Understanding Recalculation of Employee Taxes

In a pay period, some employees might not earn enough to pay for all of their deductions. When you set up a deduction, you can specify that it be either reduced or placed in arrears when an employee does not have enough wages to pay for the deduction. Reducing or placing pretax (tax-deferred or tax-exempt) deductions in arrears changes the employee's taxable gross wages. When this condition occurs during regular pre-payroll processing, the system automatically reduces the pretax deduction to zero and recalculates the employee's taxes using the new taxable gross wages. Automatic recalculation does not function for interim payment processing.