I have one employee residing in Maryland. I received a notice from the state of Maryland stating that my withholding account had a credit balance of $82.97 that would be applied to the next reporting period. I'm using 2020 QB Pro Desktop with Enhanced Payroll. 1st - Please explain how to record the credit to reduce the amount of the next Maryland Withholding payment I make to the state. 2nd - Do I need to credit/refund the employee for that amount? If so, how do I refund or stop collecting the tax until it reaches the amount of the credit. Also, does it make a difference if the credit is generated from 2020 vs 2021?
I'm here to share the steps on how to record the state withholding credit, cefceh.
Before doing so, I recommend consulting your accountant to guide you in selecting the correct account to ensure the credit is correctly applied in your tax forms. If you don't have one, you may use our Find an Accountant tool.
I've added this link to help you pay payroll taxes in QuickBooks: Set up and pay scheduled or custom (unscheduled) liabilities. It helps you pay on time so you won't miss any deadlines.
Keep me posted if you have any other concerns about recording state withholding credit into QuickBooks. I'm always here to help. Have a great day ahead.
Good morning cefceh,
Thank you for reaching back out to the QuickBooks Community. To answer your question, it won't reduce the amount because WH is calculated based on marital status, allowances, and gross wages. However, if you need to stop calculating WH, you would have to change the status to "Do not With-hold" in the employee profile under the payroll information. I highly encourage you to connect with an accountant first to ensure that this is the best approach for your business.
If you have any more questions, don't hesitate to let me know! I will do my best to address them. Be safe!