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segiwo
Level 1

Does Quickbooks desktop payroll support adjustments to tax withholding due to net negative checks from cash tips wages?

When entering tips in/out to properly tax cash tips, some paychecks are calculated with a net negative amount.  Is there any way for QB to automatically adjust the tax withholdings so that the net check is $0.  Also, does QB desktop have the ability to calculate and populate line 9 on Form 941 and box 12a and 12b on Form W-2?

3 Comments 3
MikiD
QuickBooks Team

Does Quickbooks desktop payroll support adjustments to tax withholding due to net negative checks from cash tips wages?

You’ll need to create an offsetting item to zero out the net pay, segiwo.


This item should be a non-taxable addition that’ll balance the tax calculations. Here’s how:

 

  1. Go to List at the top. 
  2. Select Payroll Item list. 
  3. Click Payroll Item tab at the bottom and select New. 
  4. Choose Custom Setup and click Next. 
  5. Choose Addition and click Next. 
  6. Enter your desired item name and click Next. 
  7. Select an Expense account click Next. 
  8. Select None for the Tax Tracking type. 
  9. Click Next until Finish. 

Use this item when recording the tips, then enter the amount causing the paychecks into negative. Make sure to type in the amount in positive form. Also, you can deduct this offsetting amount to the employee’s next paycheck. 


Lastly, QuickBooks does not supply line 9 in 941 but will populate Box 12a to 12d in W2. For additional resources, please refer to these articles:

Stay around and keep posting your questions if you need anything. 

segiwo
Level 1

Does Quickbooks desktop payroll support adjustments to tax withholding due to net negative checks from cash tips wages?

Thank you, but that does not answer my question.  I am asking if QB will adjust the tax withholding automatically to account for the net check being less than zero.  I am trying to avoid manual adjustments and tracking for paychecks and payroll forms as you are suggesting.  I just wanted confirmation that I have no other choice in QB desktop before proceeding with the manual adjustments.

MaryLandT
Moderator

Does Quickbooks desktop payroll support adjustments to tax withholding due to net negative checks from cash tips wages?

Thanks for keeping an eye on this post, segiwo.

 

QuickBooks only automatically adjust tax amounts with flat rate taxes such as Social Security and Medicare.

 

The recommended steps to correct an employee's negative check amount is to manually adjust it. You can follow the steps provided by my colleague in this thread.

 

I've added this article for additional guidance: Entering wage base and tax adjustment to correct employee's quarter (qtd) or year to date (ytd) tota.... This link will guide you through adjusting paychecks.

 

You can also refer to this link: Adjust payroll liabilities if you need to correct employee's YTD payroll info. This includes company contributions, employee additions, and deductions.

 

Keep me posted if you need additional information and I'll get back to you.

 

Thank you and have a great day ahead.

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