FICA Overpayment

I understand the importance of accurate FICA payment to correct reports and forms, @artifex. Since it's already reconciled, I've got ways to help you fix the payroll tax overpayment according to your payroll plan.

There are some tax overpayments that aren't valid. To verify, you'll want to  take into account the following situations:

• Incorrectly entered tax rate
• Incorrect liability period on a tax payment
• Incorrectly recorded historical tax payment

On the other hand, these are the following examples of valid tax overpayments:

• Your tax rate decreased after a tax payment was made
• One or more paychecks were voided or deleted after a tax payment was made
• You made a duplicate tax payment in the same liability period

If you received a refund check from a tax agency, you can treat it as a deposit for payroll taxes you paid in error. Let's create a liability check first, then apply the credit if you want to apply it to the next payment.

1. Go to Employees, and select Payroll Taxes & Liabilities.
2. Select Pay Scheduled Liability.
3. In the Pay Taxes & Other Liabilities section, select the tax or liability you want to pay. Select View/Pay.
4. Select Check/E-pay.
5. Select the Expenses tab, then choose the account where you want to apply the credit.
6. Enter the amount of the credit as a negative figure in the Amount field.
7. In the memo field, enter an explanation of the transaction.
8. Press Recalculate. If you still have a credit balance, you can apply it to your next payment.

Please know that the steps above are for QuickBooks Desktop Payroll Basic, Standard, or Enhanced. I highly recommend consulting your accountant or tax advisor regarding the accounts to use. You'll want to check out this article for the complete instructions: Resolve a payroll tax overpayment.

If you're using QuickBooks Desktop Payroll Assisted, you'll need to contact our Support Team. They can help you resolve the differences of the amounts.

See this link to learn what to do if you receive a payroll tax notice from the IRS or your state agency: Send in your payroll tax notice.

You can bookmark this guide for the complete steps in dealing with refund check from a tax agency: Handle a payroll tax refund from an agency in QuickBooks Desktop Payroll.

Please feel welcome to visit this thread again if you still have any concerns about payroll taxes. I'll be right here to continue helping. Take care.

Hi JamaicaA

Two follow up questions to your answer.

If I understand correctly, I would be crediting our liability account for FICA tax so the balance at the end of last fiscal year would adjusted accordingly? This would be great because it would correct the balance before this year is audited. By the way, I am assuming that the amount I have to enter in the expense tab must match what is due during the chose period?

Also, since the overpayment is higher than what is currently outstanding in this year Q1 balance, is there away to accomplish this adjustment so it remains as an available credit for future quarters?

Thanks in advance for your help.

It's good to have you back, Artifex.

Yes, you correctly understand the crediting of your liability account to your FICA tax. Allow me to explain this further.

Performing this will adjust the end balance correctly for the last fiscal year. Also, you're correct that the amount you enter in the expense tab should match the chosen date. The paid-through date should be March 31, 2023, and you must enter the exact amount of the credit to negative.

Regarding your last question, is there a way to accomplish this adjustment so it will remain an available credit for future quarters? Again, you need to pay through the correct or chosen date and must enter the exact amount of the credit to negative.

For future reference, if you want to learn what to do if you receive an IRS or state tax notice of discrepancy, you can read this article: Send in your payroll tax notice.

If you have additional questions about your FICA tax, don't hesitate to reply to this post. Keep safe, and enjoy the rest of your day!