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Anonymous
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Employee Taxes Incorrect Selection - Federal Unemployment Tax (Company Paid)

Good afternoon. While assisting another QB user, I noticed that two new employees were incorrectly configured in the federal taxes - Federal Unemployment Tax (Company Paid). The check box WAS selected, when it should have not been selected.

 

A payroll as been run with the incorrect configuration and now has small balance of payroll taxes (liabilities) for Federal Unemployment Tax showing as outstanding.

 

I have since unchecked the Federal Unemployment Tax (Company Paid) selection for the employees, but how do I adjust the FUTA tax liability to zero it out as the organization does not pay FUTA. Any assistance is greatly appreciated.

 

Thanks - Tim

Solved
Best answer December 28, 2018

Best Answers
BettyJaneB
QuickBooks Team

Employee Taxes Incorrect Selection - Federal Unemployment Tax (Company Paid)

Hi there, @Anonymous.

 

Welcome to the Community. Having your FUTA tax liability to be corrected is my priority so let's get this taken care of.

 

You can create a negative liability adjustment to offset the Federal Unemployment tax liability.

 

Here's how:

  1. Click on Employees at the top.
  2. Select on Payroll Taxes and Liabilities
  3. Click on Adjust Payroll Liabilities.
  4. Select the correct Effective Date.
  5. In the Taxes and Liabilities section, click the Payroll Item column and select the correct payroll item.
  6. Enter the negative amount of the adjustment.
  7. Click Accounts Affected and choose Do not affect accounts.
  8. If you have additional employees, click Next Adjustment and repeat the steps for each affected employee. 

To know more about the process, please check out this article: Adjust payroll liabilities.

 

This information should help you get back on track. Feel free to reach back out to me if I can be of additional assistance. I'll make sure to get back to you as soon as I can. Enjoy your weekend!

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5 Comments 5
BettyJaneB
QuickBooks Team

Employee Taxes Incorrect Selection - Federal Unemployment Tax (Company Paid)

Hi there, @Anonymous.

 

Welcome to the Community. Having your FUTA tax liability to be corrected is my priority so let's get this taken care of.

 

You can create a negative liability adjustment to offset the Federal Unemployment tax liability.

 

Here's how:

  1. Click on Employees at the top.
  2. Select on Payroll Taxes and Liabilities
  3. Click on Adjust Payroll Liabilities.
  4. Select the correct Effective Date.
  5. In the Taxes and Liabilities section, click the Payroll Item column and select the correct payroll item.
  6. Enter the negative amount of the adjustment.
  7. Click Accounts Affected and choose Do not affect accounts.
  8. If you have additional employees, click Next Adjustment and repeat the steps for each affected employee. 

To know more about the process, please check out this article: Adjust payroll liabilities.

 

This information should help you get back on track. Feel free to reach back out to me if I can be of additional assistance. I'll make sure to get back to you as soon as I can. Enjoy your weekend!

BarbBieber
Level 1

Employee Taxes Incorrect Selection - Federal Unemployment Tax (Company Paid)

Betty, I had the same situation happen.  I attempted to correct as you instructed, but the FUTA tax was not listed in the "taxes & liabilities" section.  Also, shouldn't the amounts withdrawn from the employees be returned somehow since it was deducted from their payroll?  They are minimal amounts, but I guess I need a little more help.  

 

Thank you, Barb

 

 

SashaMC
Moderator

Employee Taxes Incorrect Selection - Federal Unemployment Tax (Company Paid)

Hello BarbBieber,

 

Thank you for reaching out to the QuickBooks Community! Just to confirm, are you using QuickBooks Online or QuickBooks Desktop? As far as your other question, I highly encourage you to reach out to your accountant to see what is the best practice for your company. If you don't have an accountant, our ProAdvisor service can assist with this. Simply enter your zip code, and you can connect with experts within your area. This link will be instrumental in Finding an Accountant. 

 

I will be looking out to your response to assist you further. Take care for now!  

BarbBieber
Level 1

Employee Taxes Incorrect Selection - Federal Unemployment Tax (Company Paid)

I am using the desktop version.  

JenoP
QuickBooks Team

Employee Taxes Incorrect Selection - Federal Unemployment Tax (Company Paid)

Federal Unemployment is a company paid tax, BarbBieber.

 

It means that no amounts were deducted from the employees pay. It's also possible that the Payroll Liabilities section for FUTA is not set to the correct payroll liabilities account. Aside from that, the payroll item might have also been made inactive.

 

These can be the reason why you can't see it when trying to create a liability adjustment. I'll help you review your Payroll Item List and make sure to review the item's setup.

 

Here's how: 

 

  1. Go to the List menu and select Payroll Item List.
  2. Check for the box for Include Inactive at the bottom part of the page.
  3. Look for the Federal Unemployment Tax and remove the X mark before it. If it's already active, double click on it to edit the item.
  4. Click Next, then make sure that the account selected in the drop-down list for Liability account is Payroll Liability.
  5. Select Next until the Finish button is clickable.

 

Once done, go back to the liability adjustment window and check if you can already see FUTA on the list. 

 

Additional references when preparing your tax forms are also provided here:

 

 

Please reach out out to us again or add more replies to this thread if you need anything else. We're always here to help with any QuickBooks-related concerns.

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