Maintaining a company's payroll may require you to adjust or correct employees' wages, taxes, or state designation. There are two methods for making adjustments:
• Void/Manual transactions
• Quarter-to-date/Year-to-date adjustments
There are three basic adjustment guidelines governing the two methods listed above.
All corrections or adjustments relating to the current quarter must be entered by using Void/Manual transactions.
All corrections or adjustments to prior quarters of the current year must be entered through year-to-date adjustments. Aletter detailing the adjustments and the affected quarters must be sent to your Tax Service Representative.
Adjustments to quarter-to-date taxable wages or taxes withheld should only be used during installation or to correct installation errors. Other corrections should be made using one of the above two suggestions to be properly reflected on the tax filings.
Void/manual transactions
Void/manual transactions should be processed to properly adjust current quarter employee wage and tax amounts. When making these adjustments, no notification to the Tax Service is required.
Because these transactions are considered current data, the net effect is automatically included in the Payroll Register's Grand Total Page and is also transmitted to the Tax Service when the payroll is finalized through the payroll district office. Void/manual transactions update payroll totals and are included in all payroll tax deposits as applicable.
Do not use void/manual transactions to adjust fourth quarter wages if the quarter has already closed (i.e., the Tax Service's deadline for accepting quarterly data has passed). If adjustments need to be made to fourth quarter wages after the quarter has closed, use a quarter-to-date and year-to-date adjustment. The data could be improperly coded and accidentally carried into the next year, resulting in additional filing complications. All adjustments must be processed during the current year to ensure a clean transition one calendar year to the next.
This table summarizes the circumstances under which void/manual transactions should and should not be used.
|
If... |
Then... |
|
you are adjusting employee wages and /or taxes paid in the current quarter, |
use void/manual transactions. |
|
you are adjusting wages from fourth quarter and the Tax Service's deadline for accepting quarterly data has passed, |
do not use void/manual transactions. Instead use year-to-date and quarter-to-date transactions. If corrected early enough, this ensure that employee's W-2 is correct. The adjustment file includes data processed by the payroll system after the deadline and will be forwarded to the Tax Service. The Tax Service uses this new data to properly prepare the necessary amended returns. |
Quarter-to-date adjustments
Quarter-to-date adjustments affect only the wage and tax accumulations for the current quarter and have no effect on year-to-date accumulations. The effects of quarter-to-date adjustments are not recognized by the tax filing system until the quarter closes and final payroll quarterly wage and tax figures are compared to periodic totals at quarter-end.
If these adjustments are intended to increase tax liabilities, the increased liabilities will not be recognized and paid to the tax jurisdiction until the end of the quarter. Quarter-to-date adjustments should be only be used to modify fourth quarter information after the Tax Service deadlines have passed. These entries should be closely examined for the need for amended returns.
Year-to-date adjustments
Year-to-date adjustments affect only the current year's wage and tax accumulations and have no effect on current quarter accumulations. Year-to-date adjustments are used to make adjustments or corrections to wage and taxes relating to a prior quarter. The effect of year-to-date adjustments may not be recognized by the tax filing system until the year is closed and final payroll annual wage and tax figures appear on the fourth quarter payroll reports and/or W-2 forms.
If the year-to-date adjustments are intended to increase tax liabilities, the increased liabilities would not be paid to the tax jurisdiction(s) until the end of the year. This is the preferred method to use when adjusting year-to-date wage and tax amounts from installation processing.
To properly adjust prior quarter wage and tax amounts, you must:
1. Make year-to-date adjustments.
Make the necessary year-to-date adjustments to add or remove the wages and taxes as appropriate.
2. Complete the Amendment Request form.
This request should explain the need for and the intent of the year-to- date adjustments. Include all wage and tax categories affected and what portion of each adjustment is to be applied to each prior quarter.
Refer to the Reports and Forms chapter for a copy of the Amendment Request form.
3. Attach the Adjustment Audit Reports and/or Negative Wage Reports.
4. Submit the request to your Tax Service Representative.