FICA and MediCare withholdings on Retirement Contributions

Let me help you fix your tax issue, Alexuus.

Your taxes will not be calculated when the employee’s profile is set not to deduct Social Security and Medicare. Let’s open the employee's profile and make sure o uncheck the Social Security and Medicare exemption status. To do so, follow the steps provided below:

1. Go to the Payroll menu on the left panel.
2. Select the Employees tab.
3. Open the employee profile.
4. Click Edit on the Tax withholding section.
5. Expand the Tax exemptions section.
6. Remove the checkmark for the Social Security and Medicare box.
7. Click Save.

After updating the exemption status, this will now withhold those taxes when running payroll. 

In case you want to manage your employees or review the taxes and their limits, consider checking out these articles for more details: 

• Add your new employee to QuickBooks Payroll
• Understand payroll tax wage bases and limits

Furthermore, to ensure you are getting the right data, QuickBooks provides several reports that you can use and what your company needs. go through this article for reference: Run payroll reports in QuickBooks Online Payroll. 

Reach out to me if you have any other concerns or questions about withholding taxes. I’ll pop right back in to answer them for you. Have a good one.

The box is NOT checked.

Social Security and Medicare is not calculating on Retirement Contribution.

Double reply

I understand the importance of having proper calculations for your Social Security and Medicare in your 401k, Alexuus. I assure you that I'm here to help you resolve this problem.

Once an employee reaches the wage base limit, their taxes may either stop calculating or increase, depending on the specific tax regulations in place. It's essential to know that if your state or the federal government changes the wage base limit, taxes will start calculating again. Only Social Security benefits have a wage base limit, while Medicare does not.

Let's check if your employee has already reached the wage base limit by following these steps:

1. Go to Reports, then Standard.
2. Search for Payroll Tax and Wage Summary.
3. From the dropdown menu, select This Year, then Apply.
4. Select the tax type for which you want to see the wage base.

If the problem persists, please get in touch with our QuickBooks Payroll team so they can help you further investigate this problem and apply a proper solution.

You can also view your previously filed tax forms and payments in QuickBooks Online Payroll while having free access to your filed tax forms and paid tax payments.

The Community space is always open to everyone. If you have additional queries, please feel free to reply below. I'd gladly help you anytime.

This is the 9th of January and I am trying to run the very first payroll for 2024, so the balance on ALL employees is Zero.

Our Retirement is a 457b... 

QuickBooks is doing the calculations incorrectly!

I received an email wanting me to "accept solution"... but it is NOT solved.

QuickBooks Online Payroll is WRONG!

It HAS to withhold Social Security and MediCare from Retirement Contributions!

It is NOT!

Still waiting for a solution

Still unresolved:

Here is the section on 457(b) from the IRS.gov website.  I have attached "Notice 2003-20" referenced below... (I also tried making the important text Red, but that does Not appear to work on this text box.  So it is Bold Italic and Underlined)

Section 457(b) Plans

IRC Section 457 addresses nonqualified plans. Many public employees participate in nonqualified, or Section 457, plans. These plans can be established by state and local governments or tax-exempt organizations. If they meet the requirements of IRC Section 457(b), they are considered "eligible" plans; if not they are considered "ineligible" and are governed by IRC Section 457(f).

Governmental 457(b) plans must be funded, with assets held in trust for the benefit of employees. Plan assets and income of all other eligible plans must remain the property of the employer.

Plans eligible under Section 457(b) may defer amounts from income tax up to an annual limit ($22,500 in 2023; $20,500 in 2022; $19,500 in 2020 and 2021). In addition, “catch-up” contributions may be made to employees aged 50 or older. Social Security and Medicare taxes generally apply to all employer and employee contributions. For further information regarding Social Security and Medicare tax withholding and reporting on amounts deferred into eligible deferred compensation plans, see Notice 2003-20PDF and the 457(b) Contribution Limits.

Employer contributions to 457(b) plans are tax deferred up to annual limits.

Employee elective contributions are deferred from income tax. They are subject to FICA. However, see IRS Notice 2003-20, VI B, Timing of Social Security and Medicare taxesPDF.

Hello there, @Alexuus.

I'm here to ensure you'll get assistance on withholding Social Security and Medicare to maintain accurate tax computation and avoid related discrepancies.

Since your employees aren't tax-exempt from Social Security and Medicare, the program should be able to calculate these taxes. Hence, I recommend contacting our Payroll Support Team. They have all the tools and expertise to examine your situation and provide the most appropriate resolution.

Here's how:

1. Access your QuickBooks Online Company.
2. Click on Help(?), then Contact Us.
3. Enter your concern, then choose Let's talk.
4. Choose your preferred way to connect with our support:

• Start a chat with an expert.
• Get a callback from the next available expert.

Please review their support hours to connect with them accordingly.

Moreover, you might want to visit this article to guide you on paying and filing federal, state, and local taxes within the software: Pay and file payroll taxes and forms electronically in QuickBooks Online Payroll.

We'll be around to help if you need further assistance regarding your taxes or other related concerns in QuickBooks Online Payroll.

Was this problem ever solve?

I am having the same problem.

No... it has not been solved.

The more research I do, the more WRONG QuickBooks Online gets!

I told Customer Service that it was required and I was told "that is just a suggestion, you don't have to"... 

They need to put 457b back in as a retirement option!  It worked perfectly in QuickBooks Desktop for 27 years!

Hi there, Tammy.

Sometimes, you may observe that federal or state withholding is 0.00. This is common if your employee claims exempt status or has not earned enough to meet the minimum wage.

To begin with, you are required to acquire a federal W-4 form from each of your employees. Then, verify if these forms are accurate.

To learn more about the minimum threshold for federal withholding, please refer to the following link: IRS Publication 15-T.

Next, you can check your employees' tax setup in your payroll product. Make sure that the filing status and other relevant fields match those on your employee's W-4.

If your employee has set their filing status as Exempt or Do not withhold, their paycheck won't have taxes deducted. In case of an error, you have the option to modify their filing status to the right one.

Please read this article for more detailed information: Troubleshoot no income tax withheld from a paycheck.

In QBO, you can generate payroll reports to obtain information about what you've paid out. This will help you gain insights into your employees' wages and contributions, which can be beneficial during tax filing.

You can always get back to us for any follow-up concerns about federal taxes. The Community is available to assist you at any time. Keep safe.

This is not about QuickBooks Online Not withholding Taxes... it is about QuickBooks Not Withholding Social Security and Medicare on RETIREMENT CONTRIBUTIONS!

It is Federal Law that 457b retirement contributions are to have Social Security AND Medicare Paid on them.  For both Employer AND Employee share!

QuickBooks Online staff keep telling me that I am wrong.

But I have documents from the IRS that tell me I am correct and if you Google it!

Hi there, Alexius.

I understand your frustration regarding QuickBooks Online (QBO) not withholding Social Security and Medicare contributions for retirement.

I recommend contacting our live support team as this needs request to our correction team to add this retirement contribution to their year-to-date to reflect on your forms. Upon doing so, there may be a fee for this request. Our live support team has the tools to find a suitable solution.

You can follow the steps below to get a hold of them.

1. Log in to your QBO account.
2. Click on Help (?) at the upper right corner of your screen.
3. Tap on Search, then select Contact Us.
4. Select a topic to connect with the right expert.
5. Choose how would you like to contact with QB support team.

• Via a Callback, where they’ll save you a spot and call you back.
• Via Chat, start a chat with our support.

Please note their availability varies with your subscription. QBO Plus, Essentials, and Simple Start live support team are available from Mondays to Fridays from 6 am to 6 pm and Saturdays from 6 AM to 3 PM PT following Pacific Time. While our QBO Advanced support team is available any time, any day

Let me know if you have inquiries about setting up your retirement contributions in QBO. Just leave a comment with your questions below. I'll assist you as soon as possible. 

I appreciate your comment, but I have paid for a private Video call with a "QuickBooks Online Expert" already...

It cost me $50 to learn that...

She could not help.

She said the program would not do what I wanted it to do, so I should send Feedback.

So I send Feedback... Every Single Day for the 4 months I have been trying to get the issue fixed!

You see.. it is IRS Rules that are not being followed by QuickBooks Online!!!

QuickBooks Desktop did it right!  I have used QuickBooks Desktop for 27 years... never had an issue.

Was there ever a solution to this?  I've been working on this same issues with QB Support for the past few days to no avail.

Hello, @ames0038. Allow me to explain why QuickBooks not withholding Social Security and Medicare.
 

If your employee's salary exceeds the base limit or if their filing status is set as Exempt or Do not withhold, QuickBooks will not withhold or calculate Social Security and Medicare taxes for the affected employee.

To make sure, I suggest checking your employees' tax set up and filing status. 

Furthermore, to ensure this issue is thoroughly investigated, please contact our Customer Care Support Team. Here's how:

1. Log in to your QBO account.
2. Click the Help (?) icon.
3. Choose way to contact us:

• Start a chat with an expert.
• Get a callback from the next available support.

Additionally, efficiently manage your payroll reports, check this article: Run payroll reports.
 

Please reach out to us if you need any help with verifying your employees' tax information so that QuickBooks can calculate their Social Security and Medicare contributions. Our team is always ready to help. Have a good one.

HI @ames0038 ,

No it was never solved!

As a work around, I put the "Contribution" in as a "Payroll Item"; then take it out as an "Employee Deduction" to retirement.

It is horribly time consuming.

QuickBooks Online's answer is always that Social Security and Medicare are not withheld if the salary exceeds the limit (which is $168,600 by the way and NOT ONE of my employees is anywhere close to that) or they are setup as Excempt in setup... which they are NOT.

I have spent hour and hours and hours on the phone and in video calls with their "Experts" and the end result has been very unhelpful!  I paid extra for a 45 minute video call with a "PAYROLL EXPERT" only to be told that the program can't do what QuickBooks Desktop had no problem doing correctly!

I had the same issue. It took over a year of them trying and not succeeding to get it set up properly before they admitted that it wasn't possible in the online version that they forced me to migrate to.  I use a different platform for payroll now. So frustrating. I'm still getting overpayment refunds and bills for taxes paid incorrectly while they were trying to "fix" it.

Alexuss

How will this show up on the W2?

This is one of the issues I am having as well.

Let me know if you tested it, and the W2 shows g for type of retirement plan.

thank you in advance,

WRW, it will show up incorrectly on your W-2's and the only solution is to wait for QuickBooks Online Payroll to send them out wrong... then have them correct them!  And that is straight from QuickBooks Online Payroll... they can't fix it before it happens!!

Total, I spoke to about 112 different Customer Service and "Payroll Specialists"... It has been a NIGHTMARE!

They have made error after error after error.. at one point their system said we owed over $30,000 in unemployment taxes!  Which is IMPOSSIBLE since the $30,000 was on a single employees paycheck AND our current unemployment precentage is ZERO.

Like JSchoenherr above... I gave up on QuickBooks Online ever caring that THEY are the problem.

I switched to a local payroll service, which is actually about $500 more per year for the service, but hopefully it will be worth in because I won't have the nightmare year end!

Thanks for your reply. I appreciate the information.

it is not an issue with Desktop, and it is not a workaround, so I think I will stay with it until we can look at other options.

Happy Holidays to you!

My pleasure WRW!

I wish I had stayed with QuickBooks Desktop Payroll.

I used it for 27 years without a single issue!  Then they increased the price 130% and our little non-profit couldn't absorb the cost.

Stay with Desktop as long as you can!