In this article you will learn about a variety of circumstances that can cause temporary penny differences. These differences are usually due to rounding in paycheck or tax calculations.
Net pay for a salaried employee
You may notice that the net pay for a salaried employee changes by a few pennies from paycheck to paycheck, even though there are no changes to the employee's pay rate, tax setup, or deductions. These differences are due to rounding for taxes that are calculated at exact rates (such as Social Security and Medicare). Our system ensures that the employee's YTD totals for those taxes are always exactly correct. You and the employee don't need to be concerned about these small variations.
Amounts on reports or forms
You may occasionally see penny differences in the amounts shown on payroll reports and tax forms. You don't need to be concerned about those differences. The tax agencies generally only care about amounts rounded to the dollar.
Filing a form
Our system generally requires any tax discrepancies (even penny differences) to be resolved before you can file a form. Contact us for assistance in resolving those discrepancies.
Prior payrolls and tax payments
When setting up your payroll account, you may enter payrolls from earlier in the year that were processed by another service. That service may have used slightly different calculations that cause small differences from what our system expects. You should generally enter the amounts our system expects, making small adjustments where necessary. You may wish to contact us for assistance if you're uncertain about these discrepancies.
After entering prior payrolls, you'll also enter the tax payments made by the other service. There may also be small discrepancies between the payment amounts and the liabilities shown by our system. Again, you may wish to contact us for assistance in resolving those discrepancies.
Differences of more than about 10 cents are generally not due to rounding in calculations. They may indicate a more significant discrepancy or error. You should carefully review your payroll and tax records. If you can't identify the source of the discrepancy, contact us for assistance.
|Note You don't need to worry if you see a report that indicates that you owe $.01 in tax or if you write a check for a tax payment that is off by pennies. The government understands rounding discrepancies and ignores penny differences.|
Now you know about a variety of circumstances that can cause temporary penny differences.