Retroactive calculation is used if there is a change of earnings for the past. When the payroll driver detects a change for past periods, it makes evaluations to perform retroactive payroll calculation.

Depending on the nature of the retroactive change, the payroll driver makes the following evaluations:

• Does the change effect pay periods in the previous year?
• Was there an overpayment or an underpayment?
• Was there a change in tax state that we did not realize?

The payroll driver then uses one of the following methods to process the retroactive change:

The payroll driver forwards the changed taxable amounts to the current pay period and modifies the current taxable earnings. It then calculates the taxes using the current period’s tax authority and tax rate. The taxable earnings and the taxes of the previous period are not changed.