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TimWall33
Level 1

Covid FMLA leave payroll payment / FICA?

Hello,

I've read the following instructions on setting up a Payroll Item to pay Covid FMLA for an employee that has lost their daycare:

 

National Paid Leave FMLA

  1. Go to the Employees menu, then Manage Payroll Items, then select New Payroll Item.
  2. Select Custom Setup, then select Next.
  3. Select Addition, then select Next.
  4. Give your pay type a name, such as National Paid Leave FMLA, in the text field and select Next.
  5. Select COVID-19 Expenses (or whatever you named the expense account) as the expense account, and then Next. 
  6. In the Tax Tracking type window, Select National Paid Leave FMLA, then Next.
  7. In the Taxes window, select Next.
  8. In the Calculate Based on Quantity window, select Neither, and then select Next.
  9. In the Default Rate and Limit window, make sure the rate is at 0 and the limit is at $10,000, select One Time Limit from the Limit Type dropdown, and select Finish. 

In #7, it says to just click Next.  However, in the Taxes window, there are several tax items checked by default (FUTA, FICA, Medicare, etc).  Should I uncheck these or leave them checked by default before moving on (clicking Next)?

I ask because I had thought that these were not going to apply to FMLA payments.  Which is it?  Do they apply to FMLA payments or not? 

Thanks,

TW

Solved
Best answer April 23, 2020

Best Answers
Anna S
QuickBooks Team

Covid FMLA leave payroll payment / FICA?

Hi there, @TimWall33.

 

Allow me to provide more information about the National Paid Leave tax items you mentioned above.

 

In step seven, you'll want to leave the tax items (FUTA, FICA, Medicare, etc.) checked by default because our Development Team is currently working on a Payroll update to fix the accountability of those items. The update will be coming soon, but until it's released, you'll want to follow the steps precisely as they're listed. I'll make sure to keep you posted here until the update is released.

 

Feel free to reply below if you have any other questions or concerns. Take care.

View solution in original post

34 Comments
john-pero
Community Champion

Covid FMLA leave payroll payment / FICA?

There is only 1 (one) tax that national paid leave is exempt from and that is employer share of SS. If you think different then please provide a link and I will stand corrected.

 

However, QB does not has not and might not get this right so you have to leave it checked and then in each employee paycheck review screen override this 6.2% and only this 6.2% to 0.

 

All other FICA, FWT, FUTA and state and local taxes apply. These are in the end reported as W2 wages and the employee owes all employee taxes.

Anna S
QuickBooks Team

Covid FMLA leave payroll payment / FICA?

Hi there, @TimWall33.

 

Allow me to provide more information about the National Paid Leave tax items you mentioned above.

 

In step seven, you'll want to leave the tax items (FUTA, FICA, Medicare, etc.) checked by default because our Development Team is currently working on a Payroll update to fix the accountability of those items. The update will be coming soon, but until it's released, you'll want to follow the steps precisely as they're listed. I'll make sure to keep you posted here until the update is released.

 

Feel free to reply below if you have any other questions or concerns. Take care.

View solution in original post

brunello
Level 1

Covid FMLA leave payroll payment / FICA?

Question for you.

I did payroll last week with one employee with COVID -19 Familay sick but I did as COVID-19 Child care whch I believe is wrong. I have to correct this even though I processed my payroll thorugh QB's payroll service.  The credit should be 2/3 of the regualr pay rate but I did for 32.25 hours at the full regular rate. My question is how can I fix this payroll?

Anna S
QuickBooks Team

Covid FMLA leave payroll payment / FICA?

Thanks for joining the thread, @brunello.

 

I hope you're having a beautiful day. The best way to fix your payroll is to void and delete the check. This will allow you to recreate it and see if there's a difference in what you paid your employee vs. what they should've been paid. The steps below will show you how to delete it:

 

  1. Navigate to the Employees tab and select Edit/Void Paychecks.
  2. Choose the employee who checks you need to fix and press Edit.
  3. Click Void, then Delete to erase the check.

 

Now you can recreate the check and apply the COVID-19 Family Sick Leave. However, if the amounts are different from the original check, you'll have to account for the difference somehow. Whether you apply it to your employee's future checks or decide to work with them to correct it is up to you. 

 

If you have any other further questions, feel free to reply below. Enjoy the rest of your day!

brunello
Level 1

Covid FMLA leave payroll payment / FICA?

Thank you Ana! appreciate your help. Hope you are healthy as well.

Let me give you more info. I did payroll COVID-19 Child care and took the credit through Quickbooks Desktop Payroll Service. I have to fix it deleting the direct deposit check, then send the voided check to QB's Payroll check leaving the net amount paid negative like the employee owed company for it. My next step would be to re-do that payroll with COVID-19 family sick guideline that only pick 2/3 of the employee regular pay rate and whatever social security tax come up have to be "0" for both employer and employee and the 1/3 would be taxable at regular 6.2 % plus medicare. The Net amount paid should be equal to the previous direct deposit amount paid to the employee ( any discrepancy should be corrected internally ) leaving my payroll liabilities different and QB's payroll Service should adjust before 941 2do quarter is produced.

Your comment is really appreciated.

Stay Safe!

ZackE
QuickBooks Team

Covid FMLA leave payroll payment / FICA?

Hey there, brunello.
 

I'm happy to hear we were able to help. Once you've voided and deleted the check, you can follow the steps in our how to track paid leave and sick time for Coronavirus article to set up your payroll. The steps provided there will help make sure everything is configured properly so that no discrepancies occur when you run it.
 

If you have any other questions, I'm just a post away. Have yourself a great day!

Cat Lady2
Level 1

Covid FMLA leave payroll payment / FICA?

Hello,

I have already set up payroll items and placed National FMLA as an addition in the specific employee screen. (is this a company item or employee item)  I have figured the hourly rate and average hours worked. Do I place this in the top portion of the payroll screen as a rate and # of hrs as usual or do I calculate the actual dollar amount and place that figure in the addition screen? Also in the Other Taxes screen, do I put anything?  This employee is beginning FMLA this week and first needs two weeks of sick pay at full rate (is this in the FMLA set up or do I set up the first 2 weeks differently?  Thanks

Nick_M
QuickBooks Team

Covid FMLA leave payroll payment / FICA?

Hello Cat Lady2. 

 

Thanks for coming into the QuickBooks Community. One you've set up to account for the FFCRA and have included the new pay items. You're going to run payroll as normal. Refer to the link below. 

 

- How to track paid leave and sick time for the coronavirus. 

 

You'll notice the majority of the article is about setting up for the FFCRA, which you've already completed, however, at the bottom of the article it says as follows:

 

Run a regular payroll

 

Once you’ve set up your payroll to handle paid leave under the FFCRA, you can run a regular payroll. When you do run payroll, make sure you add the appropriate payroll items for the paid leave, and track those hours that have limits, and pay out your salaried employees by the hour.  Can you add this? Be sure to adjust salary wages accordingly. 

 

Review and claim your tax credits After you’ve run your payroll with the paid leave, you should be aware of how it affects your taxes. Under the FFCRA, you’ll get credit towards your Federal Tax deposit for the wages and Employer Paid Health Insurance premiums paid under this act. To ensure you’ve been tracking the leave correctly, you can review your payroll reports to see how many hours you’ve used in these tax credits. 

 

Relief programs are evolving regularly. Please visit SBA.gov for the most up to date information. The funding described in this email is made available to businesses located in the United States of America and are not available in other locations. This content is for information purposes only and should not be considered legal, accounting or tax advice, or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Intuit Inc. does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit Inc. does not warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers should verify statements before relying on them.

 

So I would suggest reviewing and claiming your tax credits after you run payroll. Check out this link for further instructions on that process. 

 

- How to claim my tax credits under the FFCRA

 

If you have any other questions or concerns, you can post them down below. 

 

Thank you and have yourself a lovely afternoon. 

 

 

brunello
Level 1

Covid FMLA leave payroll payment / FICA?

Good day Zack

I voided the payroll check direct deposit and re-processed payroll again but without direct deposit . Now What I have is a credit balance in the COVID-19 payroll Liability account  and debit balance in the COVID-19 expense account , COVID -19 exp > COVID-19 Liab. Should I combine both and the net balance would be my 7200 form reimburse credit?

Appreciate your help.

brunello
Level 1

Covid FMLA leave payroll payment / FICA?

Hi Nick.

When we do the COVID-19 Family Health as Other payroll items ( 50% of health insurance premium ) which would be the credit for employer ( employee pays the 50% ) , and review COVID-19 expenses the health insurance credit appears as debit and credit  like we are not getting the health insurance credit, do you know why?  my credit should be 2/3 of wages or hourly rate , plus portion of health insurance paid by employer, and employer is exempt of social security tax for the 2/3 portion of wages of hourly rate. 

MaryLurleenM
Moderator

Covid FMLA leave payroll payment / FICA?

Hello there, brunello,

 

You'll need to turn this feature on to track deferrals:

  1. Click the Gear icon.
  2. Select Account Settings, and select Payroll Settings.
  3. Under the CARES Act section, select the Employer Social Security deferral link.
  4. Check the box next to I want to defer my employer portion of Social Security, and then select OK.

Check this article for more information: Track your deferral payments for Social Security tax payments.

 

Stay in touch with me if you need further assistance.

brunello
Level 1

Covid FMLA leave payroll payment / FICA?

HI Mary

What is the Gear Icon? i have desktop 

ReymondO
QuickBooks Team

Covid FMLA leave payroll payment / FICA?

Hi there, @brunello.

 

The steps provided by colleague MaryLurLeenM is intended for QuickBooks Online users only. However, if you're trying to perform that steps that she has given, you can follow these instead:

 

Step 1: Set up the payroll item to track the deferral.

 

  1. Go to the Employees menu and click Manage Payroll Items. Then, select New Payroll Item.
  2. Click Custom Setup, then select Next.
  3. On the Payroll item type window, click Other Tax. Then select Next.
  4. On the Other tax window, select CARES Co. Soc. Sec. Deferral and click Next.
  5. In the Name used in paychecks and payroll report window, enter CARES Co. Sec. Sec. Deferral in the text field, then click Next.
  6. In the Agency for company-paid liability window, select the agency you pay taxes to from the drop-down. Then, click Payroll Liabilities in the Liability account drop-down, and select Payroll Expenses in the Expense account drop-down.
  7. Select Next.
  8. From the Taxable Compensation Window, select Finish.

 

Step 2: Create a check to pay the payroll liabilities.

 

Once you’ve figured out how much you owe, you can now ensure that you’ve created a check to pay the tax liabilities.

 

  1. In the Employees menu, select the Payroll Center.
  2. Click the Pay Liabilities tab.
  3. In the Pay Taxes & Other Liabilities section, mark the Federal 941 and make sure the check amount and item list under Payroll Liabilities are accurate. Then, select View/Pay.
  4. On the Payroll Liabilities window, click Create.
  5. Go to the Payroll Liabilities tab and in the Payroll Item drop-down enter the CARES Co. Soc. Sec. Deferral and the amount of the 941 tax liabilities you qualify for. You will need to enter the amount as a negative amount. Click Recalculate to adjust the liability.
  6. Select To be printed if you want to print the check. If you used a handwritten check, enter the check number or other reference in the NO. field. If you pay liabilities by Electronic Funds Transfer (EFT), clear the To Be Printed check box and enter EFT in the No. field of the liability check.
  7. Choose Save & Next or Save & Close.
  8. You’ll see your Payroll Liability Payment Summary and can then review the payments you scheduled, print a copy of the summary, and print checks.
  9. You can re-run the QuickReport to see the difference in the liabilities credit you are still able to claim if your credit was larger than your liability.

 

Please take note that if you're using the QuickBooks Desktop Payroll Assisted, you can contact Customer Support to activate the deferral credit in and then follow the steps above to set it up.

 

In case you need to pay your employees while your business is closed due to COVID-19, you can follow these steps to set up and track the Employee Retention Credit under the CARES Act.

 

That's it! Please let me know if there's anything else I can do to be of assistance. Wishing you and your business continued success in all that you do. 

daninmt
Level 1

Covid FMLA leave payroll payment / FICA?

I just ran my 940 and its showing a negative balance in exempt payments. Quickbooks notes that this should never be negative. The amount shown is directly caused by the Covid payments. I'm wondering if the Covid payroll items should not have Federal Unemployment checked?   Any suggestions? 

Jen_D
Moderator

Covid FMLA leave payroll payment / FICA?

Good day, @daninmt,

 

When setting up payroll items, the tax tracking type chosen will determine the taxes affected by it. The normal set up of COVID-19 items in the program always includes and checks the Federal Unemployment.

 

This is the reason why there are exempt amounts on the 940 report. If these amounts are not to be reported on the form, you can do a liability adjustment to remove it.

 

This article will guide you on how to do the adjusting entries: Adjust payroll liabilities in QuickBooks Desktop

 

Just in case you need someone to guide you with doing the adjustments, I would recommend contacting our Support Team again. They can provide more help with correcting payroll forms due to COVID items. 

 

Refer to this article to learn more about our contact options and support availability: Contact QuickBooks Desktop support

 

Let me know how it goes. I'll be right here if you need further assistance with printing customer transactions in QuickBooks. Have a good one!

BnGRach
Level 2

Covid FMLA leave payroll payment / FICA?

That was a super unhelpful answer. When setting up for the Covid payments, the instructions given by QB and the QB guy I talked to for 2 hours making sure it was set up correctly, advised to just click NEXT when you got the the taxes screen. You just stated the Fed Unemployment is always checked but if it wasn't supposed to be just adjust it??? How are we supposed to know if it was supposed to be checked? Should it be included in 940 or not? Do you know? Does every single QB user who followed your exact instructions on how to set up the Covid payments now have to go back and make liability adjustments???

JeriB
Level 2

Covid FMLA leave payroll payment / FICA?

I am having the exact same problem! Two hours on chat and then was disconnected. If you run a payroll summary for the year the total wages doesn’t match with the 940. Again, it is off by the same amount. Beyond frustrated!

JeriB
Level 2

Covid FMLA leave payroll payment / FICA?

 
GlinetteC
Moderator

Covid FMLA leave payroll payment / FICA?

Hello, BnGRach and JeriB. Thank you for coming to the Community to clarify this. I know this can be a stressful time for businesses and we definitely want to help you with setting up COVID items correctly. 

 

Like my colleague said, when you select the tax tracking type in the desktop version, you'll see an overview of what taxes are the default. If you're following the article for setting up COVID 19-items then the selected taxes are correct. 

 

If you've set it up correctly, yet the amount is off, I'd suggest reaching out to our Customer Care Support again. That way, they can pull up your account and further check on this:
 

Here's how to reach out to them:

 

  1. Click on this link: https://help.quickbooks.intuit.com/en_US/contact.
  2. Choose your QuickBooks product.
  3. Select which edition of QuickBooks Desktop you're using.
  4. Enter "wages on 940 doesn't match payroll summary" in the What's your question? box.
  5. Click on Continue.
  6. Choose on either to Chat with us or Have us call you options.

Please let us know if you have any additional information on this. I want to make sure everything is taken care of.

victor_sp
Level 2

Covid FMLA leave payroll payment / FICA?

Hi daninmt,

 

I am having the same situation as you regarding FUTA showing a negative amount corresponding to the COVID payments.

 

Our COVID payments were made in 2020 Q3, and we checked "Apply to next return" for the overpayment, but when we ran the next return, 2020 Q4 Form 941, QB did not apply the overpayment.  Instead, QB seems to have rolled it over to the 2020 Yearly FUTA total as a negative balance, which is where we are now.

 

Since QB does not let you submit the 940 Form with a negative balance in one of the fields, I am not sure what to do.  

 

Did you figure out a solution to this issue?  Maybe manually override the negative balance, and apply it elsewhere in the form 940?

Kristine Mae
QuickBooks Team

Covid FMLA leave payroll payment / FICA?

We want this solved as much as you do, Victor_sp. Let me help you from here.

 

You can create a liability adjustment if the amounts are incorrect. It'll help you adjust and fix the 940 form balance.

 

Also, if you're not comfortable creating any entries, you can reach out to our customer care support so a payroll agent can guide you. You can follow GlinetteC's steps on how to get in touch with us. Feel free to take note of our support hours so you can get hold of a live agent immediately.

 

The Community is available 24/7 to help you. Don't hesitate to drop by if you have other payroll concerns.

BnGRach
Level 2

Covid FMLA leave payroll payment / FICA?

Quickbooks - you are not understanding the problem. We followed the instructions meticulously. That is not the problem. We have not made any mistakes on our end. There are NO incorrect amounts per the way we set it up and paid our employees. Please stop saying we've done something incorrect.

The problem is the way we are instructed to set it up is now putting a negative balance in the exempt payments field in form 940 which the form is telling us is incorrect. The negative amount is the total amount paid out for covid national paid leave payments. It appears you have instructed us to set it up incorrectly or you have not set up the Form 940 to correctly portray the covid payments.

Jessica_young
QuickBooks Team

Covid FMLA leave payroll payment / FICA?

Thanks for reaching back out with this update, @BnGRach.

 

At this point, you'll need to review this form with our Desktop Payroll Support team so we can take a closer look at what's causing this discrepancy. Here's how you can get in touch with QuickBooks Desktop Payroll Support:

  1. Open QuickBooks.
  2. Go to Help, then select QuickBooks Desktop Help.
  3. Select Contact Us.
  4. Enter your concern, then select Continue.
  5. Choose a way to connect with us:
    • Post a question and get an answer from expert and other customers.
    • Start messaging with a support expert.
    • Get a callback from an expert (availability may be limited).

You can also check out this article on how to contact any of our QuickBooks teams: Contact QuickBooks products and services Support.

 

Let me know if there's anything else I can help with. I'm here to help!

BnGRach
Level 2

Covid FMLA leave payroll payment / FICA?

Also, did anyone else's Covid Expense amount move to Members Equity as an automatic closing entry? And my National Paid Leave Credit amount showed up in my liability payments again even though I'd already applied them to my tax payments....

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