Maine Paid Family Leave Act - employer pickup

Hi there, @kcassidy1.

How are you doing today? I hope all is well. 

You can use the Liability Adjustment tool in QuickBooks Desktop. This tool will allow you to correct employees’ year-to-date (YTD) or quarter-to-date (QTD) payroll info in QuickBooks Desktop Payroll. I'm including some steps to walk you through the process below. 

First, you'll need to find the payroll discrepancies. Here's how:

1. Run a payroll check-up (QuickBooks Desktop Basic, Standard, and Enhanced Payroll only).
2. Run a payroll summary report for the month or quarter you need to adjust. Take note of the amount of Payroll Items that need adjustments.

Next, you'll need to make the adjustment. Here's how:

1. Go to Employees, then Payroll Taxes and Liabilities.
2. Select Adjust Payroll Liabilities.
3. In the Date and Effective Date fields, choose the last paycheck date of the affected month or quarter.
4. In the Adjustment is for: section, click on Employee Adjustment to correct your employee’s YTD info. Then select the employee's name. Do this even if the item being adjusted is a company-paid item.
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.
7. Enter the amount under the Income Subject to Tax column if you need to make a wage base adjustment.
8. Under Memo, enter a note about the adjustment for reference.
9. Tap on Accounts Affected, then OK.
   • Select Do not affect accounts to leave balances unchanged for the liability and expense accounts. The adjustment will only change the year-to-date amounts on your payroll reports.
   • Click on Affect liability and expense accounts if you want the transaction to reflect in the liability and expense accounts.
10. Hit OK to close the Affect Accounts window.
11. Select Next Adjustment if you have additional employees to enter an adjustment for. Otherwise, tap on OK to save the changes.

After that, it's recommended to check if the liabilities are updated:

1. Run the payroll summary report again to check if everything is correct.
2. Run the payroll liability balances report to check if the amounts to be paid are correct.

That should do the trick. For more information about this process, check out Adjust payroll liabilities in QuickBooks Desktop. 

Please know it's always important to consult with your accounting professional before making any changes to your books. Your accountant can advise if this is the right process for your company. If you don't have an accountant, don't sweat it. You can find one here in our Resource Center. 

Don't hesitate to reach back out if you have any additional questions or concerns. I'm happy to lend a hand anytime. Have a good one! 

Thank you.

Will this calculate retroactive amounts owed by each employee from 1/1/26?

Hello there, Kcassidy1. To clarify, the liability adjustment tool does not automatically calculate retroactive amounts owed by employees. Instead, it serves to manually update your year-to-date and quarter-to-date totals on your reports without generating new paychecks or triggering additional tax withholdings.

To handle this correction properly, you will first need to manually calculate the specific portion of the employer pickup that should have been classified as taxable income for each employee between 1/1 and 3/15. Once you have those figures, add this amount to an upcoming paycheck or create a separate adjustment check, allowing QuickBooks to withhold the necessary Federal Withholding and FICA. Finally, you can use the liability adjustment tool to ensure your reporting totals are accurately synchronized for the quarter.

It is important to remember that the adjustment itself is strictly a reporting correction; any actual tax collection from employees must be processed through a paycheck.

Furthermore, since these adjustments directly impact taxable income and tax reporting, it is highly recommended to consult with your accounting professional before proceeding. They can verify that this specific process aligns with your company's requirements and ensures your books remain accurate.

If you have any other QuickBooks-related questions, let me know by adding a comment below.

Thank you for confirming and explaining that a separate check will need to be created.

In addition to Federal Withholding and FICA, it is my understanding that it is also applicable to FUTA.

Hi kcassidy1. Yes, you're right that it's also applicable to FUTA as well, along with Federal Withholding and FICA, and that aligns with IRS Rev. Rul. 2025‑4. The employer’s payment of the employee’s Maine PFML share on a catch‑up check is taxable and subject to all three taxes up to the FUTA wage base.  

You can also consult with an accounting professional, as my colleagues suggested, to confirm this treatment for your specific situation and ensure everything ties out correctly in your filings.

We're here if you have other concerns.