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Administrator Guide
Last Updated: 2025-09-19
Troubleshooting: Payroll Tax Calculations (USA)

Troubleshooting: Payroll Tax Calculations (USA)

Workday didn't calculate federal, state, territory, or local taxes for employees.

Federal, state, or local tax information isn't either:
  • Set up for the company.
  • In effect on the period end date.
    Security:
    Set Up: Payroll - Company Specific (Taxes) - USA
     domain in USA Payroll functional area.
  1. Access these tax reporting tasks:
    • Edit Company State and Local US Payroll Tax Reporting
      .
    • Edit Company Federal US Tax Reporting
      .
  2. Verify that the
    Start Date
     covers the pay period end date. The period end date generally controls which taxes to calculate. The payment date controls the rates to apply.
    For Indiana, resident and work counties are determined at the beginning of the calendar year. Set the tax election start date for an Indiana county to the first day of the year (January 1) in which the tax becomes effective for the worker.
    If tax information has changed, preserve tax history by adding new tax information with a new
    Start Date
    .
  3. Recalculate payroll.

Workday incorrectly calculated state tax for employee.

The employee is subject to reciprocity rules.
    Security:
    Worker Data: Payroll (Company Specific) - USA
     domain in USA Payroll functional area.
    Security:
    Set Up: Payroll (Taxes View)
    domain in the Core Payroll functional area.
  1. Access the
    Worker US Tax Elections
     report.
  2. Check for reciprocity by verifying:
    • The
      Work State
       and
      Home State
       are different.
    • There are elections for more than 1 state on the
      State
       tab or the
      Tax Allocations
       tab.
    • The
      Tax Allocations
       tab displays whether the worker's company is configured for ongoing work jurisdiction allocations.
  3. Review the reciprocity rules using the
    View Payroll Multistate Withholding Rules
     report for each state.
Payroll input overrode the tax calculation.
Security:
Reports: Results for Worker (Pay Calculation) - USA
 domain in USA Payroll functional area.
  1. Access the
    Pay Calculation Results for Worker
     report.
  2. View the worker's pay results.
  3. Review the
    Payroll Input
     tab for a payroll input representing a tax override. The tab only displays if the worker has payroll input for the period.
  4. (Optional) Edit or delete the payroll input.

Workday didn't withhold State Unemployment Insurance (SUI) for an employee who changed work states.

The employee had SUI wages in another state. The employee’s new state recognizes the wages paid in the prior state when determining the year-to-date wage limit.
However, SUI wages start over if a worker transfers to Minnesota or Louisiana.
Security: Reports:
Pay Calculation Results for Worker (Tax Filing/W-2s) - USA
 in USA Payroll functional area.
  1. Access the
    Tax Filing Quarterly Data for Workers
     report.
  2. Review the report to confirm that Workday withheld SUI for other states.

Workday incorrectly calculated State Unemployment Insurance (SUI) for an employee who changed work states.

The state you’re moving the SUI wages to comes alphabetically before the previous state. The new state has a lower wage limit.
Example: The employee moved from Iowa to Arizona. The payroll administrator needs to report the SUI (ER) subject wages for Iowa, 5,885.95 USD, to Arizona. The payroll administrator creates a manual payment to move SUI wages out of Iowa and into Arizona. The SUI wage limit in Iowa is 28,000 USD. The SUI wage limit in Arizona is 7,000 USD. Workday Payroll processes alphabetically. Workday will process Arizona first, resulting in an inaccurate transaction because Arizona will reach the limit before Workday processes the full amount.
Security:
Process: Off Cycle (Manual Payment)
 domain in the Core Payroll functional area. To prevent this inaccuracy, process in 2 separate transactions.
  1. Back out the previous state wages and taxes and complete the payroll result. Example: Iowa wages.
  2. Create a separate manual transaction using the
    Run Manual Payment for Worker
     task to add the new state wages. Example: Arizona wages.

There's unexpected federal tax withholding from employee's supplemental pay.

You're calculating supplemental tax with a
Flat Rate
 method and the employee has no prior results.
Workday doesn't withhold federal tax at the flat rate from a supplemental payment if you didn't calculate regular tax for the employee during the current or preceding year.
    Security:
    Set Up: Payroll - Company Specific (Taxes) - USA
     domain in USA Payroll functional area.
  1. Access the
    Edit Company Federal US Tax Reporting
     task.
  2. Confirm that the
    Supplemental Tax Method - Regular Check
     and
    Supplemental Tax Method - Separate Check
     is
    Flat Rate
    .
  3. Access the
    Pay Calculation Results for Worker
     report.
  4. Confirm that you didn't pay wages subject to regular tax in the current or preceding tax year.

Workday didn't take additional federal withholding for an employee.

The payment missing the additional federal withholding is a subsequent payment in a pay period. Workday took the additional withholding amount from the employee's first payment of the period.
Security:
Reports: Results for Worker (Pay Calculation) - USA
 secured to the USA Payroll functional area.
  1. Access the
    Pay Calculation Results for Worker
     report.
  2. Look for more than 1 result for the period, such as both on-cycle and off-cycle results.
    Workday takes the additional withholding amount from the employee's first payment of the period, whether its on-cycle or off-cycle.
  3. (Optional) Withhold an additional amount from a subsequent on-demand additional payment in a regular run.
    Select the
    Take Additional Tax Withholding Amounts
     check box when you create the on-demand payment.

Workday calculated negative taxable wages for the current pay result but didn't calculate the tax amount associated with it.

The pay result is in a new quarter; therefore, Workday adjusted the taxable wages but not the tax.