next Payroll check	BB264842
Decrease Federal tax withholding	None	None	Amount of decrease	Either	BB264842

Correct the employee's record:
You can adjust an employee's taxes by either creating an historic entry or correcting it in the next paycheck, depending on the circumstances. You can use historic entries to make end-of-year adjustments before printing W-2 forms. If the adjustment needs to affect the employee's net wages and withholding, the General Ledger accounts, or the employer taxes, correct it on the next paycheck.
Note: Historic entries do not affect General Ledger.

Talk to you soon!

Payroll Post Notes: Creating Historical Entries

Jennifer Maroney — Fri, 22 Aug 2008 14:11:00 GMT

A common question we get during the year, especially end of year, is how to add historical calculation information. The need for the historical info can vary from new organizations configuring Payroll to tax withholding corrections. Regardless of why you need to add historical information, the process is the same; create a historical entry. When you add a historical entry, it will automatically be marked as Do Not Post. This is because they are designed primarily for reporting purposes only. If you need the historical info to adjust General Ledger accounts, you will need to create a manual journal entry.

Here's how to add the historical entry:

Open the Employee record.
Select Employee, Add Historical Entry from menu bar.
Enter the appropriate Period ending date, Pay date, Bank account, Payment method, and Payment number.
In the Payment Details box, highlight Gross Pay and enter the Pay Type ID, Rate and Hours in the grid.

Highlight Deductions in the Payment Details box and enter the appropriate Deduction ID and amount, if appropriate.
Highlight Taxes in the Payment Details box and enter the appropriate Tax types, Employee W/H, and Employer Expense, if appropriate.
Highlight Benefits in the Payment Details box and enter the appropriate Benefit ID and amount, if appropriate.
Review the grid at the bottom to ensure the Current and YTD amounts are correct.
Save and close the entry.

Note: Deductions and benefits with limitations used in historical entries are not linked to currently assigned deductions and benefits. To ensure that limitations are enforced, the limits for currently assigned deductions and benefits should be reduced by any amount entered for that year via a historical entry.

For more information, check out:

Talk to you soon!

The Ledger : tax corrections

Payroll Post Notes: Payroll Tax or W-2 Adjustments

Payroll Post Notes: Creating Historical Entries