How to make adjustments to taxable wages

I appreciate your thorough explanation, Andy. To address the issue, we'll start by adjusting the State Unemployment Insurance (SUI) and State Disability Insurance (SDI) boxes on your paycheck. By unchecking these boxes, we can ensure that these taxes are adjusted to reflect zero and then make a liability adjustment to correct the payroll tax liabilities. 

First, open the employee's paycheck and uncheck the boxes for SUI and SDI. Please refer to the instructions below:

1. Go to Employees and choose Employee Center.
   
   
   
   
2. Double-click the employee's name.
   
   
   
   
3. Tap the Payroll Info tab and select the Taxes button in the upper right.
   
   
   
   
4. Click the State tab. Then, uncheck the SUI and SDI box.
   
   
   

Then, run a payroll summary report for the period you need to adjust. Locate the employee and take note of the SUI and SDI amount.

To make adjustments to the payroll liabilities, ensure that the SUI and SDI item is active on the payroll list. Then, proceed to the instructions below:

1. Go to Employees, then pick Payroll Taxes and Liabilities. 
2. Choose Adjust Payroll Liabilities.
   
   
   
   
3. In the Date and Effective Date fields, select the last paycheck date of the affected month or quarter.
4. In the Adjustment is for: section, select Employee Adjustment to correct your employee’s YTD info. Then select the employee's name. Do this even if the item being adjusted is a company-paid item.
5. In the Item Name column, select the SUI and SDI. Then, enter the Amount of the adjustment. Since the items are over-withheld, enter a negative amount. 
6. Enter the amount under the Income Subject to Tax column if you need to make a wage base adjustment.
7. Under Memo, you can enter a note about the adjustment. 
   • Select Accounts Affected, then OK. Select Do not affect accounts to leave balances unchanged for the liability and expense accounts. The adjustment will only change the year-to-date amounts on your payroll reports.
   • Click Affect liability and expense accounts if you want the transaction to reflect in the liability and expense accounts.
8. Hit  OK to close the Affect Accounts? window.
9. Tap OK to save the changes.
   
   
   

Finally, check if the liabilities are updated by running a:

1. Payroll summary report again to check if everything is correct.
2. Payroll liability balances report to check if the amounts to be paid are accurate.

By following these steps carefully, you can effectively correct your payroll tax liabilities and ensure compliance with tax regulations. If you have any questions or need further assistance during this process, please feel free to add a reply. I am committed to supporting you in navigating this journey with efficiency and accuracy.

Hi CamelleT,

Thank you for your detailed instructions. I've managed to follow them so far, but I'm encountering an issue with the adjustment section. I can't seem to locate CA-Disability (SDI) or CA-Unemployment (SUI) on the list of adjustments.  Even though no amounts were withheld, the wage base is displaying a total of $783.00, and I need it to reflect 0.00.

Could you please advise on why SDI or SUI options might not be appearing on my adjustment list? I've attached a payroll report showing the $783.00 that needs to be reversed out to zero out SDI and SUI wage base. The second page of the attached file shows the options currently available in my adjustment list.

I would greatly appreciate your review and any insights you may have on resolving this issue.

Thank you once again for your assistance.

Hi CamelleT,

It looks like those payroll items were "inactive" on the payroll list.  I've activated them and it looks like I can now make those adjustments.