How to Perform Begin-of-Year Processing for the US

There are several begin-of-year activities you must perform before you run the first payrolls of the new year.

Some of these preparations involve updates to the employees' tax card, and you can perform them on the individual cards. For large numbers of employees, you can opt to use HCM Batch Loader functionality to update multiple cards.

Note:

You can perform your year-begin processing before you have completed your year-end processing of the previous year.

What you want to do	How you do it
Clear last year's deferred compensation deductions limit overrides	For employees who required limit overrides during the previous year, you must remove these overrides before your first payroll run of the year.
Clear or update last year's federal or state tax exemptions	Employees use the Tax Withholding task from their Me page to enter their W-4 exemptions and allowances. Payroll Administrative users can also enter them on behalf of the employee. As federal and some state tax exemption statuses expire after a year, the employee must submit new withholding forms by the deadlines identified by the IRS and states tax agencies to renew them. If they allow an exemption to expire, you must end date it as of the expiration date. Use the Start-of-Year Process to identify and end date these exemptions. This process resets these exemptions. Federal income tax (FIT) Medicare Social Security (SS) State disability insurance (SDI) State income tax (SIT) State medical and family leave (FMLI) State unemployment insurance (SUI) Or you can update the individual cards manually. Refer to your state tax authority for info on what exemptions expire.
Verify Indiana county of residence or employment	For employees working or living in Indiana, you must ensure their Tax Withholding cards record their resident and work counties as of January 1. Use the Start-of-Year Process to complete this verification before the first payroll run of the year.
Validate legislative limits	Use the Calculation Value Definitions task to view these predefined legislative limits. 401 (k) Limit 403 (b) and 457 (b) Limits Social Security Limit State FUTA Credit Reduction Limit State Unemployment Wage Limit This data is predefined. You don't need to modify it.
Apply annual occupational or Local Service tax exemptions	Employees working in states with annual occupational or Local Services Taxes (LSTs) may seek exemption, such as the Pennsylvania LST. Use the Calculation Cards task to grant or revoke these exemptions.
Enable New York Paid Family Leave for eligible employees	The payroll process doesn't automatically withhold deductions for the New York Paid Family Leave program. You must impose this tax on eligible employees.
Update your payroll definitions	Use the Payroll Definitions task to verify the payroll calendar dates for the coming calendar year.
Update your state unemployment insurance rates	The unemployment insurance divisions of the states where you employ workers may change their state unemployment insurance (SUI) rates for the new year. You must make these changes on your organization calculation card as soon as you have received the new rates.
Update your state unemployment insurance wage limit	These states have multiple SUI wage limits. Michigan Nebraska Rhode Island If one of a state's wage limits changes for the new year, you must make the appropriate changes on your organization calculation card.
Opt-out individual employees from contributing to pretax age catch-up contribution	To opt-out an employee, do the following prior to processing the first payroll of the calendar year. Start the Calculation Cards task. Search for and select the person. Open their Reporting Information card for editing. Add the Reporting Information calculation component under the Federal component group. Set Eligible for Pretax Age Catch-Up Contributions to No under the calculation component details. Click Save and Close. You can do this for multiple employees through HCM Data Loader. For further info, see Payroll Configuration for SECURE 2.0 Act (ID 2971058.1) on My Oracle Support.