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ka95
Level 1

Employee Retention Credit Follow-up

After setting up for the Employee Retention Credit as directed, I have three questions:

 

1) What impact this will have on employee's W-2s ?  Salaries currently read less than actual paid -- with the difference sitting in "Cares Retention Emp"  

 

2) We will elect to receive a check for the overpayment on our 941.  How will I account for this check?  

 

3)  I'm still confused how this credit will appear in our financial statements using this setup?   I don't see a credit in my balance sheet (still reflects a payroll liability - it was not zeroed out) nor is it on my profit and loss statement.  

 

 

5 Comments
JonpriL
Moderator

Employee Retention Credit Follow-up

Hello there, @ka95!

 

Employee Retention Credit will automatically be adjusted within your liability before paying them. But I'd recommend contacting your accountant for guidance in choosing the affected accounts. You can read through this article to learn more: How to set up and track the Employee Retention Credit under the CARES Act?.

 

Lastly, here's a few articles you can read to learn more about how it affects your payroll:

If there's anything else that I can help you with, let me know in the comments/ I'll be here to lend a hand.

ka95
Level 1

Employee Retention Credit Follow-up

Thank you for your reply.   I have read and re-read How to set up and track the Employee Retention Credit under the CARES Act?  I have followed the step-by-step instructions - and double-checked my work.   I still do not see where the credit appears in my financials statements -- it's not on my balance statement (no reduction on my payroll liabilities despite using the credit to zero-out my last 941 monthly payment)  and it's not on my profit/loss statement (I would think it should show up as a credit in my payroll expenses, based on how the instructions set it up.  What am I missing?   (I was on the phone for an hour last week on this with QB support and as nice as the agent was, she was not able to resolve it - said she'd call me back in 10 minutes so she could look further - never heard back).   My concern is that the process set up by QuickBooks works to file the 941 but not to maintain the books.  

RCV
QuickBooks Team
QuickBooks Team

Employee Retention Credit Follow-up

Thanks for performing the steps in the article. Let me help you trace the Employee Retention Credit in QuickBooks, ka95.

 

I appreciate the time and effort you've spent with one of our support agents. I'll personally share your feedback with our Customer Support Team regarding this one. We'll be able to take action on improving our customer service.

 

If you're using QuickBooks Desktop Payroll Assisted service, the credits will be adjusted automatically when sending payroll. If you're using the QuickBooks Enhanced Payroll service, you can run the QuickReport to see balances of your credit. This way, you'll see the difference in the liabilities credit you are still able to claim. 

 

Here's how:

 

  1. Go to your Chart of Accounts.
  2. Select the COVID-19 Expenses account.
  3. Choose the Reports drop-down, then tap QuickReport.
  4. Update the dates to reflect the paycheck date you are looking for.
  5. The amount should show all the payroll items you've set up and run the payroll on. Then, the amount in the Total column reflects the amount of the Credit you can enter on the Liability check. 

If the credits are not reflecting on the QuickReport (same with your financial statements), I'd suggest contacting our Payroll Support Team again. Just provide your case or reference number to the phone agent. I know you already called but since this is a public forum, they can pull up and check your account in a secure environment. They'll investigate what's causing this issue.

 

Here's how to reach them:

 

  1. Click the Help icon on the top menu. 
  2. Choose QuickBooks Desktop Help
  3. Tap Contact us.
  4. Select Search for something else and enter your concern in the Tell us more about your question: field. 
  5. Tap Search
  6. Choose Start a Message or Get Phone Number to connect with our support. 

QBDT contact1.PNG QBDT contact2.PNG

 

If you have any questions regarding the CARES Act, it would be best to contact your accountant or legal professional. You can also check out the IRS website for more details.

 

I've got a link here that provides you with articles about managing your payroll: https://quickbooks.intuit.com/learn-support/en-us/payroll-management/07?product=QuickBooks%20Desktop....

 

Fill me in if you need anything else in QuickBooks. I'll be here to ensure your success. Take care always.

drpeters
Level 2

Employee Retention Credit Follow-up

Hi @JonpriL ,

 

I have the same question as the original poster. I have Quickbooks Pro Desktop 2020 with Enhanced Payroll, and I set up the accounts for tracking the Employee Retention Credit exactly as described in the article. When I generated a worksheet for W-2 data, the "CARES Retention Emp" amounts show up under the heading "Items that impact FWH - but not a Box 1 tax tracking type". Is there a way to add this into Box 1 to generate an accurate W-2? Or will this amount need to go into a different box on the W-2 form?

MaryLandT
QuickBooks Team

Employee Retention Credit Follow-up

Let me take over and share how QuickBooks populates the Employee Retention Credit (ERC), drpeters.

 

With the recent updates, you need to use Form 941 Worksheet 1 when filing ERC. To make sure Worksheet 1 will populate when opening Form 941, you should claim a credit under the Family First Coronavirus Response Act (FFCRA).

 

Also, you can read through the IRS topics about how this works: COVID-19-Related Employee Retention Credits: How to Claim the Employee Retention Credit FAQs

 

If you need to report this on the employee's W-2, I recommend consulting your tax advisor. This is to ensure you have the correct data when filing returns.

 

I've added this page: Quick links to federal tax forms to learn how QuickBooks reports your taxes.

 

Feel free to click the Reply button below if you have follow-up questions about tracking ERC. I'll be right here to help you.

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