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As another year-end is closely approaching it is very important for SAP Payroll customers in the United States to get prepared for the coming year-end as well as the start of the upcoming year. We are very fortunate that the SAP payroll product management shares a lot of information on the SAP Marketplace to keep customers up to date on relevant year-end OSS notes, documentation and FAQ’s.  This information is located at http://tinyurl.com/26krnks and I make a point to review it weekly during Q4/Q1 of each year.

Over the past 12 years I have seen several different outcomes as it relates to SAP payroll year-ends and the two biggest things to guarantee success is to start early and ensure you have an experienced team. Every year SAP provides a year-end preparation checklist which is located at http://tinyurl.com/2wy6dzm and I have listed some additional key items that that the SAP IT and Payroll Business team should review.

SAP IT Team


  • Update your SAP payroll calendar and check dates for the upcoming year.
  • Update Federal IRS Garnishment Levy (Publication 1494) information in SAP.  This will be delivered in an OSS note or you can make the changes manually.
  • Update SAP for all changes affecting Year End Tax reporting.
  • Update any deduction and payment models.  
  • Update posting dates for upcoming year.
  • Update all dates associated with month end accruals for upcoming year.
  • Install required HR Support Packages (HRSPs), up to and including the Year End Base depending on your release of SAP.
  • Review all the key OSS notes to see if they need to be applied based on your business requirements.

Payroll Business


  • Clear all outstanding claims prior to last payroll of the year.
  • Review uncollected taxes (/Nxx wagetypes) and take required steps, if desired, to resolve them.
  • Update any company specific state unemployment rates and wage base for upcoming year.
  • Review W-4 exemptions and W-5’s.
  • Review reconciliations between GL and Payroll to make sure tax accounts are in balance.
  • Make sure you keep current on any SAP and BSI TUBS that have key changes for upcoming year.

It is important that if you plan to bring on supplemental consulting resources that they have experience in US payroll, have been through multiple year-ends, and have strong troubleshooting skills. I have seen too many cases where clients realize once it is too late that their consultant does not have the skills they need and they end up having a lot of challenges.

I always recommend that clients take the time to call references as there are many people that claim to have this skill set and can’t even spell PU19 (lame SAP payroll joke). In addition at a bare minimum they should be able to walk you through the “how” regarding the key items listed above.There is no reason why US Payroll customers should have any issues with the year end as if done properly it is not a difficult process. If you follow some of the advice above you will be well on your way to a successful year end.

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10 Comments

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  1. Tammy Powlas
    more thought…the “accountant” in me suggests adding a check for payroll accruals.

    Excellent idea to reconcile the GL back to payroll.

    Many thanks!
    Tammy

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    1. Jarret Pazahanick Post author
      Hi Tammy

      Thanks is a good point and something that should added. 

      On a side note not every client I have implemented US payroll for uses payroll accruals but a majority of them do.

      It would great to get some additional year end tips for individuals reading this blog.

      Jarret

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  2. Steve Bogner
    OK, you knew this was coming…. I don’t think the clearing all the claims at year-end is either a system, compliance or business requirement. Of course it’s good to minimize and clear claims whenever possible, but for year-end there is no magic about clearing the claims.

    If you let a claim roll to the next year and it gets repaid via payroll, then that year’s wages are credited – and that falls in line with constructive receipt so I think that’s fine. If you decide the claim isn’t going to be repaid, you can clear it in the new year and there is no taxable impact – also fine. If the employee repays the claim, you can enter your IT 0221 into the previous tax year and trigger a W-2C. It all works fine.

    If there is a compelling reason to clear all the claims at year-end, I’d like to hear it.

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    1. Jarret Pazahanick Post author
      I knew this was coming based on our previous discussions 🙂

      I figured I would stick with the standard SAP approach to claims but plan to try your approach at my next client as the who claim clearing process can be cumbersome.

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    2. Scott Hudgens
      The problem with letting claims roll to next year is that /561 and your tax wage types /4-/7’s are not in balance and this will be reflective on the W2.  The amounts in /561 could consist of a collection of multiple taxable earning and deduction codes. SAP’s wage type /561 is essentially a holding bucket for negative money and was not intended to support tax reporting.  Proper clearing of /561 will readjust those taxable $’s back to the correct wage types.  In actuality, doing nothing will generate an incorrect W2 for the current year.

      Essentially, if you let the /561 roll across the year your W2 will not reflect what was actually paid to the employee. Until you get that money back you are required to present those $’s on the W2 as wages paid/reduced. 

      Hope this helps.
      Scott Hudgens

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      1. Steve Bogner
        Hi Scott –

        In the standard system, taxable wages and taxes are not reduced when the claim is created. That is controlled not so much by the claim wagetype /561 but by the Good Money wagetype /5PY. The /561 is the cash amount of the overpayment, and the /5PY is the taxable amount of the overpayment. As the employee is paid additional taxable wages they are offset against /5PY (and the UNB table), and until /5PY gets to a positive amount no taxable wages or taxes are generated.

        /561 and /5PY are generally the same amount, but might be different due to nontaxable amounts in the claim, imputed income reductions, or retro changes in gross-ups.

        If your system is reducing /4-/7’s when the claim is created then something is probably setup incorrectly.

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        1. Scott Hudgens
          Hi Steve,

          Yes your logic is correct regarding the technical processing of /561 and /5py and also the updating of /4’s and /7’s.  The true problem lies in scenarios where the customer wage types that are mapped to other W2 boxes (such as 10, 12x, 14) and are also included in the /561 claim and /5py good money holding wage types at years end.  These customer wage types are no longer there in the RT but the /4 and /7’s still reflect their amounts/impacts.   Thus leading to inaccurate W2’s.

          Thanks,
          Scott

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  3. Larry Suttles
    I agree, great tips.

    We have been live for 5 years now and every year I’ve found another table or 2 that had to be updated because it was only config/generated for a few years past go-live. I actually update all my tables, schedules, calendars and check dates prior to FY end year (6/30/XXXX) because we use Position Budgeting and Control (PBC) and the data must correct out to the FY end that extends beyond the calendar year end.

    Anyways, I wanted to make a comment that table V_T549Z (Calendar for payment model) had to be updated prior to table V_T549X (Payment/Deduction Models). I was luckily able to figure this out but it threw me for a loop at first. In addition, I’ve had to update table V_T56C3 (Cumulation Intervals) since go-live.

    Also, I have to update table V_T511K because of how I have configured a Payroll Rule to deduct union dues automatically.  And don’t forget to update tables for Fringe rates, if they are applicable to your company.

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