Additional Federal Income Tax, can I withhold a percentage (20%) instead of a fixed amount ($20)?

The calculation that QB is doing on the paychecks is wrong - by a lot!  Has there been a fix issues?  This is a HUGE problem!  And manually calculating the taxes for each paycheck is not a viable solution!!!

@smoreland1  RE: Is it possible to withhold an additional 20% of federal income tax per the employee's request?

No, not possible because you are required to follow the W-4 the employee gives you, and there is no way to specify a percentage rate on the W-4.

Hi there, TaxGuys.

Thank you for visiting the QuickBooks Community. I'll be sharing details on how QuickBooks Desktop calculates the taxes that are reported on your employees' paychecks and payroll forms. 

As a business owner, payroll is one of your most essential tasks and can be time-consuming. With QuickBooks Payroll, taxes are calculated automatically, and not only does it save you time but it also helps you focus more on your business. You can click this article to see details on how QuickBooks calculate taxes reported on your employees' paychecks: Understand how your payroll taxes are calculated.

Then, I suggest updating your QuickBooks Desktop to the latest release. This way, you always have the latest features and fixes. I also recommend the same thing for your payroll tax table. This helps you have the most current and accurate rates and stay compliant with paycheck calculations.

Since paycheck calculation in the program is incorrect, you can revert it. It will undo any payroll data that was saved prior to the update. Please keep in mind that this will only apply if you're still in the middle of payroll or your paycheck is still being processed.

Here's how:

1. Go to Employees menu, then select Pay Employees
2. Choose Scheduled Payroll or Unscheduled Payroll.
3. Select Resume Scheduled Payroll. You’ll see some employees’ names highlighted in yellow. These are the employees that have had changes.
4. Right-click on the employee name that’s highlighted in yellow.
5. Choose Revert Paychecks. 

However, if the paycheck has already been created and processed, you must delete it and recreate it so that the correct taxes appear on the employee's paycheck.

Lastly, you may refer to this artilcle to view steps on how you can create a specific payroll report to see what you've paid out in your QuickBooks payroll: Create a payroll summary report in QuickBooks.

Don't hesitate to click the Reply button below if you still have concerns about taxes. I'm always around to help, TaxGuys. Have a good one!

Duplicated response...ignore this message

Honestly, the program should allow for a direct percentage to be used. This gives the employee the capability of calculating their bring home pay within a few cents. The w4 forms are now too convoluted for most to understand or have any idea what is being withheld. What I have found is that often times, if a percentage rate is not used, the taxes have been under withheld. 

Most payroll companies do, in fact, allow for this option. Please consider this as an option. 

By chance has QuickBooks allowed for a percentage option for Federal withholding yet? Thank you! 

Adding the correct withholdings is essential to ensure QuickBooks calculates taxes automatically and accurately, Kate. I'm here to answer your query.

The option to add a percentage to your Federal Income Tax is unavailable in QuickBooks Online Payroll. Please note that the withholding is based on various factors, and I've listed them below:

• Employee’s W-4
• Pay frequency
• Gross wages
• Percentage or wage bracket method 

For more details about how QuickBooks calculates taxes, please see these articles:

• Understand how your payroll taxes are calculated
• Federal withholding tax tables: A simplified guide for 2024

Meanwhile, we can enter the amount in the program by manually calculating the percentage withholding. Then, enter the correct info in the Extra Withholding field.

Here's how:

1. Go to Payroll and then select Employees.
2. Choose the employee you want to add the withholding.
3. Scroll down to the Tax withholdings section, then click Edit.
4. On the Extra withholding (Step 4c) field, enter the amount.
   
5. Once done, hit Save.
   
   

Additionally, you can run several payroll reports in QuickBooks to help you ensure the employee info, wages, taxes, and deductions are tracked in the program correctly.

This thread is always open if you have additional questions about setting up employees' withholdings. I'm here to help you out.