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. 

"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.

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!

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. 

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:

• How to track paid leave and sick time for the coronavirus.
• What you need to know about the Families First Coronavirus Response Act.
• Latest payroll news and updates.

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

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

Hi, I use QB Desktop as well and ran SEP contributions through payroll to calculate amounts correctly.  They show as non-taxable company item on the paystubs but now that I'm running W-2s, the amounts contributed by the company are added to the employees state of NJ wages.  

Could something be setup wrong? these are company's contributions, not employees.  Why is it taxable in NJ? I understand that NJ includes all pre-tax contributions as wages, but SEP contributions are not employee contributions.  Please any input you can provide, greatly appreciated.

Hi there, yhtax876.

Let me share what I know about SEP Company contribution in QuickBooks Desktop Payroll.

Retirement plans and company contribution shouldn't affect the wages reported in W2's. You can check the tax tracking type and taxes selected by editing the payroll item for your SEP company contribution.

Like this:

1. Go to List menu.
2. Choose Payroll Item List.
3. Right-click on the payroll item, then select Edit Payroll Item.
   
4. Click Next twice and then the Tax tracking type.
   
5. Select Next and see if NJ taxes are selected. 

I'm adding this article for more info and how payroll items affect the wages in employee's W2s: Understand why the wage amounts are different on your employee's W-2.

Want to learn more about the different pay types and deductions? Check out this link for more details.

Post your concerns or any follow up questions about it. I'll keep an eye on your response. Have a great week!

Thank you, you are correct, it shouldn't affect W-2 wages.  Federal numbers are all correct.

When I looked at the payroll item, my settings are exactly how you mention but it does have NJ withholding checked.  According to QB, the information is taken from the state information they have (I was told by QB support).   I think that's what could be causing that, but how do I fix it now? I understand that I may have to amend all state quarterly reports filed during the year but more importantly, I need to get the correct W2s filed.  Thank you.

Hi there, @yhtax876.

I'll help you fix your incorrect W-2's in QuickBooks Desktop (QBDT). You can file a W-2c to make corrections on previously issued wage/tax information. 

Simply create your W-2c and W-3c in QuickBooks and print them on perforated paper only (not pre-printed). Then, manually file the forms with the Social Security Administration.

Here's how:

1. Open QuickBooks Desktop
2. Select Employees and go to the Payroll Center.
3. Click the File Forms tab.
4. Select Annual Form W-2c/W-3c - corrected Wage and Tax Statement, then Create Form.
5. Click the employee’s last name and select OK.
6. Choose the employee(s) who need a W-2c, then click Review/Edit.
7. Answer the question: Have you made the W-2 corrections in QuickBooks Desktop?
   If Yes - The current QuickBooks Desktop info shows in the Correct information column on the W-2c. Enter the Previously Reported amount for the items that should be corrected.
   If No - The current QuickBooks Desktop info shows in the Previously Reported column on the W-2c. Review each W-2c worksheet and enter the correct amounts in the Correct Information column.
8. Review each page and select Next as needed. Then, check the box Check if this is a W-2c (corrected W-2).
9. Fill in only the lines that need to be fixed in both the Previously Reported and Correct Information columns. 
10. Remove the amounts from the remaining lines. Right-click on the amounts and select Override, then delete the amounts.

Moreover, you can use any payroll reports in QBDT as reference filling out the W-2c form.

W-2s are key tax forms for you and your employees at the end of the year. You can check out this article to get help with everything from who handles your W-2s to how to file them and fix mistakes: Get Answers to your W-2 Questions.

Should you have any follow-up questions or concerns, don't hesitate to post again here in the Community or leave a comment on this thread. Take care and have a good one.

Thank you.  What I do need to fix first is for the employer SEP contributions to not be added to the employees' NJ state wages.  Right now, when I preview the employees' W2, the NJ box includes the SEP contributions.

I have already removed the NJ withholding checkmark from the payroll item but that may work for future contributions.

I'm here to help share information about your payroll item, @yhtax876.

Since the contribution is still included even after updating the payroll item, I recommend contacting our Payroll Care Team. One of our specialists online has the tool needed in entering the payroll adjustment to resolve the contributions included on the employee wages. To do so:

1. Go to Help.
2. Select QuickBooks Desktop Help.
3. Click Contact Us.
4. Enter a few words describing how the payroll item is not showing the appropriate deductions in the What can we help you with? field.
5. Select Continue.
6. Click Start a conversation or Have us call you.

Here's an article you can read to learn more about our support hours and the appropriate channel to connect with: Contact Payroll Support.

While working with your account and payroll transactions, here are the most common articles to use as your guide: Help Articles for QuickBooks Desktop Payroll.

Know that you can always leave a reply below if there's anything else that I can help you with. I'll surely be around, ready to lend a hand. Stay safe!

Thank you!

After 2.5 hrs on the phone with Quickbooks, I was able to get this corrected.

The error was due to an error in Quickbook's payroll item settings default option but luckily I got help from 2 higher-level support techs and got it fixed!!

That's great news @yhtax876.

Thanks for circling back to let us know.  It's great to hear our support team was able to get things cleared up. 

Please feel free to drop into the Community if you ever have questions about your QuickBooks or Payroll. 

We're happy to help anytime!