Year-Round Compass

Did you return from year-end holiday time only to find W-2cs waiting for you? Or were you too busy to take time off? If so, we want to help you create a better work-life balance and a less stressful work environment.

How? First, embrace the year-end/year-round strategy; remember that 2021 year-end started with the very first payroll this year.

Next, read our quarterly newsletters and attend training. Close out Q1 strong by auditing reports and preventing tax fallouts with the help of the articles in this newsletter.

Together we can transform “year end” into just plain “fourth quarter”. This is already a reality for many of our payroll clients and it can happen for you too.

Q1 Wages and Taxes review

Auditing your Wage and Tax Report each pay period will make your job so much easier in Q4. To run the report, in Dayforce go to Payroll > Reports > US Wage and Tax Report (under Fixed Format Report), select the quarter to validate and which pay groups or legal entities to report on, and then select ‘Perform Wage and Tax Validations’ option.

The rest of this article is based off the Knowledge Base article on the Ceridian Customer Community entitled Validating Quarter End Wages and Taxes:

Once the report is generated, review payroll data from all committed pay runs within the quarter for the pay groups or legal entities that you selected. If applicable, the report also alerts you when:

• Taxes should have the same wage basis, such as the employee or employer Medicare tax, but do not
• Taxes have been under withheld for the employee
• Taxes have been over withheld for the employee

Validating that wages and taxes are being reported to taxing agencies correctly and correcting as needed should be an on-going process. This will significantly minimize corrections needed at quarter-end and at year-end. Errors left undetected during the quarter will significantly increase the quarter-end, and ultimately your year-end closeout effort. Avoid W-2cs and amendments – as well as IRS penalties and interest – by taking the time each quarter to go the extra mile.

Keeping reportable earnings and deductions both correct and easily identifiable are important for both your employees and for the IRS. These great tips will help when you need to update the definition or change how they display.

Confirm current set-up

Maybe you are new to the role you play in your company’s payroll department. Or maybe you’ve forgotten exactly how this was handled during your implementation. The good news is, it’s easy to review the earnings and deductions set up. The W-2 Management Report and W-2 Preview display all reportable earnings and deductions in the boxes to which they are mapped. Be sure to verify that the correct tax and compliance method is used.

Remember, making changes or fixing any errors earlier in the fiscal year is always a wise decision. If you haven’t done it lately, do it today.

Changing tax and compliance methods

To protect your pre- and post-tax data, once earnings and deductions are created, the system will prevent changes to the tax and compliance method. If the tax and compliance method must be changed, simply create a new earning/deduction definition. Note: The system will still allow changes to the display mapping.

Taxability and tax form mappings

Taxability and tax form mappings are defined so each earning and deduction will display on the tax form in a specific box or with a specific code. The to-date values may not display correctly on your tax forms if an earning or deduction is incorrectly mapped. Ceridian’s standard incomes and deductions were designed to keep the process simple. Create new codes only if a standard does not exist.

First, review the current tax form mappings with these reports:

• The US Earning & Deduction Matrix Validation Report displays the current tax form mappings for all earning and deductions
• The W-2 Management Report shows the actual tax form for each employee

Then, update the tax form mapping in Dayforce under Payroll Setup > Earning/Deduction Definition > Tax & Compliance

Changing the order of earnings and deductions

Need to change the order of earnings and deductions on earning statements or on the Payroll Register report? It’s easy.

1. Navigate to Payroll Setup > Earning/Deduction Definition
2. Click Arrange. Earnings/deductions are displayed in the order they were applied
3. Select the earning/deduction you want to reorder
4. Click either Move Up or Move Down to reorder the earning/deduction
5. Click Save

Advanced issues:

Refer to the Dayforce Implementation Guide (DIG) (on the Ceridian Customer Community Knowledge Base under Reference Materials > Admin and User Guides (English) > Release XX Admin Guides) if you need to:

• create a new earning/deduction definition
• make adjusting entries to move YTD data from one earning/deduction to another
• add a new jurisdiction

Check out the “Maintaining Your Payroll Setup - US” training guide in the Ceridian Education Center for further assistance.

The Auto-Fill task is the first critical step (and the easiest) in the creating your ACA tax forms. It generates Forms 1095-C for employees who had an active status during the reporting year. It also does a lot more – keep reading.

It’s easy to run it, navigate to: PPACA > Year End Process > select 2021 > click Open Year > click the Auto-Fill button on the Overview screen. The first time you run the Auto-Fill task for the filing year, you should select Generate PPACA Year End data. Dayforce will ask questions during this process to help ensure your tax forms have the correct coding.

We recommend that you run the Auto-Fill task each quarter. Here’s some great reasons why:

• Find out now how many employee errors need to be fixed. Many customers are surprised to find that there is more work to do after running the Auto-Fill task. Especially if it is your first year-end with Ceridian.
• The Auto-Fill task will NOT automatically complete or create Forms 1095-C in some cases. Missing information must be entered in the system if any of these scenarios apply to your company:

• went live after January 1, 2021 (the Auto-Fill task relies on historical data)
• did not fully use the Dayforce Benefits functionality throughout the entire calendar year
• did not use Dayforce Benefits to conduct open enrollment prior to January 1, 2021
  
• have a large employee population
• have many legal entity transfers
• offered self-insured coverage
• where “offered coverage tracking” was not enabled for the entire year
• Running the Auto-Fill task lets Ceridian know you intend to file ACA with our services for 2021. This helps us plan for capacity. Plus, you won’t have to respond to emails and cases asking if you are filing with us.
• Auto-fill alerts Ceridian of certain hard-to-detect errors that will need your review before you file. Let us find them now so you can fix them right away, instead of waiting until close to the deadline during the year-end rush.

So, run the Auto-Fill task today and set a reminder to run it each quarter. You’ll be glad you did.

Follow these steps and make your work life so much easier.

Auditing and balancing your payroll

Make it part of your payroll processing routine to audit and balance your payroll after committing each pay. The following reports are available to assist you with auditing and balancing:

• Payroll Audit Report
• Payroll Register Report
• Third-Party Payment Report
• Employee Changes Report
• W-2 Exception Management Report
• Employers Quarterly State Report of Wages Paid (941 recap)

Are you ready to create accurate payrolls and eliminate the need for quarter-end/year-end corrections? Our Auditing Your Payroll for Quarter-End and Year-End Success – US guide and video are the answer. A Dayforce Live Membership is your ticket to this recorded session as well as many others in the Ceridian Education Center.

Tax Code Fallout

Delays in resolving fallouts can generate agency notices, amendments, and penalty exposure for your company. What are “fallouts”? They are tax liabilities that Ceridian Tax Service (CTS) cannot process because the tax code meets one of these conditions:

• Is not set up on your tax jurisdictional profile
• Is invalid
• Is inactive

Each payroll, CTS compares your payroll tax data to your tax jurisdictional profile. Unmatched data will be placed into a suspense account while CTS contacts you and awaits your verification. Only when CTS receives your verification will the deposits occur, potentially resulting in late payments/interest.

To prevent this situation, which can result in fees and/or penalties/interest, contact your CTS Rep as soon as you are aware of a new jurisdictional tax requirement.

For more information about fallouts and other quarterly tips from CTS, see the QE Packet.

Many clients contract with providers to pay their employees' sick pay. When an employee is off sick, they are paid by the provider instead of their employer. These payments are referred to as ‘third-party sick pay’ (TPSP). Best practice is to record them in Dayforce quarterly as an adjustment so that taxes are remitted and reported properly.

If the provider withholds Social Security and Medicare from sick pay, you must record these deductions when you record the sick pay transaction. Dayforce has no way to “know” if proper taxes were paid by the provider or still need to be withheld. Failure to enter the deductions taken by the provider timely into Dayforce will cause the payroll system to erroneously over-withhold employer/employee taxes on the next payroll run. This can quickly lead to incorrect taxes and unhappy employees lining up at your door.

Dayforce issues a warning message stating that the user indicated the provider withholds taxes, but zero taxes have been recorded.

Don’t wait for your provider to send this at year-end, request that they send your employee data at least quarterly – more frequently if possible. Early auditing is crucial to avoid costly amendments, unhappy employees, as well as potentially needing Forms W-2c related to missing or inaccurate third-party sick pay.

More information is available in the Payroll Administrator Guide (on the Ceridian Customer Community Knowledge Base under Reference Materials > Admin and User Guides (English) > Release xx Admin Guides). Search for the heading, “Third Party Sick Pay”.

Take a few minutes to review and update your Ceridian email subscriptions within your Dayforce application. We rely on you, as our partner, to keep this list up-to-date. Always remove terminated contacts immediately. We use this information for a variety of purposes but mainly to:

• know who is authorized to contact us on behalf of your company
• know where to send year-end communications, including direct inquiries as needed

To update the Year End subscriptions for any of your listed contacts, or to add new contacts, log into Dayforce and follow the below steps:

1. Navigate to System Admin > Client Properties > Contacts
2. Click New to add a new contact
3. Complete all required fields. Important: Email Address is not a required field in the system. Without an email address, however, communications cannot be sent
4. Communication Type must be set to either All or Year End. Note: This functionality is currently for Year-end Communications only
5. Once the contacts have been added or updated, click Save and Refresh for the subscription selections to become effective. Our distribution list is refreshed every two weeks
6. Once your contacts have been updated, remember to “save and refresh” for the subscription selections to become effective

Year-Round Compass newsletters are sent at the beginning of each quarter. When customers go live, we check to make sure that they have at least one contact in our distribution list. When there are none, we manually pull email addresses from D365. These are used until we receive customer contact email addresses from Dayforce.

For troubleshooting tips, check out the KB article, “Year-Round Compass Newsletters (U.S.)”

Open a case on the Ceridian Customer Community for additional assistance.