Generally, we don’t recommend adjusting taxes and deductions when you run off-cycle payroll. We’ll automatically calculate and withhold taxes and deductions for you. For off-cycle payroll runs, we will calculate tax withholdings based on your regular pay frequency, unless you change your Advanced Settings.
But you have the option to change how much we withhold and deduct from your team members’ paychecks. Before you do that, keep reading to find out why you might choose to adjust these numbers.
Reasons to adjust tax withholdings
- To enter payments made during a prior year. When you switch to Workful, you’ll enter your employees' beginning balances to ensure their year-to-date info is correct and to accurately file year-end forms, like 940s and W-2s. If you want to enter payment information from a previous year, however, you will need to run off-cycle payroll to add the data. You can adjust taxes and deductions to ensure the information is entered correctly.
- To correct a mistake caused by manually calculating tax withholdings. Calculating taxes is time-consuming and complicated, but if you were running payroll by hand before switching to Workful, that might have been the only choice you had. If, after switching to Workful, you noticed that you over- or under-withheld taxes from previous paychecks, you can adjust the taxes withheld from an off-cycle payroll run to correct the mistake and ensure your team member is paying the right amount of taxes.
Reasons to adjust deductions
- You typically deduct a fixed amount that won’t be covered by the gross check amount. Sometimes, you might deduct a fixed amount for certain benefits and deductions. But, if you’re writing a bonus check or other payment that’s less than what your team member typically makes during a pay period, there might not be enough left over to cover the deduction.
- You will deduct a set amount throughout the year. When you’re calculating how much to deduct from a team member’s paycheck for things like health insurance premiums, you usually start by determining how much you will need to deduct that year. Then, you’ll divide that amount by the number of pay periods in the year to ensure you’re deducting enough from each paycheck. If you deduct those payments from a bonus or other additional paycheck, then you might end up paying too much toward your team member’s benefits.
Read also: How does Workful handle deductions?