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City Withholding Adjustment QB Desktop 2020

Please advise what would be the best course of action in Desktop QuickBooks 2020.

 

Employee completed a locality withholding certificate in error. This was detected after payroll was run and payment issued. Employee revoked withholding certificate for said locality.

 

Locality report of withholdings is not due yet, and payroll information as not yet been communicated to the locality.

 

What would be best way to (1) refund employee the tax withheld?

 

What would be the best way to (2) amend the records so the locality account payable is reversed and said employee will not appear on future reports for locality in QuickBooks withholdings due to not being locality resident and not working in locality.

 

Thanks!

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Best answer August 10, 2020

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City Withholding Adjustment QB Desktop 2020

RE: What would be best way to (1) refund employee the tax withheld?

 

1. Create a legibility adjustment that is set to not impact account to negate that tax and the wages.

2. Write the employee a standard check using the payroll liability account used on the city tax item.

 

RE: What would be the best way to (2) amend the records so the locality account payable is reversed and said employee will not appear on future reports for locality in QuickBooks withholdings due to not being locality resident and not working in locality.

 

Well, Accounts Payable isn't involved in any way in payroll taxes in QB, so not exactly sure about that.

To stop the tax on future checks, remove it from the employee record.

View solution in original post

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Highlighted
Community Champion

City Withholding Adjustment QB Desktop 2020

RE: What would be best way to (1) refund employee the tax withheld?

 

1. Create a legibility adjustment that is set to not impact account to negate that tax and the wages.

2. Write the employee a standard check using the payroll liability account used on the city tax item.

 

RE: What would be the best way to (2) amend the records so the locality account payable is reversed and said employee will not appear on future reports for locality in QuickBooks withholdings due to not being locality resident and not working in locality.

 

Well, Accounts Payable isn't involved in any way in payroll taxes in QB, so not exactly sure about that.

To stop the tax on future checks, remove it from the employee record.

View solution in original post

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Level 3

City Withholding Adjustment QB Desktop 2020

Thanks! I'll look into this and provide an update within the next several business days.

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Level 3

City Withholding Adjustment QB Desktop 2020

I have completed Step 1. @BigRedConsulting 

 

However, I've not been able to complete Step 2.

 

So now it is correct that the income subject to tax and the wage base is now correctly reflected in the system for the employee at $0.00.

 

I attempt the KB https://quickbooks.intuit.com/learn-support/en-ca/employees-payroll/giving-an-employee-a-refund-for-...

 

When I attempt to put a positive amount in QuickBooks for that line item, no mater what QuickBooks just keeps assuming its a deduction and will not remit that amount back to the employee.

 

Item Name | Amount | YTD

Before:

Local Withholding | 0.00 | -15.00

 

I enter 15.00 in the amount column then QuickBooks automatically converts to a negative number.

After 

Local Withholding | -15.00 | -30.00 |

 

Sought

Local Withholding | 15.00 | 0.00

 

Note that the withholding payroll item is currently set up as a 'Other Tax' and not as 'Deduction'.

As a side note, the QuickBooks Payroll Checkup flagged that the local tax may have an issue since the default 'Deduction' is deactivated and two accounts 'Other Tax' were created one for Resident or Not-Resident.

 

Thoughts?

 

Community Champion

City Withholding Adjustment QB Desktop 2020

Hi @User_20200731 

RE: 2. Write the employee a standard check using the payroll liability account used on the city tax item.

------------------

However, I've not been able to complete Step 2....

When I attempt to put a positive amount in QuickBooks for that line item, no mater what QuickBooks just keeps assuming its a deduction

------------------

When I wrote "standard check" that means not a Paycheck, but a standard QB "Check".  No payroll items are involved in this process, only the payroll liability account and an amount: 

 

- If you used the payroll item on a check again then your wages and tax would no longer be 0.00 YTD as desired.

- As you are seeing, you can't put the wrong sign on a tax on a check, which is why step 1 is to use a liability adjustment.

 

Basically there is no way to do what you need to do with one transaction, and so you must use two.  At the same time, you can't use the payroll item on both, because that will throw the payroll reporting off.

 

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