Social Security and Medicare Deductions

dlb53 · ‎November 12, 2018

The taxes (Social Security and Medicare) for an employee whose pay is based on timesheet entires are incorrect and we have to manually calculate and enter them for each payroll period so the 941 calculations are correct at the end of the quarter. Calculation of these taxes for salaried employees are correct. This first started being a problem the middile of August. Payroll updates are current.

SophiaAnnL · ‎November 13, 2018

Thank you for telling me when this issue started, dlb53. I'll give you options to fix the calculation of these taxes.

It's possible that an employee's paycheck on August has an overpayment or underpayment for Social Security and Medicare. When that happens, QuickBooks will try to automatically correct the calculation on the next pay period. However, since you've started manually changing the taxes each payroll, the program wasn't able to auto correct.

I have two options for you to straighten out the tax calculations:

Do a liability adjustment for Social Security and Medicare, or
Stop manually changing them on the employee's paycheck and let QuickBooks do the correction on the succeeding paychecks.

Let's run the Payroll Detail Review report and go back to the paychecks for August.

Here's how:

Click Reports at the top.
Select Employees & Payroll, and then click Payroll Detail Review.
Filter Date from August 1 until the end of the year (December 31).
Click the Customize Report button in the upper left-hand corner, and then click the Filters tab.
In the Search Filters box, type Payroll Item.
Click the All payroll items drop-down, and then select Multiple payroll items.
Scroll down and check Social Security and Medicare for employee and company.
Click OK twice.

Once done, kindly review the employee's paychecks for August to find out the discrepancy. When you see it, you can follow the options I provided above to get it resolved.

Please leave a reply if you have additional questions. I'll get back to you as soon as I can.

View solution in original post

SophiaAnnL · ‎November 13, 2018

Thank you for telling me when this issue started, dlb53. I'll give you options to fix the calculation of these taxes.

It's possible that an employee's paycheck on August has an overpayment or underpayment for Social Security and Medicare. When that happens, QuickBooks will try to automatically correct the calculation on the next pay period. However, since you've started manually changing the taxes each payroll, the program wasn't able to auto correct.

I have two options for you to straighten out the tax calculations:

Do a liability adjustment for Social Security and Medicare, or
Stop manually changing them on the employee's paycheck and let QuickBooks do the correction on the succeeding paychecks.

Let's run the Payroll Detail Review report and go back to the paychecks for August.

Here's how:

Click Reports at the top.
Select Employees & Payroll, and then click Payroll Detail Review.
Filter Date from August 1 until the end of the year (December 31).
Click the Customize Report button in the upper left-hand corner, and then click the Filters tab.
In the Search Filters box, type Payroll Item.
Click the All payroll items drop-down, and then select Multiple payroll items.
Scroll down and check Social Security and Medicare for employee and company.
Click OK twice.

Once done, kindly review the employee's paychecks for August to find out the discrepancy. When you see it, you can follow the options I provided above to get it resolved.

Please leave a reply if you have additional questions. I'll get back to you as soon as I can.

qbteachmt · ‎November 13, 2018

This might be the issue: "whose pay is based on timesheet entires are incorrect"

Because a lot of payroll clerks do not understand how Dates are applied here.

The timesheet has Days Worked and the Paycheck is for that Pay Period = dates that fall in the pay period. but the Paycheck is the Financial activity. Taxes are only owed because the Money happened. That means the Pay Date is what applies for purposes of the 941.

Example: The first paycheck in Oct is for the second half of Sept (1st-15th) and that makes it the 4th Quarter 941 and that makes the Liabilities October liabilities, and if you are a monthly payer, that is due by Nov 15th.

Evaluate everything by date; you might have been working off of Pay Period, as if that applies to the 941. It doesn't use that. It uses Pay Date. Run your Payroll Summary report for October, to see Oct 941 data; there is no Timesheet Date relationship to this. It is Money that matters, not Dates Worked.

dlb53 · ‎November 26, 2018

Thank you for the prompt reply. Using your instructions to print a Payroll Detail Review we were able to identify when the problem first occurred and correct it.

Angelyn_T · ‎November 27, 2018

Hello, @dlb53.

Pleased to hear that your concern was fixed and QuickBooks was able to help you with your business.

Feel free to post again if you have any other future concerns about QuickBooks. Wishing you continued success!

Bigdog54 · ‎May 21, 2019

In March, I upgraded to Pro Desktop 2019 from 2017 version. I didn't remove 2017 version before I created next paycheck. Since I had cancelled Enhanced PR subscription for 2017, the paycheck didn't have any taxes deducted. I did put that payroll check into 2019 with enhanced payroll and had to override the deductions for that paycheck. The employee's next paycheck (which was the last for the quarter) deducted more than was due for that wage.

Now, I see you suggest to let quickbooks catch up with those deductions, which I've agreed to. But since those errors were in 1st quarter, will QB eventually finish catching up? Should I be doing more?

Bigdog54 · ‎May 21, 2019

In addition to my questions above, why does the payroll checkup report show the overpayments if QB is supposedly adjusting accordingly? Will that report eventually zero out?

Thanks for your help

Mark_R · ‎May 21, 2019

Hello there, @Bigdog54.

QuickBooks will finish catching up those deductions and you don't have to do any changes of the taxes each payroll. But as mentioned by my colleague, you'll need to make sure that you didn't manually change the taxes.

Regarding the Payroll Detail Review report, it'll show overpayments if the date range is set to that specific quarter. To zero out the report, please make sure that the date range should be customized into the current year.

Here's how to customize the report:

Go to the Reports menu.
Choose Employees and Payroll.
Select Payroll Detail Review report.
In the Dates section, select Custom in the drop-down.
Then, change the date range from 01/01/2019 to 12/31/2019.

Once done, the report will eventually zero out.

That's it! Don't hesitate to let me know if you have other concerns about payroll deductions. I'd be glad to help.

ictvinc · ‎August 13, 2020

I have been doing payroll liabilities right along, but this week when I go into Quickbooks it says I have outstanding Medicare and Social Security Payments due for the last two checks. Why would that happen?

Ryan_M · ‎August 13, 2020

Hi @ictvinc,

I'll take care of this query about payroll liabilities for you.

An outdated QuickBooks Desktop (QBDT) version and payroll tax table can lead to the situation you stated above. So the first thing I can suggest is to update both.

See these articles for the steps:

You can then follow the suggestions provided by my colleague @SophiaAnnL above, which is to adjust payroll liabilities or allow QBDT to make the corrections on the succeeding paychecks.

In case you'd like to enter a refund check from an overpayment of your payroll liabilities, check out this article: Record a payroll liability refund check. There are different sets of steps provided, which depend on the situation of the refund check.

I'll be around in case you need further assistance. Feel free to leave a comment below, and I'll be sure to get back to you.

Sointly · ‎February 15, 2024

Quickbook's is calculating the SS deduction at 7.26% (14.52% Emp+Co). How do I correct this?

MelroseV · ‎February 15, 2024

Hello there, Sointly.

If you're using QuickBooks Online, the SS deduction is fixed at 6.2%, and there's no option for adjustment or modification. If the calculation appears incorrect, I suggest reaching out to our customer support team. They are equipped with the necessary tools to review your account and determine the underlying cause of your issue.

In addition, if you're using QuickBooks Desktop, we can get the latest tax table update to stay compliant with the calculations.

Here's how:

Go to Employees, then select Get Payroll Updates.

To know your tax table version:

Check the number next to You are using tax table version:.
To identify if it’s the correct version, see the latest payroll news and updates.
To find more details on your tax table version, select Payroll Update Info.

To get the latest tax table:

Select Download Entire Update.
Select Update. An informational window appears when the download is complete.

If you have additional concerns regarding the SS deduction, please don't hesitate to share them with the community. Stay safe!

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