Net Zero Paycheck in Quickbooks online for 401(k) employee

Hi there, Kitkat2! I'm here to help you set up a zero net paycheck in QuickBooks Online (QBO). 

To create an additional paycheck with a net zero amount, please follow these steps: 

1. Add an Other Earnings pay type to the employee's profile.

• Set the amount to 0 or leave the $ field blank.
• Rename it as Taxable offset. Or create your own name.

2. Set up a retirement plan deductions. Set the deduction amount to zero.

3. Use the Gross up formula to determine the gross pay amount.

4. Go to Payroll, then Employees  and select Run payroll.

5. Choose an employee and pay period.

6. Zero out the employee's regular pay or salary:

• Enter 0 for regular pay hours.
• Select the salary amount. Select Skip salary this time only then Apply.

7. Select the Taxable offset box, enter the amount determined by using the gross up formula. Make sure that the other pay types are 0.

8. Select Actions ⋮ then Edit paycheck.

9. In the Employee taxes section, you can zero out Federal Income Tax and State Income Tax. (Optional)

10. In the Employee deductions section, enter the retirement plan amount.

11. Adjust the Taxable offset amount as needed to get the 0.00 net pay amount.

12. Once the net pay is zero, hit Save.

13. Select Preview payroll, then Submit payroll and hit Close.

For more details and information on creating a zero net paycheck, please refer to this article: Create a zero net paycheck

Also, we have some helpful articles that might be useful to you in the future: Set up or change a retirement plan

If you have further questions about zero paychecks in QBO or need assistance with other QBO features, please let me know by replying below. I'll be of help. Have a good one. 

Yes, I have tried this prior to my posting, and I'm having several issues with this.

I have the Taxable Offset set at $0.  I have the 401(k) Employee contribution set at $0.

When I select the employee and zero out the salary to Skip Salary at this time, I go to edit the check and it says to enter hours or pay info and gives me no other option.

If I enter the Taxable Offset amount as $100, I can edit the check, but it does not allow  me edit the 401(k) employee contribution.

If I enter the 401(k) Employee contribution, then run payroll, I then remove the salary and enter the Taxable Offset, and when I hit Preview Payroll, I am unable to edit and get a Red Box Saying Net Pay must be greater than 0.

None of these options allow me to edit a check or run a 0 net check.

The other issue with this is that this is a SALARY DEFERRAL for the 401(k) contribution, meaning no taxes should be paid.  The  Gross Up doesn't make sense since then you would be paying taxes on something that is actually a salary deferral.

Thank you for providing me with such detailed information, Kitkat2. I understand your concern, and I want to assure you that we will take it to management to improve our customer service. 

To better assist you, I suggest reaching out to our QuickBooks Online Payroll Support team. They can provide personalized guidance to ensure that your net zero paycheck is created correctly without incurring taxes on the salary deferral for the 401(k) contribution. To contact us, please follow these steps: 

1. Sign in to your QuickBooks Online company.
2. Go to Help (?) and select Contact Us.
3. Enter your concern, then select Let's talk.
4. Choose a way to connect with us:

• Start a chat with a support expert.
• Get a callback from the next available expert.
• Ask the community to get help from businesses like yours.

Additionally, you can visit this article guide to learn about how to set up a retirement plan deduction or a company contribution in QuickBooks Online Payroll or QuickBooks Desktop Payroll to track and tax it appropriately: Set up or change a retirement plan

Please let me know if you need further assistance about zero paychecks in QBO. Feel free to reply on this thread.

Old thread but FYI from the IRS's website.

The amounts deferred under your 401(k) plan are reported on your Form W-2, Wage and Tax Statement. Although elective deferrals are not treated as current income for federal income tax purposes, they are included as wages subject to Social Security (FICA), Medicare, and federal unemployment taxes (FUTA).

So it appears that you cannot remove those taxes because the IRS does not allow it.

Been on the phone with customer service for almost two hours (this happens year although much longer time).  Need to create a net zero check for the owner's 401K contribution for the year.  We have a safe harbor plan through ADP not Intuit. Intuits instructions are difficult so I call every year.  I've been sharing the screen the entire time and an addional rep was also viewing to no avail.  PLEASE HELP.

Warm welcome, Kbmilhone. I understand the challenges you've been through when creating a net zero paycheck.

I'm here to guide you on creating a net zero paycheck. Please follow the steps below:

1. Add an Other Earnings pay type to the employee's profile.

• Set the amount to 0 or leave the $ field blank.
• Rename it as Taxable offset. Or create your name.

2. Set up a retirement plan deductions. Set the deduction amount to zero.

3. Use the Gross up formula to determine the gross pay amount.

4. Go to Payroll, then Employees, and select Run payroll.

5. Choose an employee and pay period.

6. Zero out the employee's regular pay or salary by entering 0 for regular pay hours, then choose Skip salary this time only, and Apply.

7. Select the Taxable offset box and enter the amount determined using the gross-up formula. Make sure that the other pay types are 0.

8. Select Actions ⋮ , then Edit paycheck.

9. You can zero out Federal and State Income Tax in the Employee taxes section, but this is optional.

10. In the Employee deductions section, enter the retirement plan amount.

11. Adjust the Taxable offset amount as needed to get the 0.00 net pay amount.

12. Once the net pay is zero, hit Save.

13. Select Preview payroll, then Submit payroll, and hit Close.

You can contact our payroll support if you need further guidance regarding this.

Moreover, you can add deductions to your employees and set up retirement plans. Refer to this article for information: Set up, change, or delete employee-paid payroll deductions.

You can always respond by tapping the reply button below. I'd be available to assist if you need further clarification about creating a net zero paycheck.

I was on the phone with a tech for a long time as well.  You have to make the new Payroll Item more than your 401(k) owner contribution to offset the tax.  

For instance, if you are making an owner/employee contribution of $1,000, the payroll item will need to be $1,000 PLUS the taxes.  I would enter the tax amount and then have to keep adjusting it until the check became Net Zero.  It's a process, and not an easy one, but that's what is needed.  No very user friendly. Desktop is so much easier.