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Join nowI had an employee ask me why her federal taxes were withheld at a different rate on her last paycheck as compared to the prior one. I am not able to answer her because I am not able to figure out myself how QuickBooks is calculating the federal tax withholding. Is anyone able to reproduce the tax withholding calculation using a spreadsheet or similar?
It's great to see you here, @ajm01998.
I would like to share some insights on how to resolve this paycheck withholding discrepancy.
There are a few reasons why taxes won't calculate properly on the paychecks. Consider the following:
To correct this, let's make sure you're able to download the latest tax table update version 22116. You can check that by following these steps:
Next, review the status of the Payroll if it is showing active in the company file. Here's how:
If it's correct, review any discrepancy on the employee's paycheck. We can use a Payroll Detail Review report to verify the taxes withheld and the difference. Here's how:
On the report, review if the payroll checks have the correct deductions. You can get the correct calculation by multiplying the total wage base of each payroll item by the corresponding tax rate.
If QuickBooks did overwithheld any taxes, you can wait for the next payroll run for QuickBooks to auto-correct the calculations. Another option is creating a liability adjustment to correct the taxes. Here's an article with the complete steps on how to create an adjustment: Adjust payroll liabilities.
Once done, try to process the payroll again and see if the taxes withhold correctly. If not, I highly recommend contacting our Payroll Support this time to report the problem.
Here's how you can connect with us:
You can also chat our support online. Select your product and fill out the form to chat with an expert by clicking this link here: Do It Yourself Payroll Chat Support
If you need further help or have other questions with the payroll tax calculations in QuickBooks. Leave a comment below and I'll be glad to help. Have a productive week! Take care.
Thanks, but I'm not asking how to fix things. I'm asking if anyone can explain how QuickBooks does the calculation.
I've got you covered, ajm01998.
QuickBooks Payroll calculation depends on what information and transactions you entered. All items need to be set up correctly to avoid miscalculation.
For more information on how QuickBooks calculates payroll taxes, please see this article: Understand the Tax Amounts Reported.
In addition, you can use this paycheck calculator to see an estimate of the employee’s earnings for the pay period.
For future reference, I've included this article that'll help you view Payroll Details in QuickBooks: Customize payroll and employee reports.
I'm only a few clicks away if you need assistance with your payroll calculations. It's always my pleasure to help you out again.
Thank you, that's very helpful. Can you help me understand how QuickBooks handles one-off bonus payments that are not part of the regular biweekly payroll? For example, if an employee gets an annual bonus mid-way through the year, how will this affect withholding?
Thanks for posting here, @ajm01998.
Allow me to share some insights on how annual bonuses affect your withholding.
Once you've chosen the bonus payment method, you'll have to consider whether or not the bonus is taxable. The net pay on a bonus check might vary drastically depending on the taxes chosen and disbursed, as well as whether the bonus is on the same or separate check as normal payroll wages.
Bonus checks are subject to normal tax deductions, including state and federal taxes. However, they may be subject to supplement tax rates for federal and state withholding.
To create a bonus paycheck, follow these steps below:
You can also read through this article for more details: Create Bonus Paychecks In QuickBooks Desktop Payroll
Furthermore, in case you need to print your paychecks, check out this link for your reference: Print your paychecks in QuickBooks Desktop.
If you have other concerns or questions about bonuses and withholding QuickBooks, feel free to tag me in your reply. I’m only a post away from you. Have a good one!
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