What is a 7shifts Payroll tax variance?
Question
What is a tax variance, and why was I debited by 7shifts?
Answer
A tax variance is a standard adjustment 7shifts Payroll makes to ensure the exact, correct amount of payroll tax is paid to a government agency on your behalf. These adjustments are most common after a quarter ends, once all payments are fully reconciled. The most frequent reason for a tax variance is a retroactive tax rate change, where a government agency updates a tax rate and applies it to a previous period.
When you use 7shifts Payroll, you authorize our payroll partner, Check Technologies, to manage tax filings and payments. This allows them to make necessary debits and credits to ensure your tax liabilities are met accurately and on time. Since these variances are processed weekly, you may see multiple separate transactions on your bank statement.
Note: Check Technologies automatically sends an email receipt to the registered Admin when a debit is initiated. This email is sent as the debit is being processed, not before.
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.