Federal witholding on new employees is not being taken out

Hello there, knoxweb.

I'm here to ensure your new employees' federal withholding taxes will be taken out in their paychecks. This way, you'll be able to deduct correct taxes and calculate the accurate amounts to be paid and filed to the IRS.

Since it's your new employee's federal withholding that's not deducting, you'll have to confirm that their profiles are set up correctly. QuickBooks Online (QBO) calculates the federal withholding based on these factors: 

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

To check your employee's profile, here's how:

1. Go to the Workers menu.
2. Select Employees.
3. Locate and click the name of the employee.
4. Click the Pencil icon beside Pay.
5. Verify each section from Personal info to How do you want to pay [employee] carefully. Please make sure to check the What are [employee] withholdings? section where Tax exemptions field can be found and your employee's W-4 information.
6. Select Done.
7. Click the Profile tab, then make necessary updates.
8. Select the Employment tab, then correct any needed information.
9. Click Done.

I've attached screenshots below for your reference.

Once everything is all set, you'll need to delete their paycheck in the Paycheck List window, then re-create them to reflect the changes. For the detailed steps, kindly refer to this article's Create paychecks in QuickBooks Online Payroll section: Create paychecks in online payroll.

You can also verify if QuickBooks provides the right withholding amount by calculating it manually. For the complete instructions, you can refer to pages 44 - 45 in this article: 2020 Publication 15 - Internal Revenue Service.

Please let me know if you have other concerns. I'm just around to help.

Hello,

Thank you for the reply. 

I checked all the areas you mentioned, and the employee is setup correctly. 

I have 3 employees that are new (30 days) and none of them have Federal Withholding deducted.

The do have Social Security deducted.

Are there changes this year that only starts Witholding deductions after an employee earns over a certain amount of pay?

Thanks!
Kevin

Regardless of your links telling us how we're not understanding how Federal Income Tax works for 2020, Quickbooks is broken.  If I put $4,000.00 (2 children under age 17) or more in the dependents section 3, Federal Income Tax is not being withheld.  Please fix.

Hello there, johnmork,

I can provide clarifications why the federal withholding is not being taken out. 

Payroll wage and tax calculations in QuickBooks are obtained from the payroll information and transactions entered. There are several factors that affect the calculation of federal taxes:

• Filing status
• Number of allowances/dependents
• Pay frequency
• Taxable wages
• The gross wages of the worker's paycheck have a lesser amount.

For more information, let me share the Publication 15 (2020), (Circular E), Employer's Tax Guide. From there, you'll see the latest information about developments related for the redesigned Form W-4 for 2020.

To check the employee's set up, I recommend chatting our QuickBooks Online Payroll Team. They can help review how you enter those information in the system in a secure environment.

Let me know how the chat goes or if there's anything else you need. I'm always around to help.

johnmork, did you ever have the issue resolved?  I am having the same problem with a similarly situated employee.  I appreciate any insight. 

John I am glad I found your comment. I suspect this may be something I am also experiencing. Did you discover any further information/fix on this in regard to the deduction amounts affecting Federal Income Tax. 

Burnaman any new insights on your end since your November post?