Manual Payroll incorrectly record Employer Medicare Tax

Hi there, Liem.

Let me share some ways to check the negative amount recorded for the Medicare Company item. 

Payroll reports show the line item detail that appears on each payroll transaction. To confirm if the amount listed in the report is a duplicate, double-click it. If it will open a paycheck, go to the Other Payroll Items and Company Summary sections and look for a duplicate Medicare Company item. However, if it opens a YTD adjustment window, go to Other Employee and Company Payroll Items to check. If it's a duplicate, you can manually delete the item and amount in the window where you find it to correct your records. 

However, if you run the Payroll Transaction Detail report, it shows you the details of both the debits and credits for company-paid transactions like Medicare Company. If so, the amount should be correct. 

For additional reference, I've attached some articles you can use to set up payroll and guidelines in QuickBooks: 

• Set Preferences for Payroll
• New Payroll setup interview

Drop me a comment below if you have any other questions. Have a great day. 

All company paid taxes like medicare, social security, FUTA, and many states taxes consist of two accounting entries. One is a liability and the other is usually an expense, like "Payroll Expenses".

If you edit the medicare item on your payroll items list, you'll see three account fields.  Two are for your liabilities account on the next slide of the interview is an expense account for your company.  Does that field contain an expense account, or your liabilities account? If the latter it will cause what you're seeing.

If this is the case, change the expense account to be an expense account, and then when you save the item you'll be prompted and asked if you want to update your transaction data.  You do what that.

Thanks MaryGrace for the quick reply. I hope someday I can be good enough to help others like you help me now.

The payroll reports are correct. They Payroll Item Detail shows each paycheck with 9 lines (Salary, Medicare addl Tax, FITW, SS Company, SS Employee, Med Company, Med Employee, FUTA, TWC (I'm in Texas)); ALL CORRECT.

The problem is when I go to the Balance Sheet report, There is a negative number for Payroll Liabilities. I expanded this and found that each paycheck has an extra line for the Medicare Company amount. This is the only problem as FITW and SS tax don't have this problem.

I know that this is the Medicare Company item because I can change the amount and see the change in the Transactions by Account report.

So, to recap, I think the problem is in the liabilities calculation and not the payroll part of QuickBooks.

Thanks,

Liem.

Thanks BR. I think the problem is not with understanding the reports.

I think the problem is that the Medicare Company amount triggers two entries into the liabilities account, one negative and one possitive. These two entries canceled one another so that when the liabilities payment was entered, a negative balance resulted.

Both the  payroll summary and detail reports are correct. The FITW Liabilities is correct. However, Medicare and Social Security tax are lumped together into one group showing a negative balance, with Medicare Company amount having 3 lines instead of 2 like it should.

Does the grouping of the reporting indicate a Payroll Setup problem?

Thanks,

Liem.

Hello there, Liem.

The grouping of the reports doesn't mean there's an error with your payroll set up. Though, we need to make sure that everything is correct.

You'll have to verify if the payroll items are properly accounted. Here are some of the articles for your reference:

• Create or set up local taxes

• Edit a payroll item

• Edit payroll items used on paychecks

Please comment again if you have more clarifications. We'll be right here if you need more assistance.

Thanks everybody. I checked all payroll reports and they are all correct. I decide to redo all setup including the payroll items.

I'll report is this clear up the problem.

Thanks,

Liem.

I'm happy to report that the problem has been fixed.

I turned off the full payroll then turn it back on then went through the payroll setup. I had an account named FICA to track both Medicare and Social Security items. This time around I setup separate Med and SS accounts to track Medicare and Social Security items separately. Other than the separate accounts, I think everything else is the same as before; and I didn't change the paychecks.

I then went through the payroll setup including the Year-to-Date Payrolls and Finishing Up steps.

The new Balance Sheet report doesn't show the payroll liabilities line as before.   (:-)

Thanks everyone for your help.

Liem.