State Payroll Services periodically runs Workers’ Compensation Clean Ups to correct taxes for employees with late changes to their Workers’ Compensation leaves. 

Current Year Clean Up:

When a Workers’ Compensation leave transaction is entered for the current tax year but was entered too late to be caught by the regular tax exclusion program’s six-week lag, corrections to the employee’s taxes will be completed by a current year Clean Up. Current year Clean Ups run several times throughout each year. They correct employees’ taxable wages via tax balance adjustment(s). They also generate SS/Med (FICA) deficiencies and refunds, depending on whether the employee’s taxes were under- or over-withheld due to the late entry.

Prior Year Clean Up:

Prior year Clean Ups make tax corrections for employees with late changes that were entered for a previous tax year. Any employee who is picked up by a prior year Workers’ Compensation Clean Up will be issued a corrected W-2 (W-2c).

Each prior year Clean Up targets a specific tax year and is completed in two separate batches: positive and negative.

A positive W-2c batch increases an employee’s taxable wages for the year in question. This results from a retroactive entry returning an employee from paid Workers’ Compensation leave. The wages from that time frame should no longer receive the Workers’ Compensation tax-free benefit. SS/Med (FICA) deficiencies are also generated by a positive W-2c batch.

A negative W-2c batch decreases an employee’s taxable wages for the year in question. This results from a retroactive entry placing an employee on paid Workers’ Compensation leave. The wages from that time frame should now receive the Workers’ Compensation tax-free benefit. SS/Med (FICA) refunds are also generated by a negative W-2c batch.

Last Updated: September 2026