How to record an IRS refundable credit on the payroll Check

It's my pleasure to walk you through how to record an IRS refundable credit on the payroll check, @FG10.

Before we proceed, create a Payroll Liabilities Balance report. Check for credits (amounts with negative values) that match the number of refunds and the tax item. If there are credits, let's enter a payroll liability refund check.

Here's how:

1. Go to the Employees menu, choose Payroll Taxes and Liabilities. Then click Deposit Refund Liabilities.
2. Select the name of the vendor who submitted the refund check.
3. In the Refund Date field, input the deposit date.
4. In the For Period Beginning field, enter the first day of the pay period that the refund affects.
5. Choose how you want QuickBooks to handle the deposit.
6. In the Taxes and Liabilities section, choose the payroll item/s affected by the refund.
7. In the corresponding Amount column, input the positive amount.
8. Click Ok.

If the taxing agency withheld a portion of the refund for a separate balance due, you may refer to this article on how to handle this: Record a payroll liability refund check.

Additionally, let me share this link on how to use a liability adjustment to correct employees’ year-to-date (YTD) or quarter-to-date (QTD) payroll info. This includes company contributions, employee additions, and deductions.

Keep me posted if you have further questions about handling refundable credit in QuickBooks. I'll be right here to help. Have a pleasant day!

Hi,

Thanks for your response I'm not really sure how to record it.

My issue is that I received a refund check from the IRS towards my  wages not taxes,  they deducted from each check the taxes that I owe them for that quarter. so I would like to know how I enter this transaction in Quickbooks.

Thanks 

Eff

Hi,

Thanks for your response I'm not really sure how to record it.

My issue is that I received a refund check from the IRS towards my  wages not taxes,  they deducted from each check the taxes that I owe them for that quarter. so I would like to know how I enter this transaction in Quickbooks.

Thanks 

Eff

I'd be glad to join the thread and help with your question about recording tax refund, Eff.

The steps that are shared above is usually used if there's an overpayment or negative balance for the liabilities in QuickBooks. 

You can create a bank deposit to record the refund that you received from the IRS. However, I would recommend reaching out to your accountant to check what accounts to use when creating the transaction.

Here's how to record a bank deposit:

1. Go to the Banking menu and select Make Deposit.
2. Select IRS in the Received From column. 
3. Click the drop-down list under the Account column and select and account where the refund is from. This is the part where you need to check with your accountant and verify  what account to use.
4. Enter all other details such as amount, payment method, and memo.
5. Click Save and close. 

Additional details about this process are discussed here: Record and Make Bank Deposits in QuickBooks Desktop.

I'd also like to add a couple more references that might be helpful when running payroll in QuickBooks:

• Create a Payroll Summary Report 
• Run Payroll Liability Balances Report 

Don't hesitate to send us more questions if you need additional help. We'll make sure to take care of you. 

Thanks, but how do I record the liabilities that it should show a zero balance?

Good to see you back, FG10.

Please take note that the refund that you receive can't be directly used to clear the taxes. Instead, record a prior tax payment to zero out the balances without actually making a payment.

I'd be glad to share these steps with you:

1. Go the Help menu and select QuickBooks Desktop.
2. Click Next four times or until you reach the Enter prior payments window.
3. Select Create Payment.
4. Select the taxes in the Item Name column, then enter the amount of the liabilities in the Amount section.
5. Click Accounts Affected.
6. Select Account liability accounts but not the bank account.
7. Click OK, then select Done.

This process offsets your payroll liability but will not affect your bank account. This way, QuickBooks will recognize that you no longer have pending payments. Here's an article about this process for more details: Enter Historical Tax Payments in Desktop Payroll.

You can also check out this article if you need more help when filing your tax forms: Pay and File Payroll Taxes and Forms Manually in QuickBooks Desktop Payroll.

Don't hesitate to reply to us again or ask more questions in the Community if you need anything else. I'll jump right back to help you again.

Thanks for the response but that was not what i wanted to know.

My question is how doI attach a payment for my liabilitys that the IRS has taken it off  from a refund credit check towards my wages. usually I pay my own liabilitys, now there was a refund towards my wage so the IRS deducted the taxes from the check, and applied it to what i owe them for that quarter. so how do I record this that the liabilities should be zero on the balance sheet.

Thanks 

Eff

.Hi again, Eff

There's no option to directly apply what was taken off from the refund that you receive against the payroll liabilities in QuickBooks. This is is the reason why it was suggested to create a prior payment to zero out the amount of outstanding payroll tax in your company file. 

The prior payment will also zero out the amount of Payroll Liabilities in your Balance Sheet report and in the tax forms as well.

Let me know if you need anything else. 

Hi, 

thanks for your response but I don't have such an option.

I usually pay the IRS the taxes that I owe for each Payroll quarter, now these 3 quarters the IRS gave a refund check for the wages, but they took off the taxes from the check that I owe them. so now my issue is that I have liabilities that are unpaid, but by the IRS it is paid  because they took it off, so how do you do it in quickbooks that the liabilities should have a zero balance?

Thanks

eff

Thanks for the immediate response, @FG10.

I'd like to make sure that we're on the same page so I can give you the right amount of information.

Can you verify to me what payroll service you have? Or can you send a screenshot of your payroll page? Any further details about this matter are much appreciated. This can help me narrow down this concern.

Also, to further guide you in managing your payroll account and keeping track of employee expenses in QBDT Payroll, I'd recommend customizing payroll reports. To do this, I would recommend checking out this article: Customize payroll and employee reports.

Please keep me updated in the comments. Hope to hear from you soon. Take care and stay safe!

Hi,

I don't use a payroll service, I enter everything manually.

Thanks 

eff

Hi,

Its a small company only with one employee, so that's why I don't use a payroll service, I enter everything manually in QuickBooks.

Thanks

Eff

Welcome back, FG10.

You can manually record tax payments made outside QuickBooks Desktop using the  Pay Scheduled Liabilities or Enter Prior Payments.

Here's how:

• Enter the payment in Pay Scheduled Liabilities or
• Enter the payment using the Enter Prior Payments option in the YTD Adjustment window:
  1. Select the Help menu. Then choose About QuickBooks. And press Ctrl+Alt+Y.
  2. Choose the date range. Then select Next until you see the Create Payments button.
  3. Under Item Name, select the drop-down arrow. And choose the item you need to create a prior payment for.
  4. Verify the dates and update as necessary. Select Next Payment to enter another prior payment.
  5. Select Done.

More information about the different ways and scenarios when paying liabilities can be found in this article: Fix overdue or red scheduled liabilities in QuickBooks Desktop.

You might also want to visit our help page to browse articles that can guide you with your QuickBooks tasks. To get started head to our QBDT help articles at this link.

I'm just a post away if you have any additional questions about doing the liability adjustment or anything about QuickBooks. I'm more than willing to help. Have a great day!