Local tax Payroll Liabilities accounting

Hello there, @charodie.

You can run the Payroll Liability Balances Report to review if you have overpayments or underpayments that change the payroll liability balance.

Here' how: 

1. Go to the Employees.
2. Select Payroll Center.
3. Click the Payroll tab then go to Pay Liabilities.
4. Select Payroll Liability Balances from the Reports section.
5. Check if there are negative amounts (overpayments).

Then, create payroll adjustment in QuickBooks. 

1.   Go to the Employees menu, then select Payroll Taxes and Liabilities.
2. Select Adjust Payroll Liabilities.
3. Make sure to use the same date as the last paycheck of the affected quarter
4. Select Company Adjustment if you want the balance to be removed from the Payroll Liability Balances Report.
5. Select the employee.
6. Complete the Taxes and Liabilities fields.
7. Select Accounts Affected.
8. Click OK.

However, I recommend reaching out to your accountant for other ways on how to do it.

Check these articles to learn more:

• Adjust payroll liabilities in QuickBooks Desktop
• Enter historical tax payments in Desktop payroll

Keep in touch if you need help with anything else. We're always here to lend a hand. Have a good day!

Hi GraceC,

I have made these payroll liability adjusts, but my question is... Is that the most effective way of dealing with these differences? Because I can put these differences in as an expense as well. Just wondering which way the quickbooks community thought worked better.

Thanks

Hello there, @charodie!

Yes, creating an adjustment is the best way to record the small pinnies of your liability. Recording it this way will let you track the adjustment accurately based on your report.

But please know that your payroll liability is calculated base on your tax rate including the rounded off 2 digits after the decimal place. While your agency is calculating your liability base on the whole rate if your taxes. Causing it to off by a small amount once you compare them.

Lastly, I've got you these helpful articles you can read for ideas about how you can manage your account and payroll transactions: Help Articles for QuickBooks Desktop Payroll.

If there's anything else that I can help you with, let me know in the comments. I'll be happy to help.