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Experienced Member

Payroll taxes are not being taken out of one of my employees pay checks!

Payroll taxes are not being taken out of one of our employees pay checks! How do I fix this problem?

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QuickBooks Team

Re: Payroll taxes are not being taken out of one of my employees pay checks!

Welcome to our forums, @Minddbender1,

 

There are a few reasons why taxes and contributions are not calculating correctly. Consider the following:

To isolate the problem, let's make sure you're able to download the latest tax table. You can check that by following these steps:

  1. Go to the Employees tab.
  2. Select Get Payroll Updates.
  3. You'll see the tax table version beside the Payroll Update Info button.
  4. Make sure it displays version 21909.

If you're not using the correct version, let's update your payroll by following the steps below:

  1. Go to the Employees tab.
  2. Choose Get Payroll Updates.
  3. Select Download entire payroll update.
  4. Click the Update button.
  5. Click OK.

Once done, let's pull up a Payroll Detail Review report to verify the taxes withheld and the difference. Here's how:

  1. Go to the Reports menu.
  2. Select Employees & Payroll.
  3. Choose Payroll Detail Review.
  4. Click Customize Report tab (if you want to run a specific report).
  5. Choose the Display tab and select the date range from drop down list or fill in the From and To dates.
  6. In the Filters tab, choose Payroll Item from the Filter section. Select Multiple payroll items in the Payroll Item drop-down.(See screenshot.)
  7. Select the taxes that are not calculating. (See example below.)
  8. Once done, click OK twice.

On the report, review the paycheck deductions and taxes. You can get the correct calculation by multiplying the total wage base of each payroll items to its corresponding tax rate. If the figures are correct, there is no action to be taken next.

 

If QuickBooks underwithheld the payroll taxes, there are 3 ways to remedy the situation. Here's how:

  • Option 1: If you created manual checks, you can delete and recreate the transaction to correct the taxes.
  • Option 2: Apply the taxes to your next paycheck. QuickBooks has an automatic correction feature for rate-based taxes applying underpaid taxes to your next payroll run.
  • Option 3: You can offset the discrepancy by creating a liability adjustment. Here's an article with the complete steps on how to create an adjustment: Adjust payroll liabilities

Here's how to create a liability adjustment:

  1. Choose Employees.
  2. Select Payroll Taxes and Liabilities.
  3. Choose Adjust Payroll Liabilities.
  4. Select the correct Effective Date. It should be the same date as the last paycheck of the affected quarter or today's date if doing an adjustment that affects current quarter only.
  5. Select the Employee radio button if the adjustment affects the employee's YTD and Company if the adjustment is a company contribution.
  6. In the Taxes and Liabilities section, click the Payroll Item column and select the correct payroll item to adjust.
  7. Click Accounts Affected, choose Do not affect accounts or Affect liability and expense accounts.
  8. Click OK.

That should correct the General Ledger report, @jeanl.

 

Please update me on the outcome by posting a comment below. I want to make sure you have the right taxes withheld on your paychecks. I'll keep an open eye for your response. Have a great day!