Third Party Reporting Requirements

Hello, Mickeydisneyfan.

The reason your Form 940 looks like it wants to send money back is usually because QuickBooks isn’t processing FUTA/SUTA correctly. This happens when QuickBooks doesn’t recognize FUTA-subject wages for sick pay amounts or when a liability adjustment is entered with incorrect dates, amounts, or signs. As a result, the form may show that you’ve paid more than you owe and suggest a refund.

To resolve this, let's review the liability adjustment you’ve made in your current file.

Here's how:

1. Go to the Employees menu, then select Payroll Taxes and Liabilities.
2. Click on Adjust Payroll Liabilities.
3. Select Prev Adjustment to review the prior adjustment entered.
4. Check the Date and Effective Date fields to confirm the adjustment aligns with the liability balance you want to correct.
5. In the Adjustment is for: section, select Company Adjustment.
6. Under the Item Name column, select Social Security Company and Medicare Company. Enter the positive amount for the company portion of taxes calculated for third-party sick pay.
7. Repeat Step 6 for Federal Unemployment (FUTA) and State Unemployment (SUTA).

Next, Click Accounts Affected, and select Affect liability and expense accounts. Then, Hit OK twice.

For additional steps regarding creating and filing Form 941 and W-2, refer to Scenario 3 in this article: Track and report third-party sick pay in QuickBooks Desktop Payroll Enhanced.
 

If you have any additional questions or need clarification, feel free to hit the Reply button. We’re here to help.

Thanks for the response.  The method below is the exact method I did for reporting the FUTA and SUTA in Quickbooks- our third party payer pays most of the employee/ employer taxes except FUTA and SUTA and provides a W-2 to the employee, so I know I do not want to put anything into a paycheck for the employee.    The instructions give  the fix for 941 report (which I am not having to report any 941 taxes), but not for the 940 report.  I am not seeing anyway that I can override any figures on the 940 report in Quickbooks.  Any ideas?  Thank you, Mary  

Hi there, Mickey.

Thank you for providing clarification. Let me share some additional information regarding your 940 report.

To better assist you, may I ask what is the purpose of your Payroll Liability Adjustment? Is it intended to remove the liability or correct it?

If your goal is to remove the liability, please note that the amount will continue to appear on the 940 form as unpaid until it has been paid. You can process the payment either within QuickBooks or externally.

However, if the adjustment is intended to make corrections, I recommend running the Payroll Liability Balances report to confirm the accuracy of the amounts and to verify the exact amount you will pay or have already paid.

If you still need further assistance, please don't hesitate to leave a post below.