What is a Year-to-Date Payroll? YTD Meaning Explained
December 13, 2022
If you’re a business owner, the chances are that you know that success lies in the small details. That’s why, as an employer, you need to pay attention to intricacies such as year-to-date, or YTD payroll.
But what exactly is YTD payroll, and why should you care about it? It might seem difficult to get familiar with it at first, but don’t worry—our article will provide you with all the necessary details!
So, without further ado, let’s jump straight into the action!
What is Year-to-Date Payroll?
Before understanding year-to-date payroll, you must first get familiar with the term "payroll."
Simply put, payroll is the compensation that a company needs to pay for its employees’ services during a set period.
On the other hand, a YTD payroll is the amount of money a company spends on payroll from the beginning of the fiscal or calendar year to the current payroll date. YTD is calculated as a straight sum of items in the same line on each paystub from the beginning of the year.
You should note that a YTD payroll can include the amount of money paid to independent, exempt workers. These are the contractors that aren’t your regular employees but rather independent workers you hire for a specific job.
For full-time, salaried employees, the YTD payroll represents their gross income. On the other hand, a company’s YTD shows the earnings all of its employees earned throughout the year.
As mentioned previously, a YTD payroll can take into account the amount from a fiscal or calendar year. It’s up to you to choose which option works best for you, but we’ll break down the biggest difference between the two to help you with the decision.
Calendar vs Fiscal Year
The calendar year, also known as the “civil year,” has 365 days (or 366 if it's a leap year). It always runs from January 1 to December 31 and is divided into months, weeks, and days.
The calendar year is used all over the globe by individuals for planning purposes, marking special occasions, and organizing all sorts of events.
On the contrary, a fiscal year can start on any day of the year as long as it contains a full 12 months. It’s used by most schools in the world, as their fiscal year starts around September and ends 12 months later, on the next September.
Some of the best-known companies that use the fiscal year to report their financial information are Target and Walmart. Companies that have opted for the calendar year include Amazon and Meta.
Why is Year-to-Date Important?
Year-to-date is a value that’s important for both employees and employers. In the following section, we’ll cover its significance in detail.
YTD Significance for Employers
YTD payroll is significant for employers because it helps them calculate and fill in quarterly and yearly tax liabilities. It allows them to see how much they have incurred in a particular year, quarter, or month.
Employers can also use YTD to compare their payroll expenses with their annual budget. It can come in handy to help them keep track of project payroll costs and tax liabilities and decide whether they have the means to hire new employees.
YTD is also a necessary value for various quarterly filings. For example, it’s used to calculate Lines 2, 3, and 5a–5d on Form 941, a legal paper used for reporting income taxes, Medicare tax, or Social Security tax withheld from employees’ paychecks.
Lastly, employers can also use the YTD values found in annual filings of payroll and employment forms, such as W-2 and 1099 forms or Form 940.
YTD Significance for Employees
YTD is an important value in pay stubs for employees, as it provides them with a breakdown of all their earnings, including holiday pay, overtime, tips, etc. By reviewing it, they can see their taxes and deductions, such as health insurance, FICA, federal and state taxes, and similar.
Employees can also compare the YTD numbers on their pay stubs to the annual W-2, which they’re required to receive from their employer. W-2, also known as a Wage and Tax Statement, is a legal paper that employers send to their employees and the IRS at the end of each year. It reports annual wages and the amount of taxes withheld from employees' paychecks.
By keeping track of their YTD numbers, employees can check whether the W-2 numbers match the total YTD earnings.
How to Calculate Year-to-Date Payroll?
One of the ways to calculate YTD payroll is to simply multiply each employee’s gross income per pay period by the number of paychecks they’ve received.
For example, let’s say that you have three employees—John, Joe, and Jane—and that they have received wages for 10 pay periods. If per pay period, John has earned $1,000, Joe $2,000, and Jane has earned $2,500, their YTD payrolls would be $10,000, $20,000, and $25,000.
Now, to get your company’s total YTD payroll, you simply sum the YTD payrolls of all employees, meaning that in this scenario, it would be $55,000.
You should keep in mind that, although simple and easy, this method of calculating YTD payroll lacks specific information. It’s also quite hard to put to use when you have many employees and can be very time-consuming.
That’s why you should use pay stubs to calculate your YTD payroll. Not only will you get exact numbers on each employee, but you also won’t waste your precious time.
How to Calculate Year-to-Date Payroll With Pay Stubs?
A pay stub is a legal document that lists all the wages an employee earns during a pay period. Most importantly, it also displays the total earnings from the start of the year until the latest pay period.
To calculate YTD payroll with pay stubs, all you have to do is add up the YTD numbers from your employees’ pay stubs.
As all employers are required by law to provide their employees with pay stubs, you’ll either have to create this important document on your own or use an online template generator.
The first option isn’t recommended, as creating a pay stub by yourself may take a lot of time and be quite difficult. You can also make calculation errors by accident and get the wrong numbers.
For this reason, the best way to get pay stubs is to use an online generator. This way, you won’t have to calculate anything by hand, and all calculations will be as precise as they get.
Different Types of YTD Values Displayed on a Pay Stub
YTD is generally used to describe multiple factors on a pay stub, such as:
YTD Gross Pay
The main value you’ll see reported on a pay stub is the "gross pay," which is the total amount of money an employee earns for the whole year. It’s the sum of all profits, wages, salaries, and payments employees earn before any deductions or taxes are calculated.
YTD Deductions and Benefits
A pay stub typically displays the total amount that was deducted from the employee’s gross pay for various benefits and deductions. These can be voluntary or involuntary and include the following:
- 401k plan
- Union dues
- Life insurance
- Job-specific payments, such as clothing or tools
- FICA taxes
- Child support payments
YTD State Taxes
This is the total amount that goes towards paying state taxes and that is withheld from the employee’s paycheck for the year.
YTD Federal Taxes
Similarly, this is the total amount of the state taxes that are deducted from the employee’s paycheck for the year.
This value represents the total amount of reimbursement an employer has made to an employee during the year. Costs that are usually included in reimbursement include insurance payments, pay diem rates, travel-related costs such as meals and lodging, etc.
YTD Net Pay
YTD net pay includes all the money the employee has earned since the beginning of the year, after deductions and taxes. To calculate net pay, you can simply subtract tax and other withholdings from your employee’s gross pay.
Last but not least, YTD reports the total number of hours the employee has worked throughout the year. Along with this, some pay stubs take the employee’s overtime hours into account when calculating the YTD total.
YTD Payrolls FAQ
#1. How do I find my YTD income?
The easiest way to find your YTD income is to check the pay stub you receive from your employee.
#2. What is the difference between a month-to-date and a year-to-date?
Year-to-date is a period from the beginning of the calendar or fiscal year up to the current date. On the other hand, month-to-date is the period of time from the 1st of the month to the last finalized business day in it.
#3. Does YTD start from January 1st?
YTD starts on 1st of January if the company is using the calendar year to calculate earnings.
Hopefully, this article has familiarized you with the concept of YTD payroll.
Although you can calculate it on your own, keep in mind that it’s quite difficult and time-consuming. If you want to save some time and energy, use pay stubs, as this way, you’ll minimize the number of calculations you have to do.
Need pay stubs or any other important legal paper, such as a W-2 form? Feel free to check out what we have to offer, and contact us if you seek any additional help!
- YTD payroll is the amount of money a company spends on payroll from the beginning of the fiscal or calendar year to the current payroll date.
- YTD is important because it helps employers with tax duties and provides a breakdown of all earnings for employees.
- The easiest way to calculate YTD payroll is to use pay stubs.
- The most common YTD values are:
- Gross Pay
- Deductions and Benefits
- State Taxes
- Federal Taxes
- Net Pay
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