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Social Security and Medicare Deductions

I downloaded a required update Jan 3 and then created payroll. Social Security and Medicare deductions were double what they should have been on employee checks. How do I prevent this from happening again and correct this on checks that have already been cashed? QB shows employee and employer each at 6.2% for SS and Medicare at 1.45%.

Best answer 01-08-2019 10:37 AM

Accepted Solutions
QuickBooks Team

Re: Social Security and Medicare Deductions

Hi there, Melissa7,

 

I want to ensure your taxes are calculating correctly.

 

There are a few reasons why SS and Medicare taxes are calculating incorrectly. Consider the following:

  • QuickBooks is not updated or there is an internet interruption during the update.
  • Using the incorrect tax table version.
  • Employee's YTD is off.

To isolate the problem, let's make sure you're able to download the latest tax table update version 21902. 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. (Please see screenshot.)

 

If you're using the correct version, let's check if there are any discrepancies or zero deductions for the SS and MD amounts on the employee's paycheck. We can use the 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 Medicare Company, Medicare Employee, Social Security Company and Social Security Employee. (See screenshot.)
  8. Once done, click OK twice.

On the report, review if the checks have the correct deductions. 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, then there is no action to be taken next.

 

However, if QuickBooks overwithheld the SS and MD taxes, there are 2 ways to remedy the situation. Here's how:

  • Option 1: Apply the taxes to your next paycheck. QuickBooks has an automatic calculation feature for rate-based taxes deducting overpaid taxes to your next payroll run.
  • Option 2: You can offset the overpayment by creating a liability adjustment. Here's an article with the complete steps on how to create an adjustment: Adjust payroll liabilities

That should get you on the right track, Melissa7. Please feel free to let me know if there's anything you need help with. I'll be glad to work with you again. Have a good one!

4 REPLIES
BRC
Established Community Backer ***

Re: Social Security and Medicare Deductions

That's correct.  The company and employee items are both 6.2% and for medicare both rates are 1.45%.

See  https://www.irs.gov/taxtopics/tc751

 

You should be familiar with these rates as well as the other information from the Circular E before attempting payroll on your own: https://www.irs.gov/publications/p15

Experienced Member

Re: Social Security and Medicare Deductions

I've been doing this for almost 20 years w/o issues but QB deducted the wrong amounts without me changing anything from one payroll to the next other than their required update.

QuickBooks Team

Re: Social Security and Medicare Deductions

Hi there, Melissa7,

 

I want to ensure your taxes are calculating correctly.

 

There are a few reasons why SS and Medicare taxes are calculating incorrectly. Consider the following:

  • QuickBooks is not updated or there is an internet interruption during the update.
  • Using the incorrect tax table version.
  • Employee's YTD is off.

To isolate the problem, let's make sure you're able to download the latest tax table update version 21902. 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. (Please see screenshot.)

 

If you're using the correct version, let's check if there are any discrepancies or zero deductions for the SS and MD amounts on the employee's paycheck. We can use the 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 Medicare Company, Medicare Employee, Social Security Company and Social Security Employee. (See screenshot.)
  8. Once done, click OK twice.

On the report, review if the checks have the correct deductions. 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, then there is no action to be taken next.

 

However, if QuickBooks overwithheld the SS and MD taxes, there are 2 ways to remedy the situation. Here's how:

  • Option 1: Apply the taxes to your next paycheck. QuickBooks has an automatic calculation feature for rate-based taxes deducting overpaid taxes to your next payroll run.
  • Option 2: You can offset the overpayment by creating a liability adjustment. Here's an article with the complete steps on how to create an adjustment: Adjust payroll liabilities

That should get you on the right track, Melissa7. Please feel free to let me know if there's anything you need help with. I'll be glad to work with you again. Have a good one!

BRC
Established Community Backer ***

Re: Social Security and Medicare Deductions

RE: I've been doing this for almost 20 years w/o issues but QB deducted the wrong amounts.

 

Based on your description, the amounts are right.  What's wrong with them?