How to apply IRS duplicate payment to future payroll taxes

ekileen · ‎February 06, 2020

Trying to figure out how to clear payments from my Pay Taxes & Other Liabilities window that were paid with a credit at the IRS.

There was a payroll that was processed, and then at the last minute things changed, after the IRS payment had already been submitted. Those funds were then applied to future payroll tax liabilities.

The IRS is happy, Form 941 is correct and filed.

But I can't clear these liabilities from my Pay Taxes & Other Liabilities window. They are showing up as overdue and I can't find a way to show them as paid using that prior overpayment.

How to record these liabilities as paid using a credit?

Do I need to edit the original payment somehow so it can be applied to future liabilities?

Thanks!

AileneA · ‎February 06, 2020

Hi there, @ekileen.

Thank you for posting to the Community.

Let me guide you on how to apply your payroll liabilities over-payment as a credit.

Here's how:

Create a liability check.
Choose the Expenses tab. And select the account where you want to apply the credit.
Enter the amount of the credit, enter it as negative in the Amount field.
Indicate explanation of the transaction in the memo field.
Select the Recalculate button to lower the amount of the check by the amount of the credit. If there is a credit balance remaining, you can apply it to the next period by repeating steps 1 through 4.

However, if you have an accountant i advice contact them, to make sure you select the correct account to credit.

Additionally, the following article is a guide for applying Over payment as a credit: Resolving a tax over payment.

If you have any other questions, don’t hesitate to comment below. Have a great day!

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