I need help correcting the State Earnings on an employees W-2 - A couple of paychecks were issued under the wrong state and now that state shows earnings on his W-2?

Thanks for visiting the Intuit Community, leanne6.

To correct your employee’s W-2 information, we’ll have to create a liability adjustment for each state. Let’s run the Payroll Summary Report for the quarter you need to adjust. This report includes employee wages, taxes, adjustments, etc.

1. Tap the Reports menu at the top and choose Employees & Payroll to select Payroll Summary.
2. Set the correct period by clicking the Dates drop-down and then hit the Refresh button to view the changes.
3. You can use the Customize Report option to filter displayed on the statement.
4. On the Payroll Summary Report, pick the employee you’re working on and then double-click the amount of the state tax in question.
5. This will open the Transactions by Payroll Item page.
6. From there, note the wage base amount and then multiply it to the correct tax rate. Make sure to keep a record of the information.
7. Follow the same steps above to get the data for the other state.

Once you have the information handy, enter a positive adjustment to the state where the employees’ should be paying the taxes. Please know we’ll have to perform this action for each worker.

1. Go to the Employees menu and tap the Payroll Taxes and Liabilities tab to choose Adjust Payroll Liabilities.
2. This will open another window where you can record the information.
3. From there, input the correct date for the affected quarter. The Effective Date is used to compute amounts on the 940 and 941 forms.
4. In the Adjustment is for section, mark the radio-button for Employee and choose the appropriate worker.
5. Choose the state tax in the Item Name drop-down and type in a positive amount, and wage base in the appropriate field boxes.
   
6. Next, press the Accounts Affected button to open the Affect Accounts window.
   
7. Choose how you want the amounts to affect your payroll liabilities.
8. Mark the radio button for the appropriate option and click OK to save the changes.

To set up a negative adjustment, follow the above process except for the amount’s sign. There should be a minus symbol beside the number since you’ll be deducting it to the paycheck.

After following the resolution, you can start pulling up the W-2 forms for your employees. The following links provide an overview on how to fix incorrect tax forms and steps to process them.

• Amend or correct a W2 form
• Print forms

Stay in touch if you need further assistance while working in QuickBooks. Please know I’m ready to help and make sure you’re taken care of. Have a good one.

I have previously corrected the payroll tax liabilities.  My problem is that it did not fix the earnings portion of the W-2 form.  On the bottom of the W-2 (line 15 & 16) for the employee in question it lists Arizona earnings.  There is a portion of line 1 broken out and listed as Arizona earnings.  This is what I would like to correct.  I know I can override the State to Nevada, however that makes is look as though only a portion of the earning are Nevada instead of the full amount of line #1.  In addition quick books has created an A1-QRT (quarterly withholding tax return) for Arizona showing those earnings.  There is no tax liability, just an amount in payroll for the quarter.  I appreciate your assistance.

Thanks for providing an overview of what happened to your W-2 form, leanne6.

QuickBooks populates the total stage wages, tips, etc., in Box 16 that are subject to state income taxes and paid to the employee during the reporting year. Some deductions like 401(k), pre-tax medical, fringe benefits, etc., are not taxable to state income tax, however, they can affect this box.

For more details about this one, please refer to the Taxability of pay types article on how they affect this box.

The tax tracking types on your deductions/additions can affect the reported earnings if they are incorrect. With that said, let's review the deductions and check the tax type to correct this.

Here’s how:

1. Click List on the top menu.
2. Choose Payroll Item List.
3. Open the deduction you’re working on.
4. Right-click your mouse and select Edit Payroll Item.
5. Click on Next twice.
6. On the Tax tracking type window, check if you’re using the correct type.
7. If it’s incorrect, select the appropriate classification that matches your plan type
8. Click on Next.
9. Review the tax setup, then click on Next until you reach the Finish button.

If you’re unsure which tax tracking type to use for each deduction item, please reach out with your accountant for recommendations.

Then, to verify if you have the correct state withholding earnings, just follow the steps below:

1. Run a Payroll Summary report for the entire calendar year.
2. Double-click the amount for the state withholding in question. The amount here is equal to the total of the wage base column.

On the other hand, Arizona form A1-QRT will show the liability amount in the Part 2 section under section A or B depends on your deposit schedule. Also, it will appear under Part 3 Tax Computation in Line 1.

Since there's no liability amount reflected, I'd suggest consulting our Payroll Support Team. They'll pull up your account in a secure environment. Then, they'll help you review the transactions and trace why the liability amounts are not posted on the state form.

Here's how to reach them:

1. Click Help on the top menu.
2. Select QuickBooks Desktop Help.
3. Tick Contact us.
4. Choose Running Your Business in QuickBooks and hit Basic, Standard, or Enhanced Payroll.
5. Press the Start a Message to connect with us.

I've got some articles here about correcting W-2 form boxes information and state payroll tax regulations:

• W2 form boxes explained
• Arizona Payroll Tax Compliance

Visit us again if you need a hand with filing the W-2 form or any payroll related. I'm always here to help.