How to Reclassify Adjustment from Processed Payroll Runs

Reclassifying existing adjustments is an important part of payroll processing that helps ensure wages, taxes, and deductions are recorded in the right accounts. It involves reviewing past payroll adjustments, spotting any errors or misclassifications, and correcting them to keep financial records accurate and compliant. This process helps maintain clear reporting, prevents payroll discrepancies, and ensures everything aligns with accounting and tax regulations.

1. Generate YTD Report - Adjustments: Once downloaded, filter the Adjustment you wish to update. How to Generate YTD Report - Adjustments in Sprout Payroll? 
2. Make sure to check the "Payroll Month" of the adjustment run, as it will affect the 1601-C report in Sprout Payroll.
3. Create an Adjustment run and the Tax and Government setup should be turned off. Instead of utilizing the 1601C from Sprout Payroll, it is best to create a separate adjustment run based on the original crediting month.
4. Upload the reverse sign of the Adjustment amount via One-time Adjustment: How to Set up a One-Time Adjustment using Mass Upload (Excel File), to zero out the initial entry.

Example: De minimis will be reclassified from taxable to non-taxable.

Initial Adjustment: Deminimis   1000 Deminimis Allowance (taxable)

•        To zero out: Demininis/ -1000 / Taxable

•         To correct the tagging: upload Demininis/ 1000 / Non-Taxable