Understanding payroll tax variances and adjustments

This article explains unexpected 7shifts Payroll tax withdrawals or refunds and how to identify tax variances and adjustments.

Things to know

• 7shifts Payroll customers authorize our payroll partner, Check Technologies, to manage tax filings and payments.
• Check Technologies is authorized to make necessary debits and credits to ensure tax liabilities are met accurately and on time.
• Variances are standard adjustments made to ensure the correct amount of payroll tax is paid to government agencies.
• Variances are most common after a quarter ends when all payments are reconciled.
• Employers are responsible for keeping tax details up to date and paying agencies directly if filings fail.
• Refiling taxes may result in associated fees.

Identify a tax variance

An unexpected debit or credit on your bank statement from Check Technologies is typically a tax variance. These transactions often appear after a retroactive tax rate change, where a government agency updates a tax rate and applies it to a previous period. Since these variances are processed weekly, you may see multiple separate transactions on your bank statement.

Common variance types

While specific breakdowns are available via a Payroll Journal report, understanding these common terms can help identify why an adjustment occurred:

• Deposit indicates an underpayment of taxes where Check Technologies debited your bank account to cover the shortfall.
• Refund indicates an overpayment of taxes that will be refunded directly to your bank account.
• Credit indicates an overpayment that was used to reduce the final tax payment of the quarter.
• Fraction indicates an extremely small difference between tax owed and payments made that has been written off.
• Carry indicates an overpayment that Check Technologies issues as a refund rather than carrying the balance to the next quarter.

Next steps

If you cannot identify the cause of the variance, it may relate to missing tax information or a failed filing. You can contact 7shifts Support for assistance in identifying the cause. When messaging Support, provide a clear screenshot of the transaction and the associated bank code.

FAQs

How can I prevent a tax variance in the future?

While it's not always possible to avoid variances caused by late notice of rate changes from government agencies, you can take proactive steps to help. Best practice is to ensure your tax rates are up-to-date at the start of each quarter and ensure Third Party Administrator (TPA) access is enabled in all your agency portals.

Why was money debited from my account without advance warning from 7shifts?

When you sign up for 7shifts Payroll, you authorize our payroll partner, Check Technologies, to manage your tax filings and payments. This agreement allows Check Technologies to make necessary debits and credits to ensure your tax liabilities are met accurately and on time.

Was I notified about this variance debit/refund?

Yes. When a debit is initiated, Check Technologies automatically sends a receipt via email to the registered Admin of your Check Technologies account. Please note that this email receipt is sent as the debit is being processed, not before.

How do I read the bank code on my statement?

For more information on the associated codes, please see this article: Understanding Bank Codes with 7shifts Payroll