940 Report Processing Errors

Thank you for reaching out. Let me help you with correcting your Federal Unemployment (FUTA), @vgardner218.

To correct the issue of the -$0.01 overpayment shown on line 16d of the Form 940 and resolve the error message, you can adjust the FUTA tax liability for the fourth quarter. Since no additional FUTA tax was due for the fourth quarter due to all employees having met the base calculation, you can create a positive company adjustment for FUTA to offset the overpayment. 

Here's how:

1.  Go to Employees, then select Payroll Taxes and Liabilities.
2. Choose Adjust Payroll Liabilities.
3. Filter the date of the last paycheck for the affected month or quarter, in the Date and Effective Date field.
4. In the Taxes and Liabilities section, under the Payroll Item, choose the correct payroll item.
5. Under the Adjustment is for section, check the box for Company.
6. Select Federal Unemployment in the Item Name and then enter the positive amount of the adjustment. (Ex. 0.01)
7. Click on the Accounts Affected, then choose Do not affect accounts.
8. If you have additional employees, click Next Adjustment and repeat the steps for each affected employee.

FUTA taxes are paid by employers and are calculated based on the wages they pay to their employees. This tax does not impact the amount of money an employee takes home in their paycheck. For further details on FUTA tax, you can check this article: Understand Federal Unemployment Tax Act (FUTA) Credit Reduction States.

Furthermore, I've included these helpful articles when preparing your tax forms:

• Year-end checklist for QuickBooks Desktop Payroll.
• Payroll Tax Compliance Links.

If you need more help regarding your FUTA taxes, please do not hesitate to reply to this post. I'm always here to help you!

Thank you for your detailed response.  I followed the instructions step by step.  Then I ran the 940 again and I still have a -0.01 on line 16d.  Line 8(12) calculated FUTA tax as 1,898.09 and line 13 shows FUTA tax deposited as 1,898.10.  This results in line 15 showing an overpayment of 0.01.  This overpayment shows on line 16d as -0.01.  What am I missing?

I appreciate your attention to detail and effort in resolving the overpayment in your Form 940, vgardner218. Rest assured, I will provide easy-to-follow steps on creating a Journal Entry (JE) to account for the overpayment on your 1099.

The overpayment you're observing is attributed to penny-rounding differences that often occur during payroll calculations. While the IRS generally focuses on amounts rounded to the dollar and may overlook these minor discrepancies, you can create a JE to account for this.

This entry will involve debiting the FUTA and crediting the appropriate expense to correct the difference, allowing you to submit your Form 940 successfully. Here's how:

1. Navigate to the Company menu.
2. Select Make General Journal Entries.
   
3. Fill out the fields to create your journal entry.
4. Click Save & Close once done.

I recommend consulting with your accountant regarding these adjustments. They have the expertise about overpayments and ensure that everything aligns with your financial records.

If the issue persists, I recommend contacting our QuickBooks Desktop (QBDT) Support team. They have the tools to perform screen sharing and can help review the specific calculations related to the penny difference on your Form 940.

Additionally, you can refer to this article if you need to amend a tax return in QBDT for accuracy: File a corrected Federal Form 941 and 940 in QuickBooks Desktop Payroll.

I’d also like to share a helpful resource that outlines important deadlines and a list of payroll forms you need to prepare: Year-end checklist for QuickBooks Desktop Payroll.

Please know that the QuickBooks Community forum is here to support you on your journey. I am dedicated to ensuring you're successful with filing your 940-tax form. If any inquiries come up, remember we’re only a click away.

Jelayca -  Thank you for your response but telling me to contact the help desk that is not open until Monday does not help me very much with trying to solve the problem now.

 I hope that another member of the community has possibly experience this issue in the past and will be so kind to provide me with instructions to correct the issue and avoid the time drain of contacting the help desk.