Payroll taxes

It's great to see you here, @rgosyne. Let me share with you some tips on how to correct your payroll taxes in QuickBooks. This way, it calculates correctly when filing your payroll forms.

Since you didn't deduct any taxes from your direct deposit checks, please be informed that there will be future deductions with the future payroll of your employees. Then create a non-taxable deduction item and apply it to your next payroll. These items won't be added to the employee's taxable earnings. 

For more details about creating a deduction and how to apply the item to the employee's profile, see this article: Set up, change, or delete employee-paid payroll deductions.

Then, create a liability adjustment to correct discrepancies on your payroll taxes. Here's how:

1. Go to Employees, then Payroll Taxes and Liabilities.
2. Choose to 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 company-paid.
5. Under the Item Name column, select the payroll item you want to adjust.
6. Enter the Amount of the adjustment.
7. Enter the amount under the Income Subject to Tax column if you need to make a wage base adjustment.
8. Under Memo, enter a note about the adjustment for reference.
9. Click on Accounts Affected, then OK.
10. Hit OK to close the Affect Accounts window.
11. Select Next Adjustment if you have additional employees to enter an adjustment for. Otherwise, tap on OK to save the changes.
    

For complete information, you can check out this resource and refer directly to Step 2: Adjust your payroll liabilities: Adjust payroll liabilities in QuickBooks Desktop Payroll. 

Once the adjustment is done, you can now process the amendment forms for the corrections of your tax entries. For more details, you may open this article: File a corrected Federal Form 941 and 940 in QuickBooks Desktop Payroll.

In addition, let me attach these articles to help you understand tax calculations in QuickBooks Desktop:

• How QuickBooks calculates payroll taxes 
• Payroll items on a paycheck are not calculating or are calculating incorrectly

Reach back to us here in the Community if you need extra help managing your business growth and payroll transactions using QuickBooks Desktop (QBDT). I'm always here o help. Take good care.

Thanks for your help

what are you refering as a non taxable deduction tere are several choices for the the payroll item type for eg wage

Addition

deduction

company contribution 

futa

state

other

Can you be more detail on which one i should choose

thanks

I'm here to help properly set up the non-taxable deduction item,rgosyne.

Let's select Deduction. We'll have to use the Custom Setup to see this option. Please see the detailed steps below.

1. Go to Lists, then Payroll Item List.
2. Select the Payroll Item dropdown menu, then New.
3. Choose Custom Setup, then Next.
4. Click Deduction, then Next.
   
   
5. Enter the deduction's name, then select Next.
   
   
6. If applicable, select the name of the plan administrator (or add it) and the account number. Then, click Next.
7. Select None as the Tax tracking type. 
8. Click Next three times.
9. Select net pay in the Gross vs. net window, then Next.
   
   
10. After that, select Finish.

Once done, you can apply the item to the next payroll. This won't be added to your employees' taxable earnings. 

Additionally, you can set up and repay your employees' advances in QuickBooks Desktop if you want to pay them earlier than the schedule.

Please keep us posted if you need additional assistance managing payroll and employees. We're always here to ensure your record is accurate.

thanks again I did those steps the deduction was done but can you say what part it plays when adhusting the payroll liabilities

thanks

Hi there, rgosyne.

Thanks for getting back to us. I'll share clarifications about what is the non-taxable item for.

When there are taxes that didn't deduct from the payroll, the system will auto-correct it on the next payroll by adding or applying that amount.

Since you were advised to create a payroll liability adjustment to fix your 941 quarterly return, the system will no longer process an auto-correction on your next payroll.

This is the time you'll add the non-taxable item you've created. To ensure the deductions are correct on the next payroll, the amount you'll enter for the item and the adjusted amount should be the same.

In case you need it, I'll add these articles that tackle processing payroll and liability adjustment in QuickBooks Desktop (QBDT):

• Create and run your payroll.
• Adjust payroll liabilities in QuickBooks Desktop Payroll.

After that, you can now process an amendment for the previously filed 941 quarterly return. Refer to this article for future reference: File a corrected Federal Form 941 and 940 in QuickBooks Desktop Payroll.

Please let me know if you have follow-up questions about this or anything else. I'm more than happy to answer them. Take care.

Ok if I adjust my liabilities for the employee and the company social medicare and futa  for the period ending june 15th it goes to the payroll liability account and payroll expense account accordingly my liabilities for the 941 will be corrected I am still not seeing where I should use the non tax payroll item created can you elaborate on this or I am missing something?

thanks

Allow me to join the thread, rgosyne. I want to elaborate things about using the non-taxable item you created in QuickBooks Desktop.

As CharleneMaeF mentioned, you can apply it the next time you pay your employees after creating the payroll item. Simply select it from the Other Payroll Items area so it won't be added to your employees' taxable earnings. Let me walk you through:
 

1. Open the Employees menu, then Pay Employees, and choose from the check types Scheduled Payroll, Unscheduled Payroll, or Termination Check.
   • Skip to step 3 if you need to run an unscheduled payroll
2. Pick the appropriate schedule, and hit Start Scheduled Payroll.
3. Verify the Pay Period Ends date, Check Date, and QuickBooks Bank Account.
4. Select the employees you want to pay.
5. You can type in hours using the grid, or if you are using timesheets, you’ll see all their hours for this pay period already entered. To see everyone's paycheck details, click on Open Paycheck Detail.
6. Under Other Payroll Items, select the non-taxable item you created. Enter the Rate.
7. Fill out all necessary information.
8. Hit Save & Next to go to the next employee, or tap Save & Close to go back to the Enter Payroll Information window.
9. Select Continue.
10. Review the Check/Direct Deposit printing options.
11. Verify the amounts for each employee, and select Create Paychecks. I'm adding some screenshots below for reference:

See this for more information about handling paychecks: Create and run your payroll in QuickBooks Desktop.

Here are some extra modules to see what you've paid out in your QuickBooks payroll and how you can personalize them:

• Create a payroll summary report in QuickBooks
• Customize reports in QuickBooks Desktop

The Community is available 24/7 to lend a hand. Don't hesitate to keep us updated or raise additional questions regarding payroll or QuickBooks in particular. Have a good one and stay safe!

ok thanks I understand those steps now. but what about when I go to adjust payroll liabilities for that pay period and adjust each employee social security and medicare would that not take care of correcting the taxes on the 941? why would i need to add in again to the next payroll as a non taxable item I am sorry but I feel I am missing something and will appreciate some more guidance here

thanks

Allow me to clarify some of the previous responses, @rgosyne.

When you adjust payroll liabilities, the system will auto-correct it on the next payroll by adding or applying the missing tax amounts. So when you run your next payroll, the system will automatically add those taxes that haven't been taken out from the employee's previous paycheck.

On the other hand, @JoesemM mentioned creating a non-taxable deduction item and applying it to your next payroll. It implies that you can use this to deduct on the next payroll if you decide to offset taxes manually. Doing this will prevent the system from auto-correcting those taxes the next time you run payroll.

Once and for all, I recommend setting up those taxable/non-taxable deductions and contributions to allocate them to each employee and set up federal (Social Security and Medicare) and state first. Ensuring these will auto-correct the item amounts on each employee's paycheck the next time you run payroll if you decide to create a payroll liability adjustment.

On the other hand, you won't have to create a payroll liability adjustment while adding non-taxable/taxable items manually at the same time since it can overstate your taxes. You'll have to choose one option. You're correct about adjusting payroll liabilities for Medicare and Social Security for 941 to rectify, so it will auto-correct the next time you run payroll for your employees.

Additionally, if you receive a notice from the IRS about tax updates, I recommend downloading the latest payroll tax table to ensure the system calculates the tax amounts accurately. You'd like to visit this article for insights about updating SUI rates manually since it isn't included in the tax table: Update your SUI rate.

Feel free to comment if you have other payroll concerns. I'm always here to keep you assisted. Take care always, and more power to your business.

thanks i am getting some clarity so here is the run down I did my payroll on 6/11 and no payroll taxes was deducted then i did payroll again on 06/ 25 this time the taxes calculated correctly.

You are saying if i go back and adjust my payroll liabilities for 6/11 this will be autocorrected  to my next payroll which will be 7/23 also you are saying I can chhose to do it that way or choose to do it via as a non taxable payroll item and add the amount on each payroll check as a liability to the company and not the employee, however if i do it like this it will not correct the 941 for the second quarter of 2023 but show up in the third quarter can you clarify

thanks

I'm here to clarify your payroll tax liabilities concern in QuickBooks Desktop (QBDT), @rgosyne.

Yes, you're right. Adjusting your payroll tax liability is the same as adding a nontaxable item to deduct taxes on your employees' paychecks moving forward. You may choose which method is preferable for you. However, the adjustments will auto-correct your YTD wages and the reported taxes in your 941 forms, while the deduction item is only done manually to offset them. 

For a detailed comparison, please see these articles:

• Adjust payroll liabilities in QuickBooks Desktop Payroll.
• Set up, change, or delete employee-paid payroll deductions.

Additionally, you may produce a payroll summary report in QBDT if you need a quick view of your employee taxes and contributions. 

Let me know whenever you have additional queries about payroll taxes. The Community is always open to lend you a helping hand. Be safe and have a wonderful rest of the day!