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Kelly23
Level 2

Federal income tax for employee not deducted correctly

I have two employees that had to file a new W4 2020.  I have all the latest updates and payroll updates installed.  Once I change their new filing the Federal Income Withholding does not match what it should on the wage bracket table.  They have the most withheld from their check and it is only taking about 7% out when it should be closer to 10%.  I can't get the correct answer from QB support.  I don't want to calculate and have to manually create for each payroll.  Thank you.

4 Comments 4
BigRedConsulting
Community Champion

Federal income tax for employee not deducted correctly

RE: Once I change their new filing the Federal Income Withholding does not match what it should on the wage bracket table.

 

QB does not use the wage bracket table, but instead uses the computer/formula method.

 

RE: They have the most withheld from their check and it is only taking about 7% out when it should be closer to 10%. 

 

How do you calculate this?

TaxGuys
Level 2

Federal income tax for employee not deducted correctly

What is the solution to this issue? 

We have several clients with the same issue. 

The withholdings have been set to Single and all other fields are 0.  The maximum tax should be withheld, but it is way off!  One W2 shows less than 1% federal tax was withheld.

TaxGuys
Level 2

Federal income tax for employee not deducted correctly

What is the solution to this issue?  I am experiencing the same problem.

DHeraV
Moderator

Federal income tax for employee not deducted correctly

I appreciate you dropping by here in the Community, @TaxGuys.

I know how important it is to get this resolved to get you back in working order, and I'm here to ensure that you can sort this out in QuickBooks Desktop (QBDT).

To make sure that you'll get to correct the income tax calculations for your clients, let's first ensure to update your QuickBooks to the latest release. This way, new fixes will apply to your QuickBooks. 

Once your QuickBooks is updated, let's then download the latest tax table in QuickBooks Desktop Payroll. To provide up-to-date accurate rates, calculations for federal and supported state taxes, payroll tax forms, and e-file and e-pay options. 

Moreover, if the paychecks of your clients are still pending or haven't been created, I suggest reverting these to make necessary changes and to get the new deduction rate. Here's how:
 

  1. On your QBDT file, go to the Employees menu, then select Pay Employees.
  2. Select Scheduled Payroll or Unscheduled Payroll.
  3. Click 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. Select Revert Paychecks.

 

For detailed information, kindly visit: Save or revert paychecks in QuickBooks Desktop Payroll.


On the other hand, if the paycheck has been created, you have to delete and recreate them. 

Additionally, I'll also include this link where you can search for articles that can guide you in handling your taxes in QBDT: QuickBooks Desktop Payroll Taxes Help Articles.

Feel free to leave a reply if you require further assistance with correcting income tax deductions in QuickBooks. The Community team always has your back. Keep safe.

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