Year-end tax adjustment is a procedure to accurately calculate the annual income tax amount for salaried employees and adjust any overpayment or underpayment.
Typically, the income tax withheld from monthly salaries and bonuses is an estimated amount. At the end of the year, the actual income and deductible amounts are used to determine the precise tax amount.
Through this process, any overpaid taxes are refunded, while any underpaid taxes are collected.