How to properly update FUTA credit reduction for CA? Change from .6% to .9%

Hi there, @jgoppelt.

The option to update the tax rate of your FUTA credit reduction for the state of California is unavailable. This is the reason why the changes to the payroll item you've made didn't show the amount you needed.

You don't have to worry, the wages and additional FUTA amount will automatically appear on your Schedule A form, which is generated when you create Form 940 with credit reduction amounts.

And the payment needed will be based on the total amount due reflected on your form 940. Kindly read and use this article to learn more: Federal Unemployment Tax Act (FUTA) Credit Reduction States.

If you have any other questions, please let me know by leaving a follow-up query in the comments below. Take care!

when form 940 auto fills it does show me the correct balance owed. My question is.. How do i change the amount owed on the pay taxes and other liabilities page so that it reflects the correct amount from form 940. I use quickbooks desktop enhaced payroll. thank you

It's great that you've joined this thread, jmontoyalandscaping.

I'll help you in matching your liability amount with the balance of your 940 forms.

You can create a payroll liability adjustment if the amount owed on the pay taxes and other liabilities is incorrect. Here's how:

1. Go to the Employees menu, then Payroll Taxes and Liabilities.
2. Choose Adjust Payroll Liabilities.
3. Tick Employee and then select the employee.
4. Complete the Taxes and Liabilities fields using the amounts you have in your scheduled liability window.
5. Tap Accounts Affected and mark the Do not affect account radio button. This is to make sure you don't double your payment record.
6. Click OK and then OK to close the liability adjustment window.

After that, run the payroll summary and payroll liabilities balances report to ensure that the amount and everything are correct.

If your unemployment taxes are increased retroactively, then you might see it underpaid. You can use this article to know how to correct the calculation and payments in QuickBooks Desktop payroll: Enter historical tax payments in Desktop payroll.

The Community is always available to help you, let us know if you have any other questions. Have a great day.

This is all great information. Thank you. One additional problem I see is that the additional "charge" of $21 (credit reduction amount)  does not show up on the payroll summary (in the case of my client - one employee, 7K threshold met to warrant a $42.00 liability) How can I get this to work? I would like my clients to have an accurate report.

Thank you for posting here in the Community, @pyork.

I'd be delighted to assist you with your credit reduction amount not showing up in your payroll summary.

When you create Form 940 with credit reduction amounts, the wages' additional FUTA amount will automatically appear on Schedule A. If the total amount due on form 940 exceeds $500, you must make a payment before completing the form. If the total amount due on Form 940 is less than $500, you can pay it when you file the form.

With this, you'll have to create a liability adjustment for FUTA for the credit reduction amount to appear on the report. Here's how:

1. Go to Employees, then Payroll Taxes and Liabilities. 
2. Choose Adjust Payroll Liabilities.
3. In the Date and Effective Date fields, select the last paycheck date of the affected month or quarter.
4. In the Adjustment is for section, click Employee Adjustment to correct your employee’s YTD info. Then select the employee's name. Do this even if the item being adjusted is company-paid.
5. Under the Item Name column, select the payroll item you want to adjust.
6. Enter the Amount of the adjustment. 

• If the item is under-withheld, enter a positive amount to increase. 
• If the item is over-withheld, enter a negative amount to decrease.

For more in-depth details about the process and the next step (Step 3), check out this article: Adjust payroll liabilities in QuickBooks Desktop Payroll. 

I will add an article about tax calculations based on the payroll data and transactions you entered: QuickBooks Desktop calculates wages and/or payroll taxes incorrectly.

Post again if you have further questions. I would be delighted to assist you. Have a great day!

This came to me as a surprise.  It would have been nice to receive a warning that my annual report was going to show that I underpaid by $850.  My confidence in Quickbooks was further rattled when I notice the date on my 940 was 1/11/1924. (That isn't a typo on my part). Apparently this issue doesn't happen with QBO, but only Desktop.  (I can't use QBO as it does not like our only choice of internet access). How hard is it to allow a third option of  .9% ?  It is just an algorithm adjustment. Hmmm Maybe that did not exist 100 year ago.
Time travelling with QB

I completely understand the significance of providing you with the option to modify the tax rate for your FUTA credit reduction, MyriamKP. Allow me to provide additional information on this matter.

At this time, we can't update the tax rate of your FUTA credit reduction. However, we highly recommend that you share your feedback and comments with us. Your input will help us improve our services and enhance your overall experience in QuickBooks Online (QBO). 

To submit your feedback, visit the page where you can post your comments to our product engineers: Customer Feedback for QuickBooks Online.

Here's how:

1. Go to the Gear icon, located at the top right corner.
2. Select Feedback.
3. Enter your suggestions/comments and click Submit.

Additionally, you might want to visit our QuickBooks Blog for the latest innovations and product news.

For future reference, I'll be leaving this helpful resource to learn how to close your previous fiscal year and prepare for the new one in QuickBooks Online: Year-end guide for QuickBooks Online.

We're always here to ensure that your voices are heard. I'll keep this thread open for more FUTA credit reduction and any QuickBooks-related queries.