We received a refund from IRS for 3rd quarter 941 of this year. I THINK it's because I made a mistake on a paycheck that's been cashed.

Hello there.

You may receive a refund check if you have overpaid payroll taxes. You can check your payroll liability balance report and then create a payroll liability deposit to record this in QuickBooks to make sure that your taxes are accurate.

If you use QuickBooks Desktop Payroll Assisted and your refund is from a time before you used our payroll service, you must deposit the refund check into your bank account. Don’t use the instructions below. Here's how:

1. First, create a payroll liabilities balance report. Locate the amount that matches the refund check amount. 

• Proceed to step 2 if you find an amount that matches.
• If you don't find a matching amount, go over the refund notice. The check could include interest, or some of your refunds could have been applied to back taxes.

Please see this article for detailed information: Handle a payroll tax refund from an agency in QuickBooks Desktop Payroll.

Also, I recommend consulting with your accountant if you have questions on which account to post, how will this affect the W-2, and ensure your records are in tip-top shape. 

You can visit this article to know how to refund a customer in QuickBooks Online: Record a customer refund in QuickBooks Online.

The Community always welcomes you for further inquiries with regard to the tax refund check. Have a good one!

I use Enhanced payroll. And when qbks generated the 941, I couldn't override the incorrect wages. I don't understand your step 1 and step 2 references.

Hi there.

You don't need to override your 941. To record the refund in QuickBooks, you need to create a liability check. Step 1 in the article is to look for the amount that matches the refund check amount. While in step 2 is for you to enter the refund as a payroll liability checks in QuickBooks. Here's how:

1. Go to Employees, and choose Payroll Taxes and Liabilities. 
2. Select Deposit Refund Liabilities.
3. Click the vendor dropdown, and select the agency that sent the refund check.
4. In the Refund Date field, enter the deposit date.
5. On For Period Beginning field, enter the first day of the pay period that the refund affects.
6. Choose how you want QuickBooks to handle the deposit.
7. On the Taxes and Liabilities section, select the payroll items affected by the refund.
8. In the Amount column, enter the positive amount.
9. Click OK.

Once done, you may need to file a corrected 941 for overreported tax. For more details, see page 5 of Instructions for Form 941-X.

I suggest consulting your accountant if you have questions with regard to 941-X, which account will be affected, and for additional assistance to ensure your records are in shipshape. 

You can visit this article to know when and how to submit your W-2 forms to Federal and state agencies: File your W-2 forms.

Feel free to drop by the Community whenever you have further concerns regarding your tax refund check. Stay safe!

We don't have an accountant and after running the payroll liab balance report, I don't see an exact match to the refund. I did notice that I requested the refund amount due to overpayment on 3rd quarter 941. 

How can I figure the actual amount per withholding item? 

I'm so confused about how the actual payroll report did not reflect the same amount on line 2 of 941! 

Welcome back, oldgreygrammy.

I'll ensure you'll be able to record the refund check you got from the IRS.

You're on the right track. Finding the amount that matches the refund check can be done quickly by running the Payroll Liability Balances report. It may include interest that's why you're unable to see a match after running the report. 

To be sure, have you tried to review the refund notice? Since reviewing it will help us in determining the best course of action to take in recording the transaction.

If it includes interest, please follow the steps below:

1. Go to the Employees menu, then select Payroll Taxes and Liabilities.
2. Click Deposit Refund Liabilities, then choose the agency that sent the refund check in the Vendor dropdown.
3. Enter the deposit date in the Refund Date field.
4. Key in the first day of the pay period that the refund affects in the For Period Beginning section.
5. Choose Group the deposit with Undeposited funds, then enter the amount of the refund minus the interest in the Deposit total field.
6. In the Taxes and Liabilities section, select the payroll items affected by the refund.
7. In the Amount column, enter the positive amount.
8. Once done, hit OK.

After that, create a deposit for the interest and add it to the Undeposited Funds. This will allow you to deposit both payroll liabilities and interest. Refer to this article for a complete guide: Record and make bank deposits in QuickBooks Desktop.

If the tax agency withheld a portion of the refund to cover unpaid taxes from the past. You can follow these instructions:

1. Complete all the steps in Step 2 in this article: Handle a payroll tax refund from an agency in QuickBooks Desktop Payroll.
2. Enter the full amount of your tax refund in the Deposit total field.
3. Enter tax payments to account for the part withheld by the tax agency.

Additionally, using QuickBooks to file a corrected 941 X form isn't possible. I've included the following link to help you submit the correction: Instructions for Form 941-X.

I'll make sure to get back if you have further questions about the process, don't hesitate to add any details below. Have a great day.

OK, thank you for trying to make me understand this mess. 

There is NO amount on PR liab report that is even close to the refund amount...so that idea didn't help!

The MOST important question I have now: when I am in the "refund deposit for taxes and  liabilities" box, it's telling me to post the appropriate amount per Federal w/h, Medicare Emp w/h, SS Emp w/h...etc 

All I have is the amount on the refund check as per my refund request! There was NO explanation to the actual refund except 941/03 of 2022. I do not know the breakdown amounts for each of those. How can I calculate each amount per withholding to post them correctly. I don't want to mess up any w-2 amounts. 

Can somebody help me????

Thanks for replying back in the thread, @oldgreygrammy.

I understand that you don't want to mess up with this and I'm here to make sure this is well taken care of.

For us to be able to view the breakdown amounts of the following items, let's run the Payroll Summary report. 

1. Go to Reports and then Reports Center.
2. Search for Payroll Summary in the Search tab.
3. Double click to view the report and then click on Customize Report.
4. Choose the date in the Display tab.
5. Go to Filters. Type Payroll Item in the Search Filters. 
6. In the Account drop-down, select Multiple Accounts.
7. Search for the Items you want to view and click on it to put a checkmark.
8. When done selecting all the items, click OK.

You will then see the breakdown of the amounts you're looking for.

On the other hand, I recommend contacting the IRS. There, they’ll be able to provide you additional information and can advise you on what’s the best action to take to resolve this or refer to the letter you've received from them.

Additionally, you can visit this article to know when and how to submit your W-2 forms to Federal and state agencies: File your W-2 forms.

Feel free to leave a comment below if you need additional help regarding you tax refund check. I'm always here to help you further. Take care!

I received a refund for a state payroll tax item.  I was able to follow steps 1-5 of your instructions and I also completed the deposit.  I do not understand steps 6-8 of your instructions.  Could you explain it in greater detail?  My problem is that the amount I entered appeared as a liability to be paid now. I am using QB desktop pro 2021.  Thank you.

Thanks for joining the thread, Gina!

I'm not sure which of the above steps or answers you followed, but usually refunds are entered using the steps in the Step 2 section in this article: Handle a payroll tax refund from an agency in QuickBooks Desktop Payroll.

• Step 6 is simply to group the refunds from the itemized taxes into one deposit entry.
• Steps 7 and 8 are simply the list of taxes that have refunds and their corresponding amounts.

Let me know if you have more questions about recording tax refunds. I'm just around to help.