The Alabama overtime exemption law. Will Quickbooks be able to handle this?

Hey, @Sharron1955. 

Thanks for stopping by the Community with your question about the Alabama overtime exemption law. 

QuickBooks is working to implement the Alabama overtime exemption across our payroll products before it kicks off in January 2024. QuickBooks will follow up with our Alabama employers later in 2023 when the updates to the calculation and reporting are available in the product. Additional details on this agency change are available on the Alabama Department of Revenue website.

Review this Blog to keep an eye out for updates: Alabama overtime exemption rule. 

I hope this helps answer your question. I'm only a post away if you need me again. Bye for now! 

The set up for the AL overtime exemption is not correct.  I have tried to run several payrolls and it still deducted the amount for overtime.  What am I doing wrong.  I have followed the steps, I see it on the paystub.  I think it should be under the earnings no other.  I need help.

Did you ever get this figured out? Mine isn’t calculating it correctly either. 

Did you ever get this figured out. Mine wasn’t correct either 

Hello there, @Holley2. We'll point you in the right direction to help you correct your Alabama overtime exemption.

We understand the urgency of this matter and want to help you get through this as soon as possible. Our team is aware of this change and that you'll want to contact our Customer Care Team so they can help you correct your setup. We'll write down the steps below to get you going:

1. Sign in to your QuickBooks Online company.
2. Go to Help (?).
3. Select Contact Us.
4. Enter your concern, then select Let's talk.
5. Choose a way to connect with us:
   • Start a chat with a support expert.
   • Get a callback from the next available expert.

For more details, please see this page: Contact Payroll Support.

You can also check this handy article to learn more about AL overtime: Set up and track Alabama overtime exemption.

In addition, we got these articles to help you manage employees, payroll schedules, and prepare for payroll-year end:

• Edit or change employee info in payroll.
• Set up and manage payroll schedules.
• Year-end checklist for QuickBooks Online Payroll.

The Community Team is always ready to help you with your payroll tasks or if you have any additional QuickBooks-related concerns. Feel free to visit us anytime. Stay safe, and have a good one. 

I opted to let QB set this up for me.  I have checked to make sure that everything is there.  But, my payrolls are wrong.  Example:  I put 40 hours for an employee and the AL withholding was $29.00 then I added the overtime and the line item on the check stub labeled AL Withholding went to $25.00.  This is not right, it should not decrease what was already in there for regular hours.  This is defeating the whole purpose.  We are suppose to be saving money at this rate they will owe state taxes at the end of the year.  So now what?

I have not, I just replied to QB answer.  I put in regular pay and the withholding was $29.00 I then added the overtime hours and the withholding dropped to $25.00.  At this rate these people will owe tax at the end of the year.

I understand the challenges you're experiencing with the AL overtime, Holley2.

I want to assure you that you'll be routed to our Payroll Support experts to correct this matter. I would recommend contacting them to address your Al withholding for the AL overtime issue, as they have the tools to access your account and rectify this on your behalf.

Please note the availability of our payroll experts to ensure they can address your issue promptly.

• QuickBooks Online Payroll Core - Monday to Friday, 6 AM to 6 PM PT.
• QuickBooks Online Payroll Premium, Elite - any time, any day.
• Except for closed holidays: 4th of July, Thanksgiving Day, Christmas Day, New Year's Day

Moreover, you can take advantage of the payroll reporting features in QuickBooks. These reports enable you to oversee payroll taxes and track employee expenses efficiently.

If you have further concerns other than this incorrect AL overtime, post them below. I'm here to assist you. 

Has anyone figured this out?  My AL OT is not calculating anything and my AL WH is still calculating on OT like normal. 

I appreciate you for chiming in on this thread, @Randi83. I'll be sure to route you in the right direction so you can get the assistance you need in resolving your Alabama overtime issue in QuickBooks Desktop (QBDT).

We understand the importance of this matter. For now, I recommend reaching out to our customer support team so they can be aware of this issue and provide measures to resolve this as soon as possible. They may also initiate an investigation regarding this concern if necessary. To do that:

1. Go to the Help menu and click QuickBooks Help.
2. Select Contact Us.
3. Provide a brief description of your concern, and click Continue.
4. Log in to your Intuit account, select Continue, then Continue with my account.
5. Enter the single-use code you received in your email and hit Continue.
6. Choose between Chat with us or Have us call you.

Furthermore, I'll share this article to help you close out the previous year and prepare for the new one in QBDT Payroll: Year-end checklist for QuickBooks Desktop Payroll.

Should you have any clarifications about the Alabama overtime rule, please don't hesitate to visit the Community. Our team is committed to addressing your queries anytime. Be safe, and have a good one.

Ours is not working either!  Still withholding on overtime hours in Alabama!!!

Mine is now working. I had to change my employees overtime item to the Overtime (x1.5) hourly item.

We understand the importance of fixing this concern, @RunningCPA. Here's an insight about this.

It appears you are encountering a common issue that other users in this thread have also experienced. A solution that has worked for another user, Annette69, is to modify the employee overtime item in QuickBooks Desktop. We suggest performing the same steps to see if it resolves the issue. 

Otherwise, I recommend contacting our support team. The team knows about the recent changes and can help you correct your setup. Here is how to reach them:

1. In your QBDT, go to Help and select QuickBooks Desktop Help/Contact Us.
2. Click Contact Us.
3. Enter some information about your issue and choose Continue. 
4. Use your Intuit account, select Continue, then Continue with my account.
5. Enter the single-use code you received in your email and Continue.
6. Decide between Chat with us or Have us call you.

Moreover, feel free to visit these articles to guide you on managing employees inside QBDT:

• Add overtime pay to an employee
• Pay an employee bonus

The community is here 24/7. Drop your reply for more questions with QuickBooks-related concerns. We're here to help you. Take care!

I do not understand how this corrected it.  We have been using an overtime pay hourly wage payroll item for years.  Were you not using that prior to now?

My overtime has always been set up that way.  This is what happens when I run a payroll.  Example:  I put in 40 hour regular pay AL withholding is 29.00  I add my OT hours and the AL withholding drops to 25.00.  This is not right it should not deduct any with holding when OT hours are added.  My AL withholding should have remained at 29.00.  So you may want to check and make sure it is actually working correctly.  If so please let me know how you did it.

Exactly!

I have same issue.  I just wasted 45 minutes on Help Chat to be told to contact my accountant.

Any updates on this ? FYI it also doesn’t not show the $ amount that is exmpt

From  Alabama taxes on employee paystub. I have spent 5 hrs this week with support . 

I'll provide an update about the Alabama (AL) overtime exemption issue in QuickBooks and guide you with the next steps to help resolve this, rebahurley.

QuickBooks is currently working on implementing the new taxation requirement for this compliance change. Rest assured that you'll receive a communication when it is available in the product, along with additional helpful information on the new requirement.

We understand the urgency of fixing this matter. We encourage you to reach out to our Payroll Care team to let them know your account is affected. Please refer to this article to find the contact information for your payroll service: Contact Payroll Support.

Once everything is all set, please see this article to assist you in setting up QuickBooks Payroll to track overtime pay exempt from Alabama (AL) withholding tax: Track Alabama overtime exemption.

Additionally, you may want to check out any of these articles (depending on your payroll service) to help you wrap up this year’s payroll and prepare for the next with QuickBooks Payroll:

• Year-end checklist for QuickBooks Online Payroll
• Year-end checklist for QuickBooks Desktop Payroll

For any other payroll concerns or questions about tracking state taxes in QuickBooks, please don't hesitate to let us know in the Reply section below. We in the Community are always ready to help you out.

I was on the phone most of the afternoon, only to be told they would call us back tomorrow at 11:00.

I will let you all know if I find out anything tomorrow.

Another "canned" answer.  Why doesn't QB communicate to users when things don't work?  A TON of time is wasted by users and support personnel when things like this happen.  Again, proof that they do not use their own software (learned this when QB crashed with Enterprise solutions when trying to open payroll – see that Community discussion).   Perhaps they should communicate to their staff first and then users.  They DO have our contact info!!!  Per our external CPA yesterday (avid QB users), they are baffled - finally determined that we have to wait on the updates to patch things.  

Correct.  NOTHING going as it should with this.

I created new overtime payroll items and the new pitem does not add to the AL WH total, but it does deduct from it, even if the total hours entered on the employees payroll is not totaled to 40 hours. 

So, #1 - Quickbooks is not calculating hours over 40 hours for the amount to NOT be taxed by AL WH, regardless of what the pay rate is, like it says it will in the HELP ARTICLE  they are using to help people set up the new AL OT WH:

Understand AL overtime exemption

• Overtime pay is exempt only for full-time hourly employees.  It doesn’t include salaried employees.
• Work performed over 40 hours in a week is exempt, whether it’s paid as overtime or regular pay.
• The exemption applies to all paycheck dates on or after January 1, 2024 through June 30, 2025. 
• Overtime pay earned in excess of 8 hours a day under collective bargaining agreements aren’t exempt if your employees don’t work more than 40 hours in the week. 
• This info needs to be reported on either a monthly or quarterly basis, and on Form W-2.

Our employees do not have to work 40 hours to receive overtime - saturdays are always time and a half, Sundays are always double time, and some jobs anything over 8 hrs each day is overtime. 

#2- I need QB's to calculate 40 hours (regardless if it's 40 hours straight time; or if it's 30 hours straight time, 4 hours time and half, and 6 hrs double time) before it stops calculating AL WH on any other overtime hours that the employee works in a week. (example - employee worked 46 hours total - 30 hours straight time, 10 hours time and half and 6 hours double time - in this scenario the 30 hrs straight time and 10 hours time and half should be taxed, the 6 hours double time should not be taxed by AL WH). 

#3 - We all need QB to calculate the aggregate gross OT pay total that is NOT being taxed and this info to be able to be ran on a report and put on our AL WH tax forms and W2's, like it says that QB's is going to do in the Help Article

     Report the tax-exempt amounts to AL 

   This info needs to be reported on either a monthly (AL A-6) or quarterly (AL A-1) basis, and on Form W-2.

The work around I have come up with for right now until QB's gets their stuff together and can do it for us, like they say they will, is this:

Here’s my work around so I can run payroll tomorrow and until QB fixes this (***I added new wage related payroll items, which did not end up calculating AL WH):

I have 1 straight time payroll item (which does calculate AL WH)

I have 2 time and half payroll items (1 old one (1.5x) which IS calculating AL WH; and 1 new one that I just added (OT 1.5x (exempt)) which is NOT calculating AL WH <but it is deducting from AL WH, which I’m not sure it should be doing>.

I also have 2 double time payroll items (1 old one (2x) which IS calculating AL WH; and 1 new one that I just added (dbl time 2x (exempt)) which is NOT calculating AL WH <but it is deducting from AL WH, which I’m not sure it should be doing>.

Since I need AL WH to calculate hours up to 40 hours regardless of if its straight time, OT, or double time, I will use the 1 straight time pitem for all straight hours, then I will use the old 1.5x pitem and 2x pitem to add any time that is needed to get the total hours to 40 hours – all of these pitems will calculate AL WH….THEN I will use the new pitems (OT 1.5x exempt and dbl time exempt) for any hours over 40 hours, since these pitems are NOT calculating (adding) to AL WH.

Then I can run a report on just the new pitems and see how much the gross totals were that AL WH was NOT calculated on, which is what we need for the AL WH tax forms.

Maybe this will help someone else set up their payroll for time being. I am worried that it is deducting some from AL WH instead of not deducting any amount at all, but the amount it deducts really is not that much and the main thing is that it does not add to AL WH when I enter OT hours after the 40 hours that should be calculating on AL WH)

ALSO - for us to be able to set up OT that is not calculated on AL WH for the AL OT Exemption - we need to have the ability to edit the AL WH payroll item and when we get to the TAXABLE COMPENSATION box be able to unselect the OT payroll item that we do NOT want to be taxed. As of right now, when I go to edit AL WH payroll item I get this message: