This guide covers how to return an erroneously over-withheld withholding tax to an employee. The return is handled on the payslip using the additional calculation function to ensure that the Earning payment report is generated correctly.

Table of contents

Returning withholding tax with an additional calculation

If an employee's pay has been erroneously over-withheld for withholding tax and you want to return it to the employee, always handle the return on the payslip to ensure that the Earning payment report is generated correctly and the information is up to date.

Handle the return of withholding tax with an additional calculation. Create an additional calculation for the pay period and from the payslip where the withholding tax was over-withheld.

  1. You can create an additional calculation by selecting Pay > Payroll > Payslips and pay periods. Select the pay period and click  Create additional calculation (see image below, point 1).
  2. Set the dates for the additional calculation in the payroll process phase "Check selected pay criteria" and in the section "Payslip dates" for payment and voucher. 
  3. Click the "Save and create payslips" button.
  4. Click the Edit button on the employee's row to correct the information on the additional calculation.
  5. Handle all extra salary type rows on the payslip either by deleting the entire row or zeroing the balance using the Edit icon (pencil pad).
  6. Save the amount of the withholding tax to be returned on the salary type row as a negative.
  7. The additional calculation will have the withholding tax salary type row with the over-withheld withholding tax amount as a negative and the To be paid salary type row with the same amount as a positive.
  8. When the payslip information is correct, complete the payslip normally in the payroll process: deliver the payslip to the employee, pay the payslip/send the earning payment report, and create the voucher. See more detailed instructions if needed in the Payroll process.

    The earning payment report will show a notice "Withholding tax cannot be greater than the cash pay amount". This does not prevent the sending of the earning payment report, and you can send the report normally despite the notice.

Considerations in the earning payment report

The earning payment report will generate an income type row for the withholding tax where the amount is negative. For income type 402, a negative amount can be reported. However, note that if other salary type rows with recovery information are handled on the same calculation, the withholding tax cannot be negative.


Frequently asked questions

How do I return over-withheld withholding tax?
Handle the return with an additional calculation for the pay period where the error occurred. Save the amount to be returned as a negative on the withholding tax salary type row.

Why must the withholding tax return be done on the payslip?
To ensure that the Earning payment report is generated correctly and the information remains up to date.

The earning payment report warns "Withholding tax cannot be greater than the cash pay amount". What should I do?
The notice does not prevent the sending of the report. You can send the report normally despite the notice.

Can the withholding tax be negative on the earning payment report?
Yes, a negative amount can be reported for income type 402. However, this is not allowed if recovery information is present on the same calculation.

Keywords

Withholding tax, return, additional calculation, Earning payment report, payroll, negative withholding tax, error correction

This article has been translated using an AI-based translation tool. The contents or wording of these instructions may differ from those in other instructions or in the software.


Did you find it helpful? Yes No

Send feedback
Sorry we couldn't be helpful. Help us improve this article with your feedback.