I've been asked this question so many times, I figured it's time to get all details out online, to finally clear this up. Initially, it may seem that it's a straight forward answer, but, in fact, it's a bit more complex when you get to the details. In our calculations, and from what most payroll specialists say, is that it's based on the government tax structure, as a controlling entity. The government looks at a business and it's income as INCOME and EXPENSES for tax purposes. If they pay an EXPENSE inside a fiscal year, even though it's for services done in previous years, it is viewed as current years expenses. This may seem counterintuitive, but, it works out in the long run, as there is 2 things that occur:
  • The word can be done in one Year and paid in the next
  • There will always be balance if viewed from afar.
In regards to an employee, it is transparent, as they will get paid as normal PayPeriod over Payperiod (week over week or month over month). Even though they performed the work in one year, and got paid the income the next. With this in mind, the YTD is a calculation of all the pay, that employee has made in that fiscal year. To exaggerate this point. Let's say the employee makes $120,000 a year.. That means she makes $10,000 a month. If she was paid at the end of the pay period, she would get that pay on the last day of each month, sent to her bank, and she could close and open all years easily. It's never that simple though, as accounting departments, banks, HR, and all other office people work the same hours as our employee. So, if she finished at 5pm on the last day of the month.. But, the accounting department wanted to make sure she didn't leave early, they'd have to wait until 5pm, get her punch clock card, see she was there until 5pm, and then process her pay.. get it signed off by the boss, and contact the bank to send the payment... but, they also finish at 5pm, the boss is gone, and the bank closed an hour ago. So, now, we are in the first day of the next month.. and if it was December 31st, the next day would be January 1st, day off, so, technically, the first day all this could happen would be jan 2nd. And this would show as an EXPENSE to the company in the next year, and an income to the employee as well. To continue my point, it looks like the employee did a lot of work in the previous year, but no money, in 2018 for example, but, did no work in 2019, and got 10,000$. This appears lopsided, but, it will work out at the end of 2019, when again, the employee will not be paid for work done, and get the check the next day.


  • Must pick which cycle date will be used for YTD, i.e., End-Date, Pay-Date,


  • Hired Date does NOT necessarily coincide with Period-Start date.
  • YTD uses the current year dates of receiving money to get totals