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Experienced Member

Federal Taxes Not Deducted Correctly

On the most recent payroll for this week, federal taxes do not seem to have calculated correctly.  Higher paid employees have a tiny bit deducted, and lower paid employees have nothing deducted.  I had all payroll updates installed, what could have caused this?

Solved
Best answer 01-31-2018

Accepted Solutions
QuickBooks Team

Re: Federal Taxes Not Deducted Correctly

Hi there, Sunburst,

 

I can help check why the federal taxes are deducted incorrectly. I want to ensure correct taxes are calculated so accurate amounts are paid and filed to the IRS.

 

It's great that you've already installed the latest payroll updates. That knocks one step off of what we need to try next.

 

If it's the federal withholding that's not deducting correctly, you'll need to confirm the employees' profiles are set up correctly. QuickBooks calculates the federal withholding based on these factors:

 

  • Taxable wages
  • Number of allowances/dependents
  • Pay frequency
  • Filing status

 

Please follow the steps below to check the employees' profiles:

 

1.    Click the Employees menu.
2.    Select Employee Center.
3.    Double-click the employee’s name, one at a time.
4.    Click Payroll Info on the left.
5.    Please make sure the Pay Frequency is correct.
6.    Click the Taxes button.
7.    In the Federal tab, review the Filing Status and Allowances fields. Make the necessary corrections.
8.    Click OK.
9.    Click OK again.

 

You can also try manually calculating one of the employee's paychecks to see if it matches QuickBooks. To help figure out the exact withholding amount, please go through the IRS 2018 Publication 15.

 

You can use the Percentage Method (page 44-45). It's the same method used by QuickBooks to calculate federal withholding.

 

If you need further assistance calculating federal withholding, you can contact me directly. I'll be here to help in any way I can.

7 Comments
QuickBooks Team

Re: Federal Taxes Not Deducted Correctly

Hi there, Sunburst,

 

I can help check why the federal taxes are deducted incorrectly. I want to ensure correct taxes are calculated so accurate amounts are paid and filed to the IRS.

 

It's great that you've already installed the latest payroll updates. That knocks one step off of what we need to try next.

 

If it's the federal withholding that's not deducting correctly, you'll need to confirm the employees' profiles are set up correctly. QuickBooks calculates the federal withholding based on these factors:

 

  • Taxable wages
  • Number of allowances/dependents
  • Pay frequency
  • Filing status

 

Please follow the steps below to check the employees' profiles:

 

1.    Click the Employees menu.
2.    Select Employee Center.
3.    Double-click the employee’s name, one at a time.
4.    Click Payroll Info on the left.
5.    Please make sure the Pay Frequency is correct.
6.    Click the Taxes button.
7.    In the Federal tab, review the Filing Status and Allowances fields. Make the necessary corrections.
8.    Click OK.
9.    Click OK again.

 

You can also try manually calculating one of the employee's paychecks to see if it matches QuickBooks. To help figure out the exact withholding amount, please go through the IRS 2018 Publication 15.

 

You can use the Percentage Method (page 44-45). It's the same method used by QuickBooks to calculate federal withholding.

 

If you need further assistance calculating federal withholding, you can contact me directly. I'll be here to help in any way I can.

Active Member

Re: Federal Taxes Not Deducted Correctly

What can I do if taxes are not deducted at all?

Moderator

Re: Federal Taxes Not Deducted Correctly

Hello there, jgmigracion,

 

I can share a bit more about correcting your payroll taxes.

 

May I know if you're using the QuickBooks Desktop Payroll Service? If so, we'll need to identify when did the taxes stop calculating for us to make necessary corrections.

 

If the unexpected behavior only affects the most recent payroll checks, QuickBooks Desktop has an auto-calculation feature that carries over the underpaid taxes for the next payroll run. However, this feature only applies to rate based taxes like Social Security, Medicare or unemployment taxes and does not include withholding taxes.

 

In this case, you'll need to calculate the Federal Withholding manually. You can follow what my colleague MichelleT has advised in her answer above to calculate withholding taxes.

 

However, if the issue happened to several pay periods, we'll need to do a payroll liability adjustment to fix your taxes. Here's an article to help you with the process: Adjust Payroll Liabilities

 

Please keep me posted on how this goes, jgmigracion. I'm here to get things sorted out for you.

Active Member

Re: Federal Taxes Not Deducted Correctly

I am having the same issue, but quickbooks help had to escalate the ticket and no response yet. Did you get this fixed (how if so)?

QuickBooks Team

Re: Federal Taxes Not Deducted Correctly

Hey there, @dananwalters.

 

Thanks for joining us here in the Community. I can help get this taken care of, but I have some questions about your concern first.

 

So that I'm able to provide you with the most accurate information, what QuickBooks version and Payroll subscription are you currently using right now? You can leave a comment below to add more details. This can be done by clicking the Reply (green) button.

 

Looking forward to your response and providing further help. Have a good one.

Experienced Member

Re: Federal Taxes Not Deducted Correctly

I'm having the same issue.  It seems as if the federal income tax is double what it should be.  
Any help?

Moderator

Re: Federal Taxes Not Deducted Correctly

Thanks for joining this thread, @nreber.

 

I'm here to help share additional information about incorrect federal income tax calculation in QuickBooks.

 

Have you tried checking your Payroll reports to compare your previous federal income tax?

 

There are some possible reasons why your payroll taxes are calculating incorrectly. To ensure accurate calculation, your employees and payroll items should be set up correctly. It's also recommended to run a payroll report to verify if there are any discrepancies in your payroll data.

 

If you've already verified the taxes setup on your employee's profile, please refer to this article for other steps in fixing wrong tax calculation: QuickBooks Desktop calculates wages and/or payroll taxes incorrectly.

 

As always, you can contact our Desktop Payroll support if you need assistance in going through the steps. They can also help you locate if there are any discrepancies in your payroll report.

 

Let me know if you have additional questions about your Federal taxes. I'll be here to help however I can.