cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Established Member

How do I refund a household employee who made less than $2100 in 2018 for FICA taxes that I withheld?

How do I refund a household employee who made less than $2100 in 2018 for FICA taxes that I withheld?

3 Comments
QuickBooks Team

Re: How do I refund a household employee who made less than $2100 in 2018 for FICA taxes that I w...

Good to see you here in the Community, cindyrayno.

 

You've come to the right place. I have just the steps you'll need to refund the employee that made less than $2100 in 2018 for FICA taxes.

 

An ideal way to handle this is to create a non-taxable reimbursement payroll item which will be used when you create the employee's paycheck. The steps below will guide you on how to create it:

 

To set up the payroll item in QuickBooks

  1. From the Lists menu, select Payroll Item List.
  2. Click the Payroll Item drop-down button, then choose New. You could also press CTRL + N.
  3. Select Custom Setup, then click Next.
  4. Follow the on-screen instructions on the corresponding pages:
    Payroll item type: Select Addition.
    Name used in paychecks and payroll reports: Enter a name for this payroll item, for example, Reimbursement.
    Expense account: QuickBooks will automatically enter Payroll Expenses. However, if you have a specified account for this, then you may go ahead and select that.
    Tax tracking type: Make sure to select None.
    Taxes: Just click Next.
    Calculate based on quantity: If this isn't based on quantity and hours, then choose Neither.
    Gross vs. net: Select net pay to ensure that this won't affect the gross wages that'll appear on your forms.
    Default rate and limit: You can leave the Rate and Limit fields blank.
  5. Click Finish.

All of this information and more is available from our guide on how to set up payroll item. From there, all you need to do is enter this payroll item in the Other Payroll Items section when you create the paycheck.

 

 

That should do it!  With these resources, I'm confident you'll be able to apply the reimbursement on the next payroll run like a pro!

 

Keep in touch with me here if there's anything else you need. I always got your back. Thanks for reaching out, wishing you and your business the best.

Established Member

Re: How do I refund a household employee who made less than $2100 in 2018 for FICA taxes that I w...

Thanks, this is helpful.  I found out when I processed W-2's that I should not have withheld the FICA taxes on employees who made less than $2100.  How do I fix the W-2?

Moderator

Re: How do I refund a household employee who made less than $2100 in 2018 for FICA taxes that I w...

Thanks for coming back, cindyrayno.

 

After creating a non-taxable reimbursement, you'll need to create negative payroll adjustment to remove the tax amount in the W-2 form. Please refer to this article for the steps: Adjust Payroll Liabilities.

 

If you have any questions, let us know. Thanks!