Concept: Negative Tax Withholding for Negative Taxable Wages
When you process retro pay input and a negative wage adjustment results, Workday can calculate negative taxes. This makes the tax adjustment process more efficient.
To use this feature:
- Select theEnable Negative Tax Withholding for Negative Wages on Payroll Resultcheck box on theEdit Tenant Setup - Payrolltask. When you select this check box, Workday can calculate taxes to be credited, if you process a retro pay input and the retro differences result in negative taxable wages for a tax authority.
- Select thePrior Period Tax Adjustmentcheck box when you enter a retroactive pay input with a negative earning.
- Verify that negative taxable wages exist in a pay result, caused by retroactive pay calculation differences that were processed in the period.
To ensure a worker receives a tax refund on their negative taxable wages, the worker must have a positive tax balance and you must apply State or Local worktags to the retroactive payroll input that you create to process their negative earnings.
You can view the local tax authorities that don't support refunding taxes and whether negative tax withholding on a payroll result is enabled using the
Do Not Allow Negative Tax Withholding
report field. Workday recommends you run these reports to view which tax authorities don't support refunding taxes:
- All Payroll Tax Authorities
- View Payroll Other Tax Authorities
Use the
Audit Prior Period Tax Adjustments – Retro Pay Input Causing Negative Taxable Wages
report to:
- Audit prior period tax adjustments that were processed using retro payroll input with thePrior Period Tax Adjustmentscheck box selected, that resulted in negative taxable wages on the payroll result. The audit also alerts you when the adjustment crosses a month, quarter, or year.
- View workers with incomplete payroll results that have negative taxable wages, which you can adjust before closing the payroll period.