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J
jennylas
February 2, 2026
Question

IRIS Late Payroll

  • February 2, 2026
  • 1 reply
  • 23 views

I run my payroll through a third-party company formerly known as MyPay.  They transitioned to IRIS recently and completely dropped the ball on 3 straight paychecks.  I didn't notice until December and had already been taking distributions to cover my personal expenses, but they didn't process the missing tax withholding until January 2026.

What do I need to do to make the following corrections in QB:

1. Reclassify some of my Shareholder Distributions as Salaries & Wages.  The company I was working for ended our contract recently and I don't have the cashflow to cover the 3 missing paychecks on top of the distributions I already took.

2. The payroll taxes that they processed in 2026 are technically for 2025.  How do I move them to 2025?

3. They also charged me processing fees in 2026 for those tax withholdings.  Not sure if this should be moved into 2025 or kept in 2026.

Thank you!

1 reply

R
Ryland Grace
April 13, 2026

That’s a messy situation with IRIS, but we can definitely clean this up! Since you’re dealing with shareholder distributions and backdated payroll, we need to be precise so your 2025 W-2s and 1120S (S-Corp) or 1040 (Sole Prop) actually match up.

 

First, we just need to reclassify distributions to wages since the cash already left your bank as a "Distribution," we need a Journal Entry dated December 31, 2025, to tell QuickBooks that a portion of that money was actually your Gross Salary. Debit: Salaries & Wages Expense (for the Gross amount of those 3 missed checks).

 

CREDIT

THE RESULT
Shareholder Distributions (Equity account)This moves the "cost" into 2025 where it belongs, lowering your net income and ensuring your 2025 tax return reflects the correct officer compensation.

 

Also, Move the 2026 Payroll Taxes to 2025 This is the tricky part. Because the taxes weren't processed until January 2026, QuickBooks thinks they belong to 2026. To fix the timing: Create an Accrual Entry (12/31/25):

 

Debit: Payroll Tax Expense (for the Employer portion: SS, Medicare, FUTA/SUTA).

Credit: Payroll Liabilities (this shows the IRS you owed the money on Dec 31).

 

In the Payroll Center: You’ll need to go to Taxes > Payroll Tax and look for Prior Tax History. You want to record these as "Historical Payments." Crucial Step: Ensure the Period Start/End is set to Q4 2025, but the Payment Date is the actual date in January 2026 the money left your bank. This "links" the 2026 cash to the 2025 tax liability.

 

Finally, you need to Handle the Processing Fees. Pesonally, I’d recommend keeping these in 2026. Since even though the payroll was for 2025, the service (correcting the error) was performed and paid for in 2026. Unless these fees are massive (thousands of dollars), the IRS isn't going to care if they hit 2026. It’s much cleaner to just categorize them as Bank Service Charges or Payroll Fees on the date they hit your bank statement.

 

Since you’ve already crossed into April 2026, you likely already filed your 941s and W-2s for 2025. Adding these three paychecks now means you’ll likely need to file a 941-X and a W-2c (Corrected W-2) to report that extra income. If you don't, your QuickBooks file won't match what you sent to the government.

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