My tax withholding is incorrect
How does Zenefits Payroll determine what taxes should be withheld?
Zenefits Payroll uses the home address and work location provided when employees are hired into our system. Using a process called geolocation, Zenefits Payroll relies on GPS data to identify a precise location for each address. The geolocation data, in combination with Nexus and Reciprocity data, produces the employee's taxation results.
If an incorrect address is causing incorrect tax withholding, payroll administrators should make sure the offending address is updated immediately to prevent ongoing taxation errors.
Review the actual W-4 signed by the
employee. Employees should provide you with a signed
W-4on their hire date so you can meet
your recordkeeping responsibilities as
an employer. It's best practice to ensure that this
W-4matches the entries made into the
HCM/ Payroll system. If an employee
tells you that the W-4entries are
incorrect, review the signed copy of the
W-4originally provided. If the actual
W-4 matches the system entries, then
the employee must provide you with a new, updated, and signed
W-4 in order for you to update the
system. If the actual W-4 does not
match the system entries, you can update the system to reflect the
Discuss with the employee any need for adjustments on future payroll
runs. Depending on the degree of impact to the employee's
withholdings, net pay, or other deduction types, the employee may need your help to
make adjustments on future payruns
to offset the impact. This may include reducing or increasing
withholding for a single or multiple pay runs, providing an advance for
financial hardship, or making one-time
adjustments to any other deductions that may have been impacted.
Avoid making corrections to historical payrolls for withholding
discrepancies. Adjustments to future runs are more timely, and they prevent
the need for systematic taxation adjustments in the past, which can cause
discrepancies with the corresponding taxing authorities. The
administrative burden of retroactive withholding adjustments is likely
greater than the steps entailed to adjust a subsequent payroll.
- The IRS and most state agencies don't allow tax and wage statements, and other filings, to be amended only for the sake of withholding adjustments. If the discrepancy is brought to your attention after the tax year is closed and W-2s have been processed, have employees address any discrepancies when filing their personal tax return. You may wish to provide your employee with this IRS link, which provides them with best practices in ensuring their federal tax withholding is correct.
My employee’s address and W-4 data is correct, but the withholding looks wrong.
Taxable income changes: If there are changes in the
of gross income on an employee’s paycheck, like adding a special income
or even small changes to hours or a salary, the withholding calculation
Benefits or other deduction changes: Did the employee max out their
or make changes to their medical insurance elections? These and
deduction types impact taxable wages each payroll and income taxes will
fluctuate with any changes. Has your employee hit the social security taxation limit? Sometimes
employees see their net pay has changed due to tax calculation changes and
assume it’s a fluctuation in federal income tax, but social security tax
calculations can change for higher income employees.
- Bonus Income: Bonuses, commissions, and other income that classifies as supplemental can automatically increase the rate of income tax calculated. See IRS Publication 15 for more details on withholding taxes from supplemental income payments.
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