Can I have an employee be both tax-exempt and not in Payroll?

narniadis · ‎November 18, 2021

I am the bookkeeper for our church using both QB and Payroll and we have one of our tax-exempt ministers taking on a new part-time role that requires regular taxation and reporting on my side. I am trying to see if there is a way to accomplish this within payroll but keep hitting dead ends. Changing tax status in the employee file changes the entire pay total and isn't correct but I also cannot create a new employee / same SSN unless I have missed something since this is a totally new issue for me.
Advice please and thanks in advance.

JenoP · ‎November 18, 2021

Thanks for getting back to us with additional information, narniadis.

For now, there's no option to assign multiple payroll taxes set up for a single employee. As you may have noticed, changing the payroll information of the employee will affect the calculation when running payroll.

You'll want to use a third-party app that can help with the employee's tax situation. Here's how:

Go to the Apps menu and proceed to the Find Apps tab.
Click the drop-down list for Browse category and select Manage Workers.

I'd also suggest sending feedback about getting more options when managing employees in QBO. Our engineers will directly receive and review them if they can be added in future updates. Check out this article for more details: How Do I Submit Feedback?.

As always, don't hesitate to post questions in the Community if you need anything else. We'll make sure that everything is sorted out for you.

View solution in original post

Catherine_B · ‎November 18, 2021

I can help you edit your employees and exempt them from withholding taxes, narniadis.

You can exempt your employees from taxes based on the IRS mandate. Let me show you how:

Select Workers Employees.
Click the employee's name.
Select Edit employee.
In question What are the employees withholding, select the pencil icon.
Select the Tax exemptions drop-down.
Click the appropriate tax exemptions.
Select Done.

To enter the taxable payroll, you can manually enter payroll paychecks into QuickBooks Online to track your payment totals. However, it doesn't create the data you'll need for your employee's W-2s. You'll want to reach out to a tax professional on how you can manage your payroll year-end forms.

For QuickBooks Desktop, you can use these articles:

If you have more payroll questions, I'd be glad to help. Just post them here.

narniadis · ‎November 18, 2021

Catherine, thank you. I expressed my question badly - was afraid of that. The employee is already tax-exempt and I have no issues with that, Payroll is quite good at how that works. What I am needing to figure out is how to also pay the employee for their new position that is taxable. In other words making the employee dual status somehow.

narniadis · ‎November 18, 2021

Catherine,

Thank you for the response. I was afraid that I had badly worded my question and it appears I did. The employee is already Tax-exempt and has been set up that way since their hire 3 years ago. No problems within payroll setting those parameters. My question becomes that now, the employee has taken on an additional new role that is not exempt, and I need to figure out how to properly set the system to recognize the tax and non-tax incomes. I have been unable to figure this out on my own so far.

JenoP · ‎November 18, 2021

Thanks for getting back to us with additional information, narniadis.

For now, there's no option to assign multiple payroll taxes set up for a single employee. As you may have noticed, changing the payroll information of the employee will affect the calculation when running payroll.

You'll want to use a third-party app that can help with the employee's tax situation. Here's how:

Go to the Apps menu and proceed to the Find Apps tab.
Click the drop-down list for Browse category and select Manage Workers.

I'd also suggest sending feedback about getting more options when managing employees in QBO. Our engineers will directly receive and review them if they can be added in future updates. Check out this article for more details: How Do I Submit Feedback?.

As always, don't hesitate to post questions in the Community if you need anything else. We'll make sure that everything is sorted out for you.

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Can I have an employee be both tax-exempt and not in Payroll?