This Year's Year-End Adjustment: What's Different
The year-end adjustment is a familiar annual task, but when deductions are raised or forms change, the work quickly gets more complex. We organize this year's changes and what staff should prepare early.
- The basic flow of the year-end adjustment
- This year's main changes
- Checking the documents collected from employees
- What staff should prepare early
01What the year-end adjustment is — a quick recap
The year-end adjustment reconciles the total income tax withheld from monthly wages against the proper tax on the full year's income. In most cases, over-withheld tax is refunded.
To calculate the correct tax by reflecting the various deductions (spousal, dependent, insurance-premium and so on), you need to collect declaration forms and supporting certificates from employees.
02This year's main changes
When the basic deduction or employment-income deduction is raised, the deduction amounts and tax tables used in the year-end calculation change. It is essential to use the latest forms and calculation methods that reflect the reform.
If a new deduction is created, you will also need to identify who is eligible and collect any additional declaration forms.
03Checking the documents collected from employees
The perennial stumbling blocks are omissions on the forms and missing certificates. Check the following.
- That the dependent-deduction (change) declaration matches the actual situation
- Insurance-premium certificates attached (life, earthquake, iDeCo, etc.)
- The balance certificate for the mortgage credit in year 2 and beyond
- A withholding slip from a previous employer, if any
04What staff should prepare early
- Update the payroll software to the latest version and confirm the reform is reflected
- Announce the submission of forms and certificates to employees early
- Check the collected documents and follow up on any deficiencies individually
- After calculating, confirm the deadlines for issuing withholding slips and filing statutory records
Year-end overlaps with the busy accounting season. Building the schedule ahead of time and proceeding with room to spare is the surest way to prevent mistakes.
Summary
The year-end adjustment reconciles the year's income tax; accurately reflecting each deduction is crucial.
In a year with raised deductions or changed forms, always confirm the latest calculation method and the year it applies to.
Early notice is the key to collecting documents. Update the payroll software and bring the schedule forward to proceed with room to spare.
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Sources & References
This article is based on information available at the time of publication. Rules and systems may change. Please consult a professional before making any individual decisions.
