Auto-adjust is an option in App Settings that keeps tax withholdings on track when something throws off the running total — a bonus, a mid-year hire, switching payroll systems. By default, it's off, which works for most small businesses.
What it does
Every payroll, the system calculates how much tax to withhold from each paycheck.
Off (the default): Each paycheck is calculated on its own.
On: The system also checks what's already been withheld this year and adjusts the current paycheck to keep the running total accurate.
Either way, employees end the year with the right amount withheld. Auto-adjust changes the timing, not the total.
When to turn it on
Consider turning it on if any of these apply:
You started using PaycheckCity mid-year and brought over year-to-date totals
You hired an employee mid-year with prior earnings from another employer
You pay bonuses
An employee's pay varies a lot from period to period
An employee changed their W-4 mid-year
If none of those apply, leave it off.
Example
An employee earns $60,000 a year, paid biweekly. Mid-year, you give them a $5,000 bonus.
Off: Standard tax comes out of the bonus check. The employee sees a smaller take-home that one paycheck.
On: The extra tax is spread across the remaining paychecks. The bonus check is larger, the rest of the year stays steady.
How to turn it on
Go to Settings > Tax calculation settings and toggle Auto-adjust withholdings.