How can I clear an old prior year liability that has already been paid without reducing the bank balance?

Hello there, r-northern-co-wa.

I understand the frustration of dealing with accounting discrepancies from a prior year.

Creating a journal entry will not impact the payroll. Instead, it will help balance your books. You can create a prior payment to clear the liability.

Here's how:

1. Go to the Taxes menu, then Payroll Tax.
2. Select the Payments tab.
3. Review the payments listed.
4. Choose Mark as paid, then select Yes, mark paid.

For more details, check this link: Record prior payment.

I also suggest seeking guidance from your accountant to ensure accurate and compliance correction.

Additionally, you can refer to this article to identify the specific report for tracking your payroll in your books: Run payroll reports.

Let me know if you need more help correcting payroll liabilities in QuickBooks. I'm always here to help. Take care.

@r-northern-co-wa 

On the journal entry in 2022, is Wages Expense the debit side to the credit entry to Wages Payable?  If so, and those wages were paid in 2023, the journal entry should have been reversed at that time the wages were paid.  If it wasn't reversed, then your Wages Expense is currently overstated.  To fix this, reverse the entry with a journal entry: credit Wages Payable, debit Wages Expense for the balance.     

@r-northern-co-wa 

CORRECTION: on the reversing journal entry in 2023, debit Wages Payable, credit Wages Expense for the balance.