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hello77
Level 1

Payroll deduction for donation to organization

I'm probably overthinking this one — an employee has donated to the nonprofit that she works for via payroll deduction. Each payroll period there will be a deduction for the same amount — donated to the organization that is paying her. What is the journal entry to record this? 

3 Comments 3
Rubielyn_J
QuickBooks Team

Payroll deduction for donation to organization

Thanks for bringing this to our attention, @hello77. Let me clarify things for you.

 

First, you will need to set up a deduction type for your employee profile. This way, once you run the payroll, the same amount will be deducted from the donation.

 

For more insights, please see this article: Add or edit a deduction or contribution.

 

Additionally, there's no need for you to create a journal entry. This way, there will be no duplicate records in your account. But if you decided to create one, I suggest consulting an accountant for the accounts to be used. This is to ensure that your book is accurate and balanced.

 

Moreover, let me share this link to help you change or delete a payroll deduction item in Online Payroll.

 

Fill me in if you have other questions about managing payroll deductions in QuickBooks. I'll be happy to help you. Stay safe!

hello77
Level 1

Payroll deduction for donation to organization

Thanks for the response — to further clarify, payroll is managed outside of Quickbooks, so a journal entry is prepared for every payroll and I know how to do that and have the proper accounts set up, etc. I'm asking a specific question with the following scenario:

 

An employee has selected to donate to the employer (nonprofit employer) via payroll deduction ($15 each paycheck, twice monthly, $30/mo). I have a payroll deduction account setup (non-tax), so the journal entry is as normal — debit wages/salary, credit the withholding accounts, credit bank for net wages. 

The question is what is the journal entry to "give the employer" back that donation? If I debit the payroll deduction (non-tax) account and credit the donation income, the bank account is not balanced. I'm staring at this and cannot determine what the proper entries are — I'm missing something. 

 

Rainflurry
Level 14

Payroll deduction for donation to organization

@hello77 

 

Are you recording the donation deductions for the employee pre-tax?  The donation deductions should be after-tax.  Therefore, instead of crediting the bank account for net wages, credit the bank account for net wages less $15 and record that $15 as a credit to donation income. 

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