Hello there, @KS59803.

You don't need to create a negative check to zero out the liability, you can simply apply the payroll liability over-payment as a credit to your next liability. I'm here to help guide how.

First, negative liability happens when you have an overpayment made on your previous taxes or payroll liabilities, if you have a liability overpayment, you can simply apply it as a credit to a payroll tax account.

To apply a tax credit, you can follow these steps:

1. Create a liability check.
2. Select the Expenses tab. And select the account where you want to apply the credit.
3. Enter the amount of the credit (only up to the amount of the check) as a negative figure in the Amount field.
4. Enter an explanation of the transaction in the memo field.
5. Select the Recalculate button to lower the amount of the check by the amount of the credit. If there is a credit balance remaining, you can apply it to the next period by repeating steps 1 through 4.

For further details, you can check this article: Apply your payroll liability overpayment as a credit.

Let me know directly if you have any other payroll or QuickBooks questions. I'm just a post away to help you!

Please don't use this method if you are experiencing a legitimate software glitch (i.e., you always use the "Pay Payroll Liabilities" function, and never mess around with journal entries or writing checks directly to handle anything related to payroll liabilities).  The method described above *will* in fact affect both the payroll liability and the expenses.  The best way to figure out if you're having a glitch or not is to use the Payroll Liabilities Report for the year you're looking at and make sure that it shows $0 balances due, all paid.  If it does, you're looking at a software glitch if you're seeing "Past Due" liabilities that you know aren't past due, and using this fix will not fix anything, it will make the "Past Due" liabilities disappear from the Pay Payroll Liabilities window, but it will also mess up your payroll liabilities for that period, and your expenses for whatever period you cut the $0 check in.  I am still looking for an actual fix for this.

My client has been paying liabilities directly from the check register for years (8 to be exact).  What a mess.  Since this crosses many year ends, how do I make a simple fix to the "pay liabilities"?  

I need to remove a wage garnishment from our liablities as the employee is no longer employed here. How do I remove it?

Thank for joining this thread, Jacuff.

Once a tax liability is set up from the payroll schedule, you're unable to remove it. Just make sure the garnishment liability has a zero amount in the system.

If you have other types of liabilities, such 401(k) contributions, health insurance, and dental insurance, you can remove them. Let me show you how to delete a scheduled payroll liability in QuickBooks Desktop:

1. Go to Employees, then select Payroll Center.
2. Click the Pay Liabilities tab.
3. Select Change Payment Method from the Other Activities drop-down list.
4. In the QuickBooks Payroll Setup window, select Benefit and Other Payments.
5. Select Schedule Payments, and double-click the payroll item to edit.
6. Under Payment Frequency, select the I don't need a regular payment schedule for this item option.
7. Select Finish, and click Finish again.

I've added this article: Run payroll liability balances report to get answers to questions about payroll liabilities.

Stay in touch with me if you need additional information. Just tag my name and I'll get back to you.

Thanks so much!  Haven't tried it yet because like everything else, I have to be in single user mode meaning kicking 5 people off during the workday.  How annoying.The answer seems simple and will result in much less confusion.

AWESOME FIX!  THANK YOU!

mp611

It solved my problem. What a relief!!! Thank you.

I also have old tax liabilities that were paid online and somehow still showing up under "pay liabilities". I have tried putting a minus/negative amount in the expenses column to match the payroll liabilities that is flagged as overdue, as well as putting a zero in for the check amount, and unchecking the "to be printed", then making the check # say "EFT". It still won't take it because QB desktop wants an "account" associated with the negative expenses amount I am putting in. 
   What account should I use? One of my problem examples is using "local withholding" as the account the $$$ is supposed to come out of...

Hi there, S4121. 

I'd be more than happy to help you settle the payment that is still showing as overdue in the Pay Liabilities tab.

Since you already made the adjustment to correct the amount that you should be paying for this specific tax, you'll just need to enter a prior payment. That way we can zero out the balance of the tax payment in the Pay Taxes and Liabilities tab. To know more about liability adjustment, please refer to this article: Adjust payroll liabilities.

Also, you need to ensure you use the same account after changes are made.    

If you need additional references about payroll in the future, please feel free to access our site: Help articles for QuickBooks Desktop Payroll. 

Keep me posted if you have other questions about liability adjustment. I'll be here to help however I can. Stay safe!

Im SO glad you posted this! Ive been trying to solve it for a week.This did the trick!

I also need assistance with that.  They are showing in Pay Taxes & Other Liabilities as Overdue but I have already paid them with a check.  All I need is to clear my liabilities accounts and not affect expense account at all. 

Thanks for following this thread, @aquinones. I can help you record tax payments to get rid of the overdue status and ensure that your tax reports are accurate. 

The most suitable way of recording the tax payments you've made outside QuickBooks is entering them as historical tax payments in QuickBooks Desktop. Here's how to do it:

1. Go to the Help menu, then choose About QuickBooks.
2. Press Ctrl + Alt + Y or Ctrl + Shift + Y to open the Setup YTD Amounts window.
3. Click Next until you reach the Enter prior payments section.
4. In the Enter Prior Payments window, select Create Payment to enter all prior payroll tax and non-tax payroll liability payments you've made.
5. Enter the Payment Date and For Period Ending date accordingly.
6. In the Taxes and Liabilities field, choose the payroll tax item that you've already paid, then enter the amount.
7. Select test the Accounts Affected... button, then select the appropriate option on how you want the payment to affect your Chart of Accounts.
8. Click Next Payment (if you've another payment that needs to be recorded), then select Finish to complete the process.

I've got you an article with the detailed steps in recording historical payroll information to your QuickBooks Desktop Payroll: Enter Prior Payroll.

For future reference, read through this article should you need to track where your business stands in terms of employee expenses: Customize the payroll and employee reports.

I'm always around to help if you have any other concerns or follow-up questions. Take care!

Finally!  Thank you.  I have been trying to find a fix for this forever.  It was only .09 and .02 but, I couldn't stand see it and that it was marked in red and overdue when it really wasn't.  The amounts just differed slightly from QB to what the accountant actually paid online.  Now, if it ever happens again, I know what to do! Thank you.

Thanks a lot.  It worked for me.  

I had not chagned the rate for SUTA.  Excess liability amount accumulated for 3 Qtrs. - didn't know what to do but your solution worked perfectly alright.  Thanks a lot.

this is the only thing that worked, thank you

Thank you so much, it worked!!!