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jdwoolman
Level 1

How to correct an employee state tax withholding?

QB Payroll calculated a state tax withholding (Oklahoma) on two checks of one of my employees.  I submitted this withholding to the state on my quarterly return, but for reasons unknown to me or the state employee, their system adjusted my liability to zero.  I assume I would just return the withheld money to my employee, but how do I go about removing it from my payroll liabilities due?

1 Comment 1
Adrian_A
Moderator

How to correct an employee state tax withholding?

We can remove it by going to the employee's profile, jdwoolman.

 

Before doing so, we'll need to enter a payroll liability adjustment to zero out the tax withholding. You can check this article for the detailed steps: Adjust payroll liabilities.

 

Afterwards, you'll have to add an Addition item for the return withheld money. Here's how:

 

  1. In the Lists menu, select Payroll Item list.
  2. Select New in the Payroll Item drop-down.
  3. Select Custom, and then Next.
  4. Select Addition (Employee Loan, Mileage Reimbursement).
  5. Click Next.
  6. Enter a name for addition.
  7. Select an expense account.
  8. Continue with the process to successfully add the item.

 

You can reach out to your accountant if you're unsure what expense accounts is best to used.

 

 

Then, you're good to remove the Oklahoma withholding tax. You can follow these steps:

 

  1. From the Employees menu, select Employee Center.
  2. Double-click the employee.
  3. Go to the Payroll Info tab.
  4. Select the Taxes tab.
  5. Go to the State tab.
  6. Select None on the STATE WORKED and STATE SUBJECT TO WITHHOLDING section.
  7. Click OK.
  8. In the Potential Setup Error window, select Continue.

 

I'm just right here if I can be of any help!

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