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oldgreygrammy
November 21, 2022
Question

We received a refund from IRS for 3rd quarter 941 of this year. I THINK it's because I made a mistake on a paycheck that's been cashed.

  • November 21, 2022
  • 9 replies
  • 88 views

In July, our former pastor's final paycheck was reduced by the pastor's utility bills once she left the parsonage. I should've used Misc. expense for that reduction instead of Pastor's utilities (which is an addition to her salary) It appears to have reduced her federal withholding by half it's normal salary tax. When QB created the 941 form, the total wages on line 2 is $85.31 less than Payroll summary for that quarter. The refund is $85.59. 

Should I keep the refund? Should I post it to Payroll Expense acct? 

 

How will this affect her w-2? 

Is there a solution???? 

9 replies

JamesAndrewMModerator
Moderator
November 21, 2022

Hello there.

 

You may receive a refund check if you have overpaid payroll taxes. You can check your payroll liability balance report and then create a payroll liability deposit to record this in QuickBooks to make sure that your taxes are accurate.

 

If you use QuickBooks Desktop Payroll Assisted and your refund is from a time before you used our payroll service, you must deposit the refund check into your bank account. Don’t use the instructions below. Here's how:

 

  1. First, create a payroll liabilities balance report. Locate the amount that matches the refund check amount. 
  • Proceed to step 2 if you find an amount that matches.
  • If you don't find a matching amount, go over the refund notice. The check could include interest, or some of your refunds could have been applied to back taxes.

 

Please see this article for detailed information: Handle a payroll tax refund from an agency in QuickBooks Desktop Payroll.

 

Also, I recommend consulting with your accountant if you have questions on which account to post, how will this affect the W-2, and ensure your records are in tip-top shape. 

 

You can visit this article to know how to refund a customer in QuickBooks Online: Record a customer refund in QuickBooks Online.

 

The Community always welcomes you for further inquiries with regard to the tax refund check. Have a good one!

oldgreygrammyAuthor
November 21, 2022

I use Enhanced payroll. And when qbks generated the 941, I couldn't override the incorrect wages. I don't understand your step 1 and step 2 references.

Gina MM
March 20, 2023

Welcome back, oldgreygrammy.

 

I'll ensure you'll be able to record the refund check you got from the IRS.

 

You're on the right track. Finding the amount that matches the refund check can be done quickly by running the Payroll Liability Balances report. It may include interest that's why you're unable to see a match after running the report. 

 

To be sure, have you tried to review the refund notice? Since reviewing it will help us in determining the best course of action to take in recording the transaction.

 

If it includes interest, please follow the steps below:

 

  1. Go to the Employees menu, then select Payroll Taxes and Liabilities.
  2. Click Deposit Refund Liabilities, then choose the agency that sent the refund check in the Vendor dropdown.
  3. Enter the deposit date in the Refund Date field.
  4. Key in the first day of the pay period that the refund affects in the For Period Beginning section.
  5. Choose Group the deposit with Undeposited funds, then enter the amount of the refund minus the interest in the Deposit total field.
  6. In the Taxes and Liabilities section, select the payroll items affected by the refund.
  7. In the Amount column, enter the positive amount.
  8. Once done, hit OK.

 

After that, create a deposit for the interest and add it to the Undeposited Funds. This will allow you to deposit both payroll liabilities and interest. Refer to this article for a complete guide: Record and make bank deposits in QuickBooks Desktop.

 

If the tax agency withheld a portion of the refund to cover unpaid taxes from the past. You can follow these instructions:

 

  1. Complete all the steps in Step 2 in this article: Handle a payroll tax refund from an agency in QuickBooks Desktop Payroll.
  2. Enter the full amount of your tax refund in the Deposit total field.
  3. Enter tax payments to account for the part withheld by the tax agency.

 

Additionally, using QuickBooks to file a corrected 941 X form isn't possible. I've included the following link to help you submit the correction: Instructions for Form 941-X.

 

I'll make sure to get back if you have further questions about the process, don't hesitate to add any details below. Have a great day.


I received a refund for a state payroll tax item.  I was able to follow steps 1-5 of your instructions and I also completed the deposit.  I do not understand steps 6-8 of your instructions.  Could you explain it in greater detail?  My problem is that the amount I entered appeared as a liability to be paid now. I am using QB desktop pro 2021.  Thank you.

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