Annual Tax Adjustments Processing

During a calendar year, there may be times when too much or too little tax is paid because of varying incomes or other circumstances. The annual income tax adjustment process corrects this problem.

You can identify employees who don't qualify for an annual tax adjustment. This includes employees who have:

• Terminated and were rehired and the company decides not to adjust taxes.

• Notified you in writing that they plan to present their tax adjustment themselves (self-presentation).

  This could be based on several reasons. One reason is when an employee has earned more than the government-allowed income limit and must self-present their tax adjustment data.

To process tax annual adjustments:

1. Define annual adjustment parameters on the Annual Adjustments page.

2. Define an annual period and create the calendar for the pay groups that you will run on the Calendar Definition page in the core application.

3. Enter tax data from Form 37 on the Define Prior Employer Data MEX page.

   Form 37 details tax data for employees you hire mid-year who worked for another company earlier in the same tax year. The system processes this information during the annual tax adjustment and that's why it's important to have this information entered prior to the annual adjustment process.

4. Identify payees who don't qualify for an annual tax adjustment on the Payees Without Adjustment page.

5. Run the Form 37 report for employees who are going to present their own annual adjustment tax data.

   You can also run this report at other times of the year. For example, you may also want to provide this information to terminating employees.

6. Run the Annual Adjustment Tax process (PL AJUSTE ANNUAL) at the end of the year.

7. Run the Annual Tax Adjustment Results process (GPMXAA02) through the Annual Adjustment report to view annual tax adjustment results.

8. (optional) Run the Subsidio Acreditable process (GPMXAA04) through the Annual Adjustment report to display tax subsidy data and have the details of how the system calculated the Subsidio Acreditable for those employees who had multiple employers during the year.

9. Run the Minimum Wage Salary Level process (GPMXAA01) through the Annual Adjustment report to create an addendum to the annual tax adjustment process.