Adjusting taxable wages for employees

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Change to CS Support service hours

Our Support department is closed on Friday, April 28th for a company event. However, limited Accounting CS phone support is available on that date from 9 AM - 5 PM ET due to the approaching deadline for quarterly payroll tax forms.

Links to our most popular payroll tax processing topics are available in the Alerts and notices section on the right side of most pages.

The application provides a number of ways to manually adjust taxable wage amounts and gross taxable wage amounts for employees. This might be necessary to make corrections to the taxable wage information on payroll checks due to an error in tax treatment, for example, or to reduce taxable wage amounts if retirement plan contributions for an employee are paid outside of the payroll process.

Notes

  • "Taxable wage amount" refers to the employee's gross wages minus any pre-tax deductions with the taxable wage limit applied. "Gross taxable wage amount" refers to the employee's gross wages minus any pre-tax deductions with the taxable wage limit not applied.
  • The adjustments that you make will affect the amounts displayed on payroll reports and any payroll tax forms that include taxable wage amounts, including Forms W-2 and 1099. The adjustments do not affect gross or net pay amounts.
  • To make year-end taxable wage adjustments, use the Adjust Taxable Wages dialog.
  • To make taxable wage adjustments throughout the year, you can do any of the following.
    • Make changes directly to printed payroll checks or handwritten checks that have generated liabilities.
    • Change the wage exempt status for particular clients or employees.
    • Change the tax exemptions for a client's payroll items.

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Making year-end taxable wage adjustments

  1. Choose Setup > Employees, select the employee whose taxable wage amounts are to be adjusted, and click the Edit button.
  2. Click the Payroll Taxes tab.
  3. Click the Adjust taxable wages link.
  4. In the Adjust Taxable Wages dialog, use the Data range options to choose whether to include data based on payroll transactions from the current year or prior year for the employee. By default, the Current year option is chosen.
  5. In the Taxes column, click the Ellipsis button to open the Adjust Taxable Wages - Tax Selection dialog, where you can select the taxes that are to be adjusted for this employee. The taxes and related wages and adjustments that you select here will be listed in the Tax Balances section of the Adjust Taxable Wages dialog.
  6. When you have selected the appropriate taxes to adjust, click the Done button to return to the Adjust Taxable Wages dialog.
  7. In the Gross Taxable Wages Adj. and the Taxable Wages Adj. columns, specify any adjustment amounts. The adjustment can be either positive or negative.
  8. Use the Notes field to enter any notes regarding this adjustment.
  9. Click OK when you have entered all the necessary adjustments.

Note: If you need to delete any of the adjustments you have added, highlight the row and then click the Delete button Delete button.

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Making adjustments to payroll checks

  1. Choose Actions > Enter Transactions.
  2. In the Transaction list, highlight the payroll check for which you want to adjust taxable wage amounts and then choose Edit > Adjust Taxable Wages.

    Note: You can adjust wages only for printed payroll checks or for handwritten checks that have liabilities generated for them. Information in the Adjust Taxable Wages dialog cannot be modified for any other types of payroll checks.

  3. In the Adjust Taxable Wages dialog, use the Tax Balance grid to make the necessary adjustments for the payroll check.
  4. Click the Ellipsis button in the Notes column to enter any notes regarding this adjustment.
  5. Click OK to save the adjustment information.

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Changing the wage exempt status for clients or employees

Changing the wage exempt status for specific taxes for clients or employees enables you to update taxable wages for all payroll checks entered after the change and to adjust the taxable wages from existing payroll checks. Note that this may affect previously filed payroll tax forms.

  1. Choose Setup > Clients or Setup > Employees and click the Payroll Taxes tab.
  2. Highlight the client or employee and click the Edit button.
  3. In the Taxes section, mark the Wage Exempt checkbox for any taxes for which you want to make the client or employee exempt.
  4. Click the Enter button to save the changes to the client or employee record. The application displays a dialog to inform you that the wage exempt status changes will affect the taxable wage amounts for all payroll checks that are entered for this client or employee after this change.
  5. If you want the taxable wage amounts for prior payroll checks to reflect the change also, specify an effective date and then click OK.

Payroll checks are not recalculated and no amounts on the checks are changed.

The changes you make to the taxable wage amounts for existing payroll checks may affect previously filed tax forms.

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Changing the tax exempt status of payroll items

Changing the tax exempt status for specific taxes for payroll items enables you to update taxable wages for all payroll checks entered after the change and to adjust the taxable wages from existing payroll checks. Note that this may affect previously filed payroll tax forms.

  1. Choose Setup > Payroll Items and click the Tax Exemptions tab.
  2. Select the appropriate client record from the Client field in the top right-hand corner of the screen.
  3. Highlight the payroll item in the Payroll Items list and click the Edit button.
  4. Mark the checkbox for any tax for which you want to make the payroll item exempt.
  5. Click the Enter button to save the changes to the payroll item. The application displays a dialog to inform you that the tax exemption status changes will affect the taxable wage amounts for all payroll checks that are entered for this client after this change.
  6. If you want the taxable wage amounts for prior payroll checks to reflect the change also, specify an effective date and then click OK.

Payroll checks are not recalculated and no amounts on the checks are changed.

The changes you make to the taxable wage amounts for existing payroll checks may affect previously filed tax forms.

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