Payroll Taxes - Voided Direct Deposit

I know some way so you can see the discrepancy and fix it accordingly in QuickBooks Desktop (QBDT), Newbie76. 

Before we begin, please know that if a direct deposit is rejected by QuickBooks, it will not be included in the payroll taxes calculation, since an adjustment will be created to remove the tax deposit for that employee. Once the adjustment is created, you can adjust your payroll tax forms accordingly.

To determine if there are any discrepancies in the Social Security Employee, Social Security Company, Medicare Employee, and Medicare Company items recorded in Line 10 and 12 of 941 form, we can first run a Payroll Summary report. The purpose of this report is to confirm that these payroll items have the same amounts. Afterward, you can run a Payroll Detail Review report to view full employee details, including the four federal payroll taxes, and to identify any missing information.

Here's how: 

Step 1: Run a Payroll Summary report 

1. Go to the Reports menu, choose Employees & Payroll, then select Payroll Summary. 
2. From the Dates dropdown, you can select Last Calendar Quarter or according to your preference. 
3. Click the Show Columns dropdown, then choose Total Only. 
4. Compare the Social Security Employee from the Taxes withheld section to the Social Security Company within Employer Taxes and Contributions. Do this again to the Medicare Employee and Medicare Company. 
5. To view a more detailed information, you can double click either of these four federal payroll taxes.
6. Get the item rate by going to the Lists menu, choose Payroll item lists, look for the Amount column that contains percentage, then minimize the window.  
7. Since you double-click the chosen federal payroll tax, you can multiply the percentage from the Payroll Item Lists, then multiply this to the Wage Base total column, the result should be the same with the Amount column. 

Step 2: Run Payroll Detail Review report

1.  Go to the Reports menu, choose Payroll Detail Review report. 
2. From the Dates dropdown, select Last Calendar Quarter or according to your preference. 
3. Click the Customize Report, then go to Filters tab. 
4. From the Search Filters, enter Name, click the Name dropdown, then select All employees. 
5. In the Search Filters, enter Payroll Item, click the Payroll item dropdown, then choose Multiple Payroll items. 
6. Within the Select Payroll Item window, tick Medicare Company, Medicare Employee, Social Security Employee, Social Security Company, then click OK. 
7. Hit OK.
8. Compare the details if it contains the correct information by multiplying the Payroll Tax Rate to the Wage Base. The result should be the same with the Amount column. 

If there's an empty information within the report, you can refer to this article to learn more how to use a liability adjustment to correct employees’ year-to-date (YTD) or quarter-to-date (QTD) payroll info in QBDT payroll: Adjust payroll liabilities in QuickBooks Desktop Payroll. 

You can also resolve a payroll tax overpayment if you're seeing a negative tax amount in your payroll product or have a credit notice from the IRS or state agency. 
 

Please let me know if you have additional questions regarding payroll taxes in QBDT, Newbie76. We'll be around to assist you further. 

My issue is resolved. I just wanted to provide an update in case it becomes helpful for someone else. 

We processed payroll on Wednesday. We pay all taxes on Wednesday during the processing. The employee called on Friday and said he accidentally gave us a closed account, and we didn't receive the rejection until the following week. I knew that the taxes paid were the correct amount owed. We issued the employee a normal paper check (From what I read in the QB community, after this I have figured out a better way to handle this). The original direct deposit was voided to keep the income from being recorded twice. A tax liability adjustment was done to account for the taxes paid for the employee. This put our liabilities owed back to the correct amounts. However, when I ran the Form 941 at the end of the quarter, all tax amounts were showing as correct but the Total Taxes after Adjustments (Line 10) and Total Taxes after Adjustments and Nonrefundable Credits (Line 12) were showing a lower number, resulting in Quickbooks populating an overpayment. I knew that we had paid the correct amount, and that we were not owed a refund.

I went back into the payroll liability adjustment and added in the Wage Base Amount to the Social Security and Medicare Portions. When I ran the 941 now, the amounts are correct. 

Hopefully this helps!

Thank you for sharing your findings, Newbie76. This will surely help anyone who may be facing a similar situation. That's what makes the Community so great - real QuickBooks users providing first hand experiences and knowledge. Take care!