100% 401k contribution and how to account for the social security and medicare taxes.

I'm here to help you record this paycheck, sjhove1966.

In QuickBooks Desktop, you can create a zero paycheck instead of a negative one. To do this, just enter the 401K deduction and create an addition item (Cash Advance or Loan) in the Other Payroll Items section. The amount for the addition item should be the negative net pay amount on the paycheck. This is to zero out the net pay.

Here's how:

1. Click Employees at the top, and then select Pay Employees.
2. Click the schedule of your payroll if you have any, or click Start Unscheduled Payroll if you don't.
3. Check the employee's name on the list, and then click the Open Paycheck Detail button.
4. In the Other Payroll Items section, click the drop-down arrow below ITEM NAME. Select Add New.
5. In the Add new payroll item window, select Addition, and then click Next.
6. Enter the name of the addition item, and then click Next twice.
7. In the Tax tracking type section, select None.
8. Click Next, and then Finish.
9. On the paycheck, enter the Check amount beside the new item you've created. The net pay will be zeroed out.
10. Click Save & Close and proceed with creating the paycheck.

If you want the Medicare and Social Security taxes to be taken out, you'll need to have an earnings item. You can either divide the employee's salary in half; the first half for the earnings and the other half for the 401K deduction. Since we can't give direct suggestions on how to account for the federal taxes, it would be best to consult an accounting professional.

Please let me know if you have any further questions. I'll be here to answer them for you.

@SophiaAnnL

You don't do this: "If you want the Medicare and Social Security taxes to be taken out, you'll need to have an earnings item. You can either divide the employee's salary in half; the first half for the earnings and the other half for the 401K deduction"

Splitting it does Nothing Different.

@Anonymous

You cannot deduct all their Gross as IRA contribution, because there has to be taxes withheld. You can deduct their Net after Medicare and Social Security are deducted.

It isn't subject to Fed Income tax. You need to know if your State treats it the same or not, as well.

@qbteachmt: In QBO enhanced payroll, how do you get 100% of the net check (after taxes) to be contributed to the 401(k)? 

This topic is labeled as Enterprise = PC Desktop. I don't know QB Online Payroll well enough to "talk you through it." The point is, to Enter the amount to deduct as the amount that would be takehome = end at 0. Example:

$1,000 Gross

only Medicare and Social Security need to compute, so that = $76.50 deducted from $1,000.

That means the IRA amount is $923.50.

@qbteachmt Thank you for taking time to respond. I understand the math, just not sure how to make QBO do it. The 401k contribution box is not editable while running payroll. I'll have to call tech support. 

Hey there, Jtclarkcpa.

You can edit the 401k amount when you run the payroll. 

Let me guide you how:

1. Click Workers, then choose Employees.
2. Click Run payroll, choose the pay schedule, then click Continue.
3. In the employee row, click the Pencil icon next to TOTAL PAY.
4. Click Employee deductions and Company-paid contributions.
5. Change the amount in the 401k field.
6. Click OK.

Please check the screenshots as reference.

We're just here if you have other payroll concerns. Have a good one! 

@Kristine Mae Thank you for the reply. I was trying to run it 'bonus only' and those fields are not editable that way. I discussed with tech support and learned I could do it running normal payroll. It's a little tricky because you have to -0- out the federal and state withholding (401k contributions are not subject to income taxes) and then the amount of the 401k contribution becomes a circular calculation so you have to adjust, adjust, adjust until you get the net check to $0. Fun stuff! 

Thanks for getting back to us, @jtclarkcpa.

I appreciate you following the steps provided by my colleague. Also, thanks for sharing the steps you've done with our Tech Support Team to get this working. Information like this will definitely help other users having the same issue.

Should you have any follow-up questions or concerns, don't hesitate to post again here in the Community or leave a comment on this thread. Take care and have a good one.

How did you get it to net to 0?  I made adjustments, and they still add employer paid taxes, SS and unemployment.  I can't seem to remove those as I thought 401(k) contributions are not taxable.