Taxable Wages for Canada and US Payroll

This section describes what taxable wages are, where you can view the taxable wage amounts, and how you can adjust these amounts in Dayforce.

Overview

When calculating payroll, Dayforce automatically generates the limited and total taxable wages for each tax that applies to an employee's earnings.

Limited Taxable Wages: The amount of the employee's earnings that is taxed. This value includes only earnings above exemption values and earnings below wage limits.
Total Taxable Wages: The amount of the employee's earnings that’s taxable but isn’t necessarily subject to a tax. These wages include earnings below exemption values and earnings above wage limits.

For example, say that an employee has earnings that are past the limit defined for a tax, so that earnings above the limit aren’t taxable. As a result, limited taxable wages wouldn’t include the earnings past the limit. The total taxable wages would include all of the earnings, even the earnings above the limit.

Dayforce records limited and total taxable wages whenever an earning is paid through Payroll. These earnings include earnings sourced from WFM, auto pay earnings, generated earnings, and check and quick entry earnings added or imported in Payroll.

You can review these totals in the Total Taxable Wages and Limited Taxable Wages columns in the following areas of Payroll:

In the Preview tab of Pay Run Management, under the Summary and Employee subtabs.
In the On-Demand Summary tab of Pay Run Management for US employees with on-demand pay enabled.
In the Preview tab of the employee slide-out panel.

Example of the Preview tab for a US employee:

Breakdown of a US employee's limited and total taxable wages in the Preview sub-tab.

Example of the Preview tab for a Canadian employee:

Breakdown of a Canadian employee's limited and total taxable wages in the Preview sub-tab.

Dayforce also provides functionality for adjusting limited and total taxable wages in some scenarios.

The Adjustments tab includes the Total Taxable Wage and Limited Taxable Wage columns that you can use to update wages for the tax entries of the selected adjustment.
The Total Taxable Wage and Limited Taxable Wage columns are also shown for deduction entries of a selected adjustment. However, they’re only editable when you select a worker's compensation deduction from the Code column. Worker's compensation deductions track taxable wages similar to how taxes do, and so these columns allow you to update the wages as needed.
Note: Dayforce doesn’t show limited or total taxable wage totals for worker's compensation deductions in the Preview tabs listed earlier.
The Checks tab also includes the Total Taxable Wage and Limited Taxable Wage columns that are listed in the previous points.
- Because these columns are always shown in the Checks tab, they’re only intended for updating manual checks for Canadian employees.
- Like other checks generated in Payroll, when you save a manual check, Dayforce automatically generates taxable wages, even if you don’t add any taxes to the check. Thus, you would only use the Total Taxable Wage and Limited Taxable Wage columns to create tax entries if you need to manually override one or more taxable wages that the system generates.
Note: You shouldn’t update the Total Taxable Wage and Limited Taxable Wage columns in the Checks tab for US employees.

Wages in Manual Checks

You can create a manual check for an earning in the Checks tab without clicking Calculate in the Check Entry tab of the Entries dialog box for the selected check:

Check Entry tab in the Entries dialog box.

When you don’t click Calculate, taxes or deductions aren’t calculated on the earning unless you manually add tax entries to the check.

When you click Save without using the Calculate button, Dayforce still automatically generates the limited and taxable wages for the employee and employer taxes that are associated with the earnings on the check.

The system-generated wages for the applicable taxes appear in the Preview tab of the employee slide-out panel, but Dayforce doesn’t generate entries for them in the Check Entry tab of the check.
(Canada only) If you haven’t manually added any tax entries to the check, Dayforce shows a warning message to indicate that limited and total taxable wages were automatically updated.
(Canada only) Manual edits to Total Taxable Wage and Limited Taxable Wage amounts in manual checks overwrite the system-generated values.
Manually updating taxable wages for US employees isn’t recommended.

When you create a manual check in the Checks tab and click Calculate in the Check Entry tab of the Entries dialog box, the following occurs for US and Canadian pay groups:

For US pay groups, limited and total taxable wages aren’t generated by the calculate function.
- The Limited Taxable Wage and Total Taxable Wage columns in the Calculate control for the manual check will be undefined:
- They are also undefined for the tax entries that get generated in the Check Entry tab when you submit the Calculate control:
- Dayforce generates the taxable wages when you click Save in the Checks tab, and you can view these amounts in the Preview tab as described earlier.
For Canadian pay groups, limited taxable wages are generated both when you click Calculate in the Check Entry tab of the Entries dialog box for the check, or when you click Save. The results are always the same regardless of the point in which they are generated. So, if you create a check without using the Calculate button, the wages are still generated.
- The Limited Taxable Wage and Total Taxable Wage columns in the Calculate control for the manual check will be defined:
- They are also defined for the tax entries that get generated in the Check Entry tab when you submit the Calculate control:
- The entries in the Limited Taxable Wage and Total Taxable Wage columns that are generated by the calculate function in the Checks Entry tab are not editable. However, you can still delete these entries if needed, or manually add new tax entries to override the automatically calculated wages.

See Calculate Manual Checks.

Updating Limited and Total Taxable Wages in the Adjustments Tab

Before You Begin: In the Adjustments tab, Dayforce doesn’t automatically update limited and total taxable wages. All of the inputs in this tab are manual.

In some cases, you might need to add an adjustment in the Adjustments tab to update an employee's limited and total taxable wages manually. For example, say that an employee was paid through the wrong type of earning for a period of time. The old earning wasn't taxable but the new earning is. As a result, you can create an adjustment with a tax entry where you enter 0 in the Amount column and update the Total Taxable Wage and Limited Taxable Wage columns based on the amount that should have been subject to the tax.

Entering 0 in the Amount column of the entry is a required step because this column can’t be left clear.

(Canada Only) If you add a Canadian tax entry for an adjustment without creating an entry for its corresponding employee or employer tax and click Save, Dayforce automatically generates an entry for the corresponding tax. This ensures the limited and total taxable wages are updated for both the employee and employer tax.

In the following example, a user creates an entry for EI, entering an amount of zero and limited and total taxable wages of $350. When they add this entry, Dayforce automatically adds the corresponding employer tax with the same taxable wages:

Corresponding employer tax and taxable wages when a user creates an EI entry, entering an amount of $0 and an amount of $350 for total taxable wages.

The system-generated entry always has an amount of zero and the same limited and total taxable wages as defined for the corresponding tax entry that you created.
The Message column of the entry indicates that it was system generated to pair with the tax entry that you created.
You can delete the system-generated entry if needed.