Should the Payroll Expense account on the P & L match the Form W-3 when there are Reported Cash Tips and Offset or do I need to create a journal entry for cash tips?

Hello there, Taxangel.

The payroll expense amount in the Profit and Loss report is the total gross wage. They don't match with the W-3 form. 

You don't need to create a journal entry for the cash tips. You can set it up in QuickBooks Online. Here's how:

1. Click Workers, then choose Employees.
2. Choose an employee, then click to open the employee's profile.
3. Click the Pencil icon next to Pay.
4. Click the Pencil icon in the Additional pay types section.
5. Under You can also pay Employee, choose Cash Tips.
6. Click Done, then Done again. 

You can refer to this article for more information: Cash tips.

If you have further questions, please leave a comment below. 

Total payroll expense can also include employer share of taxes, if you set it up that way. Payroll taxes can be posted right along with property taxes on forms but to me is more confusing 

I am using Quickbooks Accountant  Desktop 2019  The W2's are issuing correctly with the tips being reported.  This client I have set up with Reported Cash Tips and Reported Cash Tips offset.  When I add up Gross Wages and employer's payroll taxes it does not add up to the Payroll Expense on the Profit and Loss.  I'm wondering if I need to add cash tips to the income manually?

Thanks for the reply but I'm using QuickBooks Accountant Desktop and these instructions don't apply.

I've read your original question, Taxangel.

You don't need to add cash tips as an income. These are gratuities/rewards that are paid to employees in cash. Once your employee received a cash tip, you'll have to add it in the paycheck for tax purposes, then take out the amount so they won't get paid twice. I've got you an article for more information: Report tips in and out on employee paychecks in QuickBooks Desktop Payroll.

Regarding the Profit and Loss report, the payroll taxes amount is already added in the gross wage. Having said that, you no longer need to add up the payroll taxes to the gross wage amount.

Let me know if you have further questions. We're here to answer them for you.