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I created two accounts to handle the tax impact of a cash bonus that was paid to an employee: one as a compensation item to add $100 as "Cash Bonus Paid" to generate tax on the amount, and then a Deduction item to back out the $100 as a non-taxable item used solely to avoid payment of an additional $100 to the employee. The latter I made an error ... in the "liability" field in the Payroll Item setup, I entered a GL # that referenced "Payroll Liabilities" (2101) instead of the number for "Direct Deposit Liability" (2110). Now I have $100 in the unpaid liability screen for "Payroll Taxes and Liabilities". I edited the Deduction item and changed the code to the correct code, and the system asked me how far back I wanted to update data, and I gave it the date of the paycheck in this pay period (since I just created the Deduction code). However in the screen for "Create Custom Liability Payments" the Deduction code still shows up, and if I select it, it says there is no "liability agency" and asks if I want to create one. If I say yes, it opens the Payroll Item edit for the deduction code, and since I changed the GL from Payroll Liabilties to Direct Deposit Liabilities, there is no option to assign an "agency"! How do I get rid of the $100 sitting as an unpaid liability?
Thanks in advance for guidance on this.
Hello there, @Deadwood Al.
I understand that handling payroll items and correcting entries can sometimes lead to complex situations. Let's work through the steps to resolve the issue of the $100 sitting as an unpaid liability in QuickBooks Desktop (QBDT).
First, let's ensure the payroll item is set correctly:
Next, here's how to remove that unwanted liability from the Pay Liabilities tab:
Check to ensure the Adjustment has been applied correctly:
Additionally, you can learn how to request a direct deposit limit increase if your payroll is higher than your limits or if you need to pay out bonuses.
Please feel free to reach out if you have any other questions. We're here to ensure your payroll liabilities are correctly managed, which is crucial for accurate financial reporting.
@Deadwood Al RE: How do I get rid of the $100 sitting as an unpaid liability?
In the payroll center on the Pay Liabilities tab, click the Manage Payment Methods link near the bottom of the window. Then find the item you don't want to pay and remove the payment schedule from it.
@MarkAngeloG RE: Next, resolve the $100 showing as a payroll liability:...
There is no reason to enter a liability adjustment for something that is not a liability. Nor is there a reason to pay it in the first place, as the OP stated.
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