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ajm01998
Level 2

Accidentally withheld too much federal income taxes - QuickBooks Enterprise

We accidentally withheld more federal income taxes than an employee's W-4 indicated. The employee has already received the funds via direct deposit, so we can't void the check, but we have not yet remitted the taxes to the IRS. He has requested that we pay the funds to him rather than remit them to the IRS, but I can't figure out a way to cut a paycheck that has no gross pay and a "negative" federal tax withholding. Is this possible, or do I have to send the funds to the IRS and withhold fewer taxes in the next paycheck?

 

We are using QuickBooks Enterprise with Enhanced Payroll.

Solved
Best answer June 18, 2021

Best Answers
MariaSoledadG
QuickBooks Team

Accidentally withheld too much federal income taxes - QuickBooks Enterprise

I have another way on how you can correct this and refund your employees, ajm01998.

 

We can create payroll corrections, then submit a reimbursement check to refund your Employee. But first, let's add a new payroll item. To do this follow the steps below.

  1. From Lists on the menu bar, select Payroll Item List.
  2. Select the Payroll Item button. Then select New.
  3. Click the Addition item type. Then select Next.

Then, set up the new item: 

  1. Select an expense account, if this will be an advance to the employee, choose an asset account.
  2. Set the Tax Tracking type to None so that the amounts do not report on tax forms. Next, select Next.
  3. For amounts paid per mile/kilometer, select the Based on Quantity checkbox. Then select Next.
  4. Choose to calculate net pay, select Next.
  5. Enter a Default Rate, then select Finish.

Once done, recalculate your payroll data. 

  1. Click the Employee menu and select Payroll Setup.
  2. Select Data Review.
  3. Under the question "Would you like QuickBooks to help you check your payroll data?," select Yes.
  4. Click Continue

You can also read this article for more information: Refund an employee for a deduction that was over withheld. For future reference, you can use this article that will serve as a guide to help prepare your tax forms: Year-end checklist for QuickBooks Desktop Payroll.

 

Let me know if there's anything else that you need with your federal taxes. Don't forget, we're always here to get you covered.

View solution in original post

2 Comments 2
MariaSoledadG
QuickBooks Team

Accidentally withheld too much federal income taxes - QuickBooks Enterprise

I have another way on how you can correct this and refund your employees, ajm01998.

 

We can create payroll corrections, then submit a reimbursement check to refund your Employee. But first, let's add a new payroll item. To do this follow the steps below.

  1. From Lists on the menu bar, select Payroll Item List.
  2. Select the Payroll Item button. Then select New.
  3. Click the Addition item type. Then select Next.

Then, set up the new item: 

  1. Select an expense account, if this will be an advance to the employee, choose an asset account.
  2. Set the Tax Tracking type to None so that the amounts do not report on tax forms. Next, select Next.
  3. For amounts paid per mile/kilometer, select the Based on Quantity checkbox. Then select Next.
  4. Choose to calculate net pay, select Next.
  5. Enter a Default Rate, then select Finish.

Once done, recalculate your payroll data. 

  1. Click the Employee menu and select Payroll Setup.
  2. Select Data Review.
  3. Under the question "Would you like QuickBooks to help you check your payroll data?," select Yes.
  4. Click Continue

You can also read this article for more information: Refund an employee for a deduction that was over withheld. For future reference, you can use this article that will serve as a guide to help prepare your tax forms: Year-end checklist for QuickBooks Desktop Payroll.

 

Let me know if there's anything else that you need with your federal taxes. Don't forget, we're always here to get you covered.

View solution in original post

ajm01998
Level 2

Accidentally withheld too much federal income taxes - QuickBooks Enterprise

Thanks, that's a pretty good workaround.

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