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IASG
Level 2

Pay Stub Non-Taxable Company Item Changed to Taxable Company Item

I have a SEP IRA Company Contribution set up with Tax Tracking Type "408(k)(6) Co. Match." It has always shown up on my employees pay stub under a "Non-Taxable Company Items" section. On my most recent payroll, it is now under a "Taxable Company Items" section. I did not change anything with the Payroll Item.

 

I am confused as to why this changed and what it means? What is now taxable?

 

I wonder if something changed with some of the recent payroll updates? When I printed the stubs the day I ran the payroll (04/06) they show up under Non-Taxable but I printed the same stubs yesterday (04/14) and they show up under Taxable. I'm very confused.

6 Comments 6
JenoP
QuickBooks Team

Pay Stub Non-Taxable Company Item Changed to Taxable Company Item

Hi there, IASG.

 

Taxable it will be added to the total taxable amount when added to the employee's paychecks. Also, payroll updates does not affect the tax tracking type of a company contribution or how the item was set up.

 

Let's go to the Payroll Item List window to edit the item and switch it back to the original setup. Here's how:

 

  1. Go to the List menu and select Payroll Item List.
  2. Look for the SEP IRA Company Contribution and double-click on it.
  3. Click Next until the Tax Tracking Type window.
  4. Select the correct tax tracking type. 
  5. Click Next thrice, then click Finish.

Once done, you may need to delete the paychecks if they're not yet distributed to your employees. Then, recreate them to make sure the taxes are calculated correctly according to each payroll item's setup.

 

Let me share an article with you about managing retirement plans in QuickBooks Desktop: Set up a payroll item for retirement benefits (401(K), Simple IRA, etc.).

 

The Community is always here if you need anything else. 

IASG
Level 2

Pay Stub Non-Taxable Company Item Changed to Taxable Company Item

"Let's go to the Payroll Item List window to edit the item and switch it back to the original setup."

 

That's why I'm confused. I didn't change anything in the Payroll Item setup.

 

I can tell that from my salaried employees that the Federal Withholding, Social Security, Medicare, and State Withholding is not treating the SEP Contribution as taxable income. The taxes are the same as always.

 

See attachments. Same pay period. Same pay date. The Net Pay is identical. I don't understand why the stub would  be different for the same period just because I generated the stub at a different time. I only ran the payroll for the period once.

JasroV
QuickBooks Team

Pay Stub Non-Taxable Company Item Changed to Taxable Company Item

I appreciate the screenshot you've provided, @IASG.

 

Let's re-sort your payroll item list to repair any data issue. Let me guide you how.

 

In your QuickBooks Desktop (QBDT):

  1. Go to the Lists menu.
  2. Click the Payroll Item List.
  3. Select the Include Inactive checkbox.
  4. Click the QuickBooks View menu and select Re-sort List.
  5. Select OK in the Are you sure you want to return this list to its original order? prompt.

You can also read this article and go to Re-sort payroll item list section for more detailed steps: Re-sort lists.

 

Once done, I recommend updating your payroll tax table to ensure the accuracy of your tax every time you pay your employees.

 

You might also want to check our Help articles page for future reference. From there, you can read great articles that can guide you on managing your QuickBooks effectively.

 

Should you have any other concerns or questions, know that you're always welcome to post here anytime. I'll be around to help. Have a good one!

IASG
Level 2

Pay Stub Non-Taxable Company Item Changed to Taxable Company Item

I think I found what changed.

 

I decided to restore my company file from 03/31/20 and look at the payroll item in question. I noticed one significant difference. Under the Taxes page, there was no National Paid Leave Credit in the restored copy. By default, the National Paid Leave Credit was checked in my most recent company file, and this caused my SEP to show up as Taxable on pay stubs. When I unchecked it, my SEP went back to Non-Taxable on pay stubs.

 

Was this related to the CARES Act? I didn't change anything. Quickbooks changed something in the payroll item via an update. Quickbooks needs to be more careful here. 

 

SEP Taxes Compare.jpg

AlcaeusF
Moderator

Pay Stub Non-Taxable Company Item Changed to Taxable Company Item

Thanks for sharing this information here in the Community, @IASG.

 

I can share some insights about running payroll in QuickBooks Desktop. The National Paid Leave Credit option normally shows to the list of taxes you can choose for your payroll items.

 

This item is made available in QuickBooks Desktop to ensure users who need it can comply with the Family First Coronavirus Response Act (FFCRA). However, it should remain unchecked if you haven't made any changes to the SEP-IRA Contribution account.

 

For now, I suggest running the Audit Log feature to check for any changes made to the company file.

 

Here's how:

 

  1. Click the Reports tab at the top menu bar.
  2. Select Accountant & Taxes.
  3. Choose Audit Trail

Additionally, here are some helpful references that you can check out about the National Paid Leave item, as well as some latest payroll news and updates:

 

Let me know in the comment section below if you have any other questions. Have a great day ahead.

jsue
Level 1

Pay Stub Non-Taxable Company Item Changed to Taxable Company Item

Mine did the same thing!  Couldn't figure out why.

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