Quarter end processing is a US-only requirement. Every US employer engaged in a trade or business who pays remuneration for services performed by an employee must file Federal, State, and Local tax returns at the end of each calendar quarter. These quarterly files must include employee level wage and tax data. After all quarter-end processing has been done for the year, year end processing can take place.
Before You Begin: There are some functional setup steps required before the first quarter end is processed. These steps must be done by a system administrator before quarter end. If you do not have system administrator role access, these steps might not be considered part of your quarter end processing job as the payroll administrator. See Quarterly Reporting Setup.
There are no quarter end processing activities in Canada. Canadian taxing authorities do not require quarterly tax filing.
In Dayforce, quarter end processing involves creating the quarter end file and transmitting it to Dayforce Tax Service (DTS). After the quarter end file has been successfully sent to DTS, the process in the application is complete unless you need to make corrections to the quarter end file.
The following is a list of the tasks included in the general process flow for processing quarter end; click a link to jump to its section in this topic:
- Validating the Wages and Taxes Being Reported for the Quarter
- Committing the Quarter End
- Generating the Quarter End File
- Prior Quarter Adjustments
- Amendments & Escalations
Validating the Wages and Taxes Being Reported for the Quarter
Throughout the quarter, payroll administrators validate the wages and taxes being reported for the quarter by running the Wage and Tax Report in the Payroll feature with the Perform Wage and Tax Validations option selected.
Payroll administrators select which quarter to validate and which pay groups or legal entities to report on. On the report, the application includes payroll data from all committed pay runs within the quarter for the selected pay groups or legal entities and performs several validations, alerting the payroll administrator to any of the following situations:
- If taxes that should have the same wage basis, such as the employee and employer Medicare tax, do not.
- If taxes have been under-withheld for an employee.
- If taxes have been over-withheld for an employee.
Validating the wages and taxes being reported for a quarter should be an ongoing process so that issues can be corrected before the quarterly filing deadline.
To commit the quarter end, payroll administrators commit payroll for the last pay run of the quarter.
The final pay run of the quarter is the last pay run, both normal or off-cycle pay runs, that has a pay date within the quarter. A pay period that is fully contained within the quarter, but that has a pay date after the end of the quarter, is included in the next quarter.
When payroll administrators load the last pay run of the quarter, the application informs them that the pay run is the last of the quarter and that it must be committed by the deadlines specified in the Dayforce Tax Service Quarter End Planner.
Payroll administrators follow their normal process to review the pay run, running payroll audits and recording quick entries as needed, before committing when ready. The application prompts the payroll administrator again that they are committing the last pay run of the quarter.
By committing the last pay run in the quarter, the payroll administrator is committing the quarter end; unless there are adjustments (described later in this section) this ends the payroll administrators involvement in the quarter end process.
Generating the Quarter End File
On the deadline specified by DTS, typically the last Friday of the quarter, a system administrator needs to run the CTS Quarterly Filing (US Only) background in System Admin > Background Jobs to generate the quarter end file. For more information about the available parameters in this background job, See CTS Quarterly Filing (US Only) in the Dayforce Implementation Guide.
Administrators select the quarter end they want to process from the first parameter and Preemptive Run selected from the Filing Mode drop-down list.
The application generates the quarter end file and transmits it to DTS; at this point, payroll administrators cannot make off-cycle, prior period adjustments against pay periods in the quarter without making prior quarter adjustments.
The application also automatically generates and archives three reports: the Employer's Quarterly State Report of Wages Paid, Other State Wages Report, and Wage and Tax Report. These archived reports aren’t printed but available in Payroll > Archived Reports.
Note: After a quarter has been committed and the quarter end file generated and submitted to DTS, it isn’t possible to void pay runs within the quarter.
If payroll administrators need to make adjustments to the payroll data of a prior quarter after the quarter end file has been generated, they can create a prior quarter adjustment:
Prior quarter adjustments are a specific type of off-cycle pay run that must meet these criteria:
- The Run Type must be Prior Period Adjustment.
- The selected Pay Date must be the last day of the quarter.
- The off-cycle pay run must be applied against the last pay period with a pay date in the quarter; the payroll administrator must select this pay run from the Load Pay Run panel in Payroll before creating the new off-cycle pay run.
Payroll administrators enter the details of the prior quarter adjustment within the off-cycle following the normal process for prior period adjustment off-cycle pay runs.
After the prior quarter adjustments have been created, a system administrator needs to run the CTS Quarterly Filing (US Only) background job in System Admin > Background Jobs to generate the quarter end file for the legal entities that have modified data.
Administrators select the quarter end they want to process from the first parameter and Mass File selected from the Filing Mode drop-down list.
The application generates the adjusted quarter end file for the legal entities impacted by the prior quarter adjustments and transmits it to DTS.
The application only allows prior quarter adjustments between the end of the quarter and a cutoff date defined by DTS. After this cutoff date, any changes or corrections have to be filed with DTS as an amendment.
Amendments require a manual process coordinated with DTS in which physical paperwork is filed by your organization with DTS. Even though you enter details about the amendments in the application for reporting and informational purposes as adjustments for amendments, Dayforce cannot generate and transmit another quarter end file using this information. Instead, you must physically file the information with DTS. The actual paperwork that you file with DTS to modify the quarter end filing is the amendment.
If you try to make a prior quarter adjustment after the cutoff date, the application displays a message stating that the adjustments will create amendments.
In extremely rare cases, DTS might be able to grant an extension on the cutoff date, so that their corrections to the prior quarter are created as adjustments that are automatically sent to DTS rather than as amendments that requiring manual processing.
Important: It is unlikely that DTS will be able to grant an extension.
The following workflow describes what occurs if escalation is possible;
- A Dayforce Support representative configures the customer instance to adjust the date on which payroll administrators can still file prior quarter adjustments.
- The payroll administrator creates a prior quarter adjustment, following the normal process.
- The payroll administrator runs the CTS Quarterly Filing (US Only) background job.
If Escalation Isn’t Possible
When escalation isn’t possible, you must file an amendment with DTS.
This involves payroll administrators creating an off-cycle pay run following the steps to make a prior quarter adjustment however when they commit the off-cycle pay run, the application marks it as an amendment; the details of the adjustments do not generate a new quarter end file and they aren’t sent to DTS. Instead, the payroll administrators needs to coordinate with DTS to file the amendment manually.
In summary, the quarter end process involves the following activities for the payroll administrator:
- Commit pay for the last pay run in the quarter.
- Run the CTS Quarterly Filing (US Only) background job to generate the current quarter file.
- Make any necessary prior quarter adjustments before the current quarter end file is submitted by DTS.
- Runs the CTS Quarterly Filing (US Only) background job with the appropriate quarter selected to generate any adjusted quarter end files.
- Escalate to Dayforce Customer Support if a prior quarter adjustment needs to be made after the cutoff date for adjustments has passed to determine if the deadline can be extended.
If the deadline can be extended:
- A support representative logs into the application using a service role and runs the Quarter/Year Re-Open Filing Period (Escalation Job) background job in System Admin > Background Jobs to adjust the deadline.
- Following normal processes, the payroll administrator creates the prior quarter adjustments.
- The payroll administrator runs the CTS Quarterly Filing (US Only) background job for the quarter.
If the deadline cannot be extended:
- The payroll administrator creates and commits the prior quarter adjustments, following the normal process and acknowledging the prompts the application displays about filing amendments.
- The payroll administrator co-ordinates with DTS to file the amendments manually.