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schroder1
Level 3

National Paid Leave setup help: Step 4 Clarification

Greetings,

 

I recently had an employee take COVID-19 related leave. This person qualified for National Paid Leave Employee (I do not need to address health insurance credits or other leave-type issues). Unable to find a QB solution in time, I entered his pay as normal wages and submitted our semimonthly 941 deposit as normal (including Employer SS). I am struggling to set up QuickBooks for an "after-the-fact" correction to his paycheck. Primarily, one step in the process is raising flags for me, and I can't find any discussion or credible opinion elsewhere to confirm whether the instructions still contain errors.

 

I am attempting to follow the instructions located here: how-to-track-paid-leave-and-sick-time-for-the-coronavirus/00/524743 (updated July 24, 2020).

 

Please, can someone comment on my experience here?

 

STEP 1: Completed.

 

STEP 2: Completed without issue, but note I had to only create one account: "COVID-19 Expenses" of type "Other Expense". There are no references to Liability accounts. This relates to Step 4.

 

STEP 3: I created the payroll item "Nation Paid Leave Emp" of type "Addition" as instructed. This is mapped to "COVID-19 Expenses" and has a limit of $5110.

 

STEP 4: I found "National Paid Credit Leave" was already created (by a payroll update, I suppose). I see by default it has settings different from the Step 4 instructions. In particular, instruction step 4.6 assigns accounts: "COVID-19 Expenses" for the Liability account and "COVID-19 Expenses" for the Expense account.

 

Main Question: "COVID-19 Expenses" is an Expense account, not a Liability. I am instructed to map the same Expense account to both the Liability and Expense functions of this tax item. QuickBooks even warns me that this is unusual, but this warning is not mentioned in the instructions. Are the instructions missing a Liability account addition in Step 1? Please, if this "double mapping" is correct, comment on how this affects liability balances, payroll reports, etc.

 

Related/Alternate Question: The July 24 website instructions are at odds with the more-recent Intuit-added tax item settings. By default, the automatically added tax item maps to our normal "Payroll Liabilities" and "Payroll Expenses" accounts. This suggests the correct way to map this is to use a Liability account and an Expense account -- not double mapping to an Expense, as instructed in Step 4. Which tax-item mapping settings are correct?

 

Minor Question: What are the impacts of using the Addition type rather than normal Wages types in Step 3?

 

I use QB Premier 2020, Desktop. Version info: QB 30.0.4009.0, Tax Table 22016, Payroll 11082053

 

Thank you so much.

Solved
Best answer January 21, 2021

Best Answers
schroder1
Level 3

National Paid Leave setup help: Step 4 Clarification

I now have a solution. The below setup worked for me with QB Premier Desktop 2020. I used only the Employee national paid leave item, but I don't see why the Family or Childcare setups would be any different. I did not use or test the Health Premiums setup, but based on how well the Employee one worked I would trust this setup for Health Premiums as well. I also did not use or test the National Paid Leave & Medicare Credit. This strategy created no errors on my payroll liabilities balance report, and it populated our quarterly 941 return correctly, after a little nudging.

 

Short answer: Step 4.6 is CORRECT. Map National Paid Leave Credit (type Other Tax) to Liability: COVID-19 Expenses and Expense: COVID-19 Expenses. You will see a warning about mapping to the same account; click Yes. Steps refer to the Intuit setup article here. This thread originally addressed the article updated on 6/24/20; as of this post it has been updated on about 1/7/21 (it says "two weeks ago"). To my great annoyance the issues discussed in this thread were not addressed in the update. Additionally, these steps are missing a necessary liability account needed for the Health Premium setup. The Health Premium setup (Step 3.5) is wrong; you should map to Liability: COVID-19 Payroll Liabilities (type Other Current Liability) and Expense: COVID-19 Expenses (type Other Expense).

 

Long answer: here are the details for my accounts, payroll items, paycheck, liability payment, and 941 reporting experience.

 

ACCOUNTS

Add two new accounts to your account tree for this setup. You can use whatever name you like, but I will show mine.

1. type Other Expense, COVID-19 Expenses

2. type Other Current Liability, COVID-19 Payroll Liabilities

 

PAYROLL ITEMS

Add up to five new payroll items. Some may have already been added for you by Intuit (the National Paid Leave Credit item was already in my payroll item list, so I was unable to create a new one for it in the Other Tax section). Add new items using the Custom setup, not EZ.

[Item Type / Name / Account Mapping / Tax Tracking / Taxes / Calculate / Limit / Limit Type ]

1. Addition, COVID-19 Employee, COVID-19 Expenses, National Paid Leave Emp, Qty, $5110, Annual restart

2. Addition, COVID-19 Family, COVID-19 Expenses, National Paid Leave Family, Qty, $2000, Annual restart

3. Addition, COVID-19 Child Care, COVID-19 Expenses, National Paid Leave FMLA, Neither, $10000, Once

4. Company Contribution, COVID-19 Health Premium, Liability is COVID-19 Payroll Liabilities; Expense is COVID-19 Expenses, National Paid Leave Health, $10000, Once  (also set the Agency to whoever you pay your premiums to)

[Item Type / Tax / Name / Account Mapping ]

5. Other Tax, National Paid Leave Credit, COVID-19 Tax Credits, Liability is COVID-19 Expenses (yes, liability to the expense) and Expense is also COVID-19 Expenses (so it's circular). Agency is IRS or U.S. treasury or whomever you pay these taxes to.

 

Note where you select which taxes are affected by the addition items, just be sure Social Security Company is UNchecked. At least the following should still be checked: Soc Sec Employee, Medicare Company, Medicare Employee, Federal Unemployment. There are certainly others that should also be checked but these were worth confirming.

 

CREATING A PAYCHECK USING NATIONAL PAID LEAVE

In Other Payroll Items, add the NPL item you want (i.e. COVID-19 Employee). Enter hourly rate (must calculate equivalent rate for salaried folks) and quantity of sick leave used. Income will appear in the Employee Summary section. Ensure the regular earnings are correct as well (if you are correcting an old paycheck for example, you must unlock net pay, add the new leave item, and reduce earnings by an equal amount). Under Company Summary you can see whether Social Security Company was calculated correctly. NPL additions should NOT increase SocSec Company but DO increase SocSec Employee, Medicare Company, and Medicare Employee. If you are concerned about Medicare Company, be aware this will be captured by short-paying your liabilities manually, and it still shows up on your 941 as a nonrefundable credit along with the leave pay itself.

NOTE: If you are using the Health Premium item, you would enter the dollar amount paid in Rate, and "1" for Qty. There is no way (using this setup) to add in the health premium without first having another wage or addition in the same paycheck. Sorry I don't know why that is.

 

CREATE LIABILITY PAYMENT AND DEDUCT NATIONAL PAID LEAVE CREDITS

When paying (or fixing) your liability payment, firstly be sure the payment captures the date of the paycheck in question. Ideally they have the same date.

Create your payment normally, or open your existing liability payment. In the check-view of the payment, go to the bottom table and add new lines for the credits you are using, entered as negative numbers which reduce the total payment. Payroll Item: COVID-19 Tax Credits, Amount: <negative USD>.

 

EXAMPLE PAYCHECK AND LIABILITY PAYMENT

If you paid John $1000 wages and $1000 sick pay because he had Covid-19 for half this paycheck, then his paycheck included $1000 Hourly Wages and $1000 COVID-19 Employee.

The Hourly Wages generate 12.4% social security taxes ($62 Emp + $62 Co) and 2.9% medicare taxes ($14.50 Emp + $14.50 Co).

The COVID-19 Employee leave payment generates 6.2% social security taxes ($62 Emp + $0 Co) and 2.9% medicare taxes ($14.50 Emp + $14.50 Co).

Let's also assume $200 for the employee's federal withholding.

 

Your liability check to the IRS would look like this (not including any other employees, just John's contribution):

Federal Withholding +$200

Social Security Employee +$124

Social Security Company +$62

Medicare Employee +$29

Medicare Company +$29

COVID-19 Tax Credits <$1000> John, COVID-19 Employee leave earnings

COVID-19 Tax Credits <$14.50> John, COVID-19 leave portion of Medicare Company

 

Now in this example the check total is negative, which isn't allowed. How you handle this depends on your situation. I had other employees in the same payroll, so let's just say my total liability payment was $10,000, and reducing it by $1014.50 for John's NPL credits resulted in an EFTPS payment of $8,985.50. If this doesn't work for you I suppose you just retain those credits to use against a future liability payment in the same 941 reporting period, or just declare those on your 941 return and get a refund. There might be another IRS form to get a refund... this is out of my experience and you would need to research this.

Also I didn't demonstrate the health insurance credits because I didn't use them, but it's the same idea.

 

 

FILING THE 941 RETURN

I won't go through the whole return, but I wanted to point out a couple of things.

 

Firstly using National Paid Leave items shows up in two places. The effects on social security are seen in line 5a(i), 5a(ii), etc. You will see the rate for 5a is (0.124) and only (0.062) in (i) and (ii). This reduces social security owed and accounts for the company exemption from social security. The effects on medicare are less obvious because it comes from Worksheet 1. Ultimately they are included in line 11b, carried down to line 11d, and subtracted from your taxes in line 12. This is also the route where the leave pay itself is accounted for.

 

Secondly, you may or may not see all these boxes populate automatically on your first try. I don't know why, but QB needs a nudge here, and users have experienced different problems with, of course, different solutions. For me, line 5a(i) didn't populate... but, oddly, line 11b did. Whatever your problem, the solution is to "reset" QB's attention to these items.

 

Methods include:

a. Creating a new "dummy" paycheck to pay out a COVID-19 Addition item. You can delete the paycheck later.

b. Delete and re-create your actual paychecks which use any COVID-19 items. Usually Intuit staff recommend this, and it's invariably followed by users balking at how difficult or cumbersome it is. However, it has worked for some, including me.

c. Delete and re-create the relevant payroll items, including the tax credit item (from the payroll item list -- the item itself -- not the appearance of the item on a particular paycheck). If you do this I would then ALSO re-create the paychecks which used those items to be sure everything is calculated correctly.

 

Whatever method you choose, I highly recommend taking screenshots or otherwise recording the original paycheck information before you start tinkering.

One of these methods should trigger QB to pay attention, and when you generate the 941 again the boxes should populate properly (barring any errors in your actual setup or payroll).

 

NOTE that Worksheet 1 is used by QB and it will appear towards the end of the interview process where you generate your 941. I saw some users still wished to manually override figures (I'd rather find the problem and fix it) and had to override them in Worksheet 1 in order to fix figures appearing on the 941 itself.

 

 

Hope that helps. Godspeed.

 

 

Please note I am not a tax or accounting professional and this advice reflects only my personal experience. I was guided by our professional accountant and verified all our 941 figures with him prior to filing. That beings said, this has worked for me, and I pray it can guide you as well.

View solution in original post

33 Comments
AlexV
QuickBooks Team

National Paid Leave setup help: Step 4 Clarification

Good day, schroder1.

 

The article you're following is the most up-to-date process for tracking paid leave and sick time in the wake of COVID-19. 

 

To check your payroll setup, I'd recommend reaching out to our Customer Care Team. They can better assist you regarding paid leave and sick time for the coronavirus. Before doing so, please check our support hours here.

  1. Go to Help QuickBooks Desktop Help.
  2. In the Have a Question window, click the Contact Us link at the bottom.
  3. From the Contact Us page, select any topics.
  4. Under Here's how to connect with a QuickBooks expert section, click the Get Phone Number or Start a Message button.

You can also check these links for more details:

I'll be here if you have other questions. Wishing you all the best!

schroder1
Level 3

National Paid Leave setup help: Step 4 Clarification

Thank you AlexV,

 

Thank you for confirming this article (linked) is the most up-to-date and providing additional links for other topics.

 

If you don't mind, however, I would really love to know whether my concerns for Step 4 are warranted.

 

Can anyone confirm whether these are typos? Is it really OK to map the same expense account to both the liability and expense functions of this tax item? The directions don't acknowledge how strange this is, and Intuit's other actions suggest it shouldn't be that way.

 

 

Pabz_L
QuickBooks Team

National Paid Leave setup help: Step 4 Clarification

Let me get you back on track, @schroder1.

 

Yes, you can follow the steps outlined in the article. For more details, please see this article to track the paid leave and sick time of your employee: Track paid leave and sick time.

 

 If you need further assistance, you can also contact our support team. To do that, you can follow the steps given by my peer above. Another option is to consult your accountant. This way, he or she can help you with the mapping of your accounts. If you don't have one, you may use our Find an Accountant tool.

 

You can also check out this article to learn how to get your tax credits within QuickBooks Desktop Payroll after you’ve given your employees paid leave: Claim tax credit under the FFCRA.

 

Don’t hesitate to leave a comment below if you have any other questions. The Community is always ready to lend a hand. Have a good one!

john-pero
Community Champion

National Paid Leave setup help: Step 4 Clarification

@schroder1  let me lay out some of tge background and then maybe it will make at least a little more sense. While i have yet to deal with any such paid myself, here is what i understand.

 

Covid-19 paid leave is fully or nearly fully reimbursible against your tax luability f or non paid leave or by an actual cash reimbursement from the IRS.  If you were to expense the leave pay you would in turn need to claim the reimbursement as income and that is not the case. As well, only employee deductions and employer medicare tax is due on covid leave pay. At least when it was rolled out it was e xempr from employer SS. So, however QB has you entering it would be correct. In this situation it is best to use the default payroll items added by QB. Back in April before the various payroll updates you would have been instructed to manually add the pay types.

 

Now whether you can edit your already run payroll depends on your subscription type. If you can edit tge issued pay you can always submit a revised 941 although not through QB.

schroder1
Level 3

National Paid Leave setup help: Step 4 Clarification

Thank you for replying, @Pabz_L,

 

This part of your message...

 

"Yes, you can follow the steps outlined in the article. For more details, please see this article to track the paid leave and sick time of your employee: Track paid leave and sick time."

 

This is the same article I'm asking about and linked to myself in the original post. Did you mean to link to something else?

 

Also you said "yes follow the steps in the article" but can you please specifically address the issue of mapping an expense account to a liability function in step 4.6 (and the same expense account also to the expense function in that same step)?

 

I'm looking for an answer like "yes I know it may seem strange but it works properly, just trust it" or "oh gosh, that's a mistake, it should read XXXX" This would give me the confidence that your answer is given with an understanding of my question.

 

Just worth pointing out... QuickBooks actually warns me this setup is strange -- I still believe the steps must contain a typo. A real bonus here would be to just update the article and say "A warning dialog will appear--Click OK" for this step, or to otherwise fix the step.

 

 

Rea_M
QuickBooks Team

National Paid Leave setup help: Step 4 Clarification

Thanks for getting back to us here in the Community, @schroder1.

 

I'm here to ensure that the steps provided in the How to track paid leave and sick time for the coronavirus article is accurate and is applicable for all Desktop Payroll versions. Step 4.6 lets you select the liability account that tracks other taxes to be paid and the name of the expense account you used (Please see the screenshot below). Then, follow the next two steps to complete the process.

 

After that, you just need to run a regular payroll along with the FFCRA payroll item. You can get back to the article's Next steps with the FFCRA section for detailed information: How to track paid leave and sick time for the coronavirus.

 

With QBDT Payroll, you'll get to record the tax credit after you paid your employees paid leave or provide health benefits under the FFCRA. To learn more about this, you can check out this article: How to claim my tax credits under the Family First Coronavirus Response Act.

 

Please feel free to leave a comment below if you need anything else or follow-up inquiries about tracking paid leave and sick time in QBDT Payroll. I'm just around to help. Keep safe always.

 

schroder1
Level 3

National Paid Leave setup help: Step 4 Clarification

@Rea_M, thank you for your response.

 

Unfortunately you didn't address my question; you never comment on the fact that we are instructed to map an expense account to the liability function of the payroll item in step 4.6. You basically just tell me "do step 4.6, and here's a neat screenshot I took."

 

But look, here, you said: "Step 4.6 lets you select the liability account that tracks other taxes to be paid and the name of the expense account you used"

 

It seems you are confirming that the account selected here should actually be a liability account and NOT an expense account, which conflicts with the instructions given.

 

Please comment on the fact that we are instructed to map an expense account to the liability function of the payroll item in step 4.6. I don't think this is right!

 

Maybe this screenshot will help.

 

capture.png

 

MariaSoledadG
QuickBooks Team

National Paid Leave setup help: Step 4 Clarification

Tracking both liability and expense accounts is done separately and I can guide you on how to do it, schroder1.

 

The liability account can be applied before you can take credit. To do that, you'll have to do a few things first. You'll need to get a Quick Report to see the balances for the credit. Please follow the steps below.

  1. Go to your Chart of Accounts, then select the COVID-19 Expenses account. This can include all 5 National Paid Leave payroll items:
    • National Paid Leave Employee sick
    • National Paid Leave Family Leave
    • National Paid Leave FMLA
    • National Paid Leave Employer health Insurance cost
    • National Paid Leave Medicare credit
  2. Select the Reports ▼ dropdown, then select QuickReport.
  3. Select Customize Report. In the Columns box, type in Qty then select it.
  4. Select OK. This will show you the quantity (hours) on the items used.
  5. Update the dates to reflect the paycheck date you are looking for. The amount should show all the payroll items you’ve set up and run payroll on. The amount in the Total column reflects the amount of the Credit you can enter on the Liability check.

After you've figured out how much you oweensure that you’ve created a check to pay the tax liabilities. This is where your liability account is included. Here's a complete article for the detailed steps: How To Claim My Tax Credits Under the Family First Coronavirus Response Act.

 

Also, in setting up a new tax item, you'll need to select COVID-19 Expenses in the Liability account dropdown and select COVID-19 Expenses in the Expense account. This was being mentioned in step 6.

However, I still recommend reaching out to your accountant in choosing the appropriate accounts to use. 

 

For future reference, you'll want to read this article for more information: The IRS's page on Coronavirus tax relief.

 

Let me know if you have questions about the National Paid Leave setup. I'll be right here to answer you if there's something that you need help with.

schroder1
Level 3

National Paid Leave setup help: Step 4 Clarification

Thanks @john-pero, I appreciate the background!

 

I think just using the defaults is a good idea -- I can't seem to get an acknowledgement from Intuit that there may be an error in the forum-published setup.

 

But does that work? There is no default QB wage/addition payroll item. So, I'm back to the forum to add one, and that again lands me in "weird settings" territory. Maybe the "National Paid Leave" addition should map to the regular Payroll Expenses account (instead of a new COVID-19 Expenses account as instructed)? I don't know the details of how payroll items interact with tax reporting, but I think the Other Tax and Addition items here should at least map to the same expense account.

 

What do you think?

 

Also thanks for mentioning the 941 revision advice -- we will be doing that.

schroder1
Level 3

National Paid Leave setup help: Step 4 Clarification

@MariaSoledadGthank you for your detailed response. Unfortunately we're still not there.

 

I'm not asking about how to pay the liability, or how to take the credit. I'm asking whether step 4.6 makes sense.

 

We are mapping an expense account to the liability drop-down.

 

Again, QB warns me not to do it. QB items are by default set up (by Intuit!) differently than the instructions. Occasionally someone on the "QuickBooks Team" even (accidentally?) suggests we should be using a liability account here instead.

 

Yet, your instructions tell me to do it. Your screenshots of the instructions and your and your colleagues' paraphrasing of the instructions amount to the same. Look, I read the instructions -- I know what they say and just linking, screenshot-ing, and repeating them doesn't answer my question.

 

If you're trying to tell me that step 4.6 is correct (without actually saying it), then please just address this prompt from QuickBooks:

 

 

capture.png

 

 

At this point I would happily take a simple "YES" or "NO" -- just tell me which button to click, and I will go away.

 

Please don't link me to any more helpful articles -- just a Yes or No will be fine; I really don't want to waste any more of the QuickBooks Team's time typing up thoughtful sounding pleasantries.

 

 

 

john-pero
Community Champion

National Paid Leave setup help: Step 4 Clarification

National paid leave pay is EXEMPT from employer share of SS and thus must be tracked separate from regular wages so that you are not charged that tax. Otherwise tax liability for employee taxes and employer Medicare and 940 (and state and local) must post to same payroll liability accounts as regular pay. Taking the credit for eligible wages paid against your normal 941 liability, which includes liabilities for leave pay, is a separate calculation for which you simply pay less than you would otherwise owe (or file for the cash advance).

 

The separate calculation of leave pay and credits is part of the revised 941 form. Depending on if the IRS will treat this as they do PPP loan forgiveness your expense for paid leave might not be a deductible payroll expense, due to the credit possibly not counting as income, another reason it has to track separate

john-pero
Community Champion

National Paid Leave setup help: Step 4 Clarification

Step 4

 

I cannot get past Step 4 since there is NO National Paid Leave Credit in the dropdown - only items for various states. i am using payroll update 22101

 

I recall a long time ago seeing the credit created in QB but never needed it until now. How do you select something that does not exist?

Jessica_young
QuickBooks Team

National Paid Leave setup help: Step 4 Clarification

This is a great point, @john-pero. This item isn't included by default but would have been created manually when setting up for Covid-19 related expenses. Here’s a brief outline of the steps:

  1. Determine your employee’s benefit and hourly rate. Before you can give your employees this sick leave, you first need to figure out what pay leave type they fall under and their hourly rate.
  2. Set up your expense accounts for the paid leave. Once you know what type of paid leave type is applicable to your employee’s situation, setting up this account will help track the eligible wages to use towards tax credits later on. (This would show up in Step 4, above.)
  3. Set up payroll items
  4. Once you set up your liability and expense accounts, you need to set up payroll items to track each type of paid leave found under the FFCRA that you identified in step 1.
  5. Set up a new tax item. Once you’ve set up your payroll items, you’ll need to set up tax items to ensure you’re tracking the tax credits. These steps are the same for all Desktop Payroll versions.

This article has more detailed instructions on the initial setup: How to track paid leave and sick time for the coronavirus.

 

I want to hear if this works for you! Please let me know if you have additional questions on this, I'm here to help!

schroder1
Level 3

National Paid Leave setup help: Step 4 Clarification

@john-pero 

Just to be sure though -- if the part where "you can't select it" is step 4.5... that might be because Inuit has already created a National Paid Leave Credit item for you and so is no longer available to select manually. If this is true then it will appear as an Other Tax type payroll item (probably at the very bottom).

 

If it doesn't appear there either -- then from what you're saying, it sounds like your National Paid Leave Credit item appeared and later disappeared on its own. I am using payroll version 11082053, tax table version 22016, and I (still) see that payroll item and others.

 

 

 

@Jessica_young 

Jessica, I don't think that's the whole story -- these items (list below) were created by "default" at some point for me--and likely also for others. I didn't add them to my payroll item list; Intuit did. I don't think John manually created his, and later deleted it, and then forgot.

 

CARES Co. Soc. Sec Deferral

CARES Retention Credit

Medicare (Emp) - Add'l Tax

National Paid Leave Credit

 

Note: an addition item for  "National Paid Leave EE" was not created automatically for me (nor were alternates like Family/FMLA/Health). I had to add it manually using steps 3.1-3.4.

Jamar2020
Level 1

National Paid Leave setup help: Step 4 Clarification

Good Morning,

I have a side question regarding the 80 hours each employee is given. 

How do I set up this PTO up for tracking so it does not come off our regular PTO.

Hours used/Available

Also, does QuickBooks have something set up so it roll off at the end of the 2020?

Can you please send instructions?

Thank you,

[email address removed]

Rea_M
QuickBooks Team

National Paid Leave setup help: Step 4 Clarification

I'm here to ensure you're able to set up and track your employees' PTO hours in QuickBooks Desktop (QBDT) Payroll accordingly, @Jamar2020.

 

You can easily pay your employees paid leave if they’ve been affected by COVID-19 with QBDT Payroll. This way, you're able to comply with the Family First Coronavirus Response Act (FFCRA).

 

You'll first need to figure out what pay leave type they fall under and their hourly rate. Then, set up your expense accounts and payroll and tax items for the paid leave. For the step-by-step guide, I'd recommend checking out this article: How to track paid leave and sick time for the coronavirus.

 

Additionally, you can utilize the Reset hours each new year option so the PTO hours will roll off at the end of 2020. You can learn more about this through this article: Set up and track time off in payroll (QuickBooks Desktop Payroll section). It includes details about changing time off and how to paid and unpaid policy.

 

You're always welcome to let me know how it goes. Just click the Reply button below. I'm just around to help. Take care.

GoldsmithBooks
Level 2

National Paid Leave setup help: Step 4 Clarification

I still have not gotten clarification on this and I don't feel anyone answered your concerns.  I've been going back and forth on this with a few clients and now that I'm trying to file the 941's I don't feel confident in the calculations QB is transferring to the 941. I had to manually apply the credit to reduce the 941 payment but the Employer SS appears to not have been calculated correctly even though it is not checked in the item set up and I am showing a different amount that is due for the 941 that I cannot figure out where this amount is coming from after I applied only the wage amount of the credit.  I thought I had it figured out but I am not so confident anymore.  Any further clarification would be very helpful on the correct account mapping of both the Liability & Expense from anyone who has used their credit & filed their 941 with it being (or looking) correct would be great.  What accounts did you map to and did you have to manually apply your credit to your 941 payment?  Did it flow to your 941 correct?

JonpriL
Moderator

National Paid Leave setup help: Step 4 Clarification

Hello @GoldsmithBooks,

 

You can pull up your Payroll Liabilities Balances report to identify the amounts and accounts reported on your 941 quarterly form. Let me show you how.

  1. Go to Reports.
  2. Under Employees & Payroll, select Payroll Liabilities Balances.
  3. Select Customize Report.
  4. On the Display columns by menu, select Total only.
  5. Under Filters, select Payroll Item.
  6. Select all the appropriate payroll items.
  7. Click OK.

On top of that, here's an article you can read to learn more about your quarterly form is generated: How QuickBooks populates the 941?

 

Additionally, I've got you this helpful article for guidance in preparation for the 2020 tax season: QuickBooks Desktop Payroll Year-end Checklist.

 

If there's anything else that I can help you with, please let me know by leaving any comments below. I'll be here to lend a hand.

schroder1
Level 3

National Paid Leave setup help: Step 4 Clarification

@JonpriLThanks for the info but sorry, you didn't answer the question.

 

Please try again?

 

"Any further clarification would be very helpful on the correct account mapping of both the Liability & Expense from anyone who has used their credit & filed their 941 with it being (or looking) correct would be great."

amber24
Level 1

National Paid Leave setup help: Step 4 Clarification

Hello, 

 

I am also struggling with this. I have followed the set up instructions and the Medicare Credit and Employer Health insurance cost flow to the Covid-19 Expense Account. (Both the liability and the expense.) I have been taking the total of the emergency sick leave wages, the employer Medicare credit and the employer health insurance as my National Paid Leave Credit when I pay the liabilities. Based on the balance in the expense account, this seems incorrect. I generated the 941 and it's showing that I didn't take enough of the credit and am set to receive a refund. What am I missing? 

 

Thank you. 

 

 

ShiellaGraceA
QuickBooks Team

National Paid Leave setup help: Step 4 Clarification

Hi @amber24,

 

I'll help ensure you'll be able to take the correct credit for your National Paid Leave Credit. Since you've followed the correct setup, you'll want to make sure 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.

 

To get the report:

 

  1. Go to the Reports menu at the top.
  2. Select Employees & Payroll and then Payroll Summary.
  3. Change the Dates to the last quarter or choose Custom.
  4. Click Refresh.

If you need to create an adjustment, please check out this article for the step-by-step guide: Adjust payroll liabilities in QuickBooks Desktop.

 

Give us a call if you need further assistance with the adjustment. You can use this link to reach out. Also, here's a guide that covers all tasks you can do when using the payroll feature.

 

 

Keep me posted if you still have questions or concerns with payroll. I'm always here to help. Take care and have a good one.

schroder1
Level 3

National Paid Leave setup help: Step 4 Clarification

@Jamar2020, I finished this issue for our company and I believe my setup will work for you. The hours which we logged for National Paid Leave did NOT deduct from PTO. Actually they didn't deduct from anywhere as far as I can tell. I am about to type up our whole setup and post it here. If you want detailed instructions go to that post.

 

Short answer for you: when you set up a new payroll item for COVID-19 leave income (i.e. COVID-19 Employee Sick, COVID-19 Family Sick, COVID-19 Childcare, or COVID-19 Health Premiums or whatever else you wish to name them) be sure the Employee/Family/Childcare items are an Addition type. Health Premiums are a Company Contribution type.

 

The place you enter hours used is in the employee's paycheck details. In the Other Payroll Items section of his paycheck, add the desire leave item such as COVID-19 Employee Sick. Enter their hourly rate (if on salary this must be calculated and still entered as the equivalent hourly rate) and quantity of leave taken. The total COVID-19 leave income should then populate under the Employee Summary section.

 

Notice we never entered any PTO. We just added a specific number of hours for this leave item.

 

The 80 hour cap is partially controlled by the default rate and limit settings for the payroll item you are using. For example, a COVID-19 Employee Sick item would be set to an upper limit of $5110 annually. I think QB will not alert you when 80 hours is reached unless you are paying at the maximum rate (and so reach the maximum dollar amount at exactly 80 hrs), so you will need to track hours manually.

 

To see how many hours have been used run a payroll detail report:

Reports > Employees and Payroll > Payroll Item Detail

Customize the report settings:

Date (include the pay period where COVID-19 leave was used)

Columns: check Qty

Filter: account COVID-19 Expenses (or whatever expense you mapped your leave item to)

You can see the total leave hours used  n the report under Qty for each leave item.

 

 

 

 

schroder1
Level 3

National Paid Leave setup help: Step 4 Clarification

I now have a solution. The below setup worked for me with QB Premier Desktop 2020. I used only the Employee national paid leave item, but I don't see why the Family or Childcare setups would be any different. I did not use or test the Health Premiums setup, but based on how well the Employee one worked I would trust this setup for Health Premiums as well. I also did not use or test the National Paid Leave & Medicare Credit. This strategy created no errors on my payroll liabilities balance report, and it populated our quarterly 941 return correctly, after a little nudging.

 

Short answer: Step 4.6 is CORRECT. Map National Paid Leave Credit (type Other Tax) to Liability: COVID-19 Expenses and Expense: COVID-19 Expenses. You will see a warning about mapping to the same account; click Yes. Steps refer to the Intuit setup article here. This thread originally addressed the article updated on 6/24/20; as of this post it has been updated on about 1/7/21 (it says "two weeks ago"). To my great annoyance the issues discussed in this thread were not addressed in the update. Additionally, these steps are missing a necessary liability account needed for the Health Premium setup. The Health Premium setup (Step 3.5) is wrong; you should map to Liability: COVID-19 Payroll Liabilities (type Other Current Liability) and Expense: COVID-19 Expenses (type Other Expense).

 

Long answer: here are the details for my accounts, payroll items, paycheck, liability payment, and 941 reporting experience.

 

ACCOUNTS

Add two new accounts to your account tree for this setup. You can use whatever name you like, but I will show mine.

1. type Other Expense, COVID-19 Expenses

2. type Other Current Liability, COVID-19 Payroll Liabilities

 

PAYROLL ITEMS

Add up to five new payroll items. Some may have already been added for you by Intuit (the National Paid Leave Credit item was already in my payroll item list, so I was unable to create a new one for it in the Other Tax section). Add new items using the Custom setup, not EZ.

[Item Type / Name / Account Mapping / Tax Tracking / Taxes / Calculate / Limit / Limit Type ]

1. Addition, COVID-19 Employee, COVID-19 Expenses, National Paid Leave Emp, Qty, $5110, Annual restart

2. Addition, COVID-19 Family, COVID-19 Expenses, National Paid Leave Family, Qty, $2000, Annual restart

3. Addition, COVID-19 Child Care, COVID-19 Expenses, National Paid Leave FMLA, Neither, $10000, Once

4. Company Contribution, COVID-19 Health Premium, Liability is COVID-19 Payroll Liabilities; Expense is COVID-19 Expenses, National Paid Leave Health, $10000, Once  (also set the Agency to whoever you pay your premiums to)

[Item Type / Tax / Name / Account Mapping ]

5. Other Tax, National Paid Leave Credit, COVID-19 Tax Credits, Liability is COVID-19 Expenses (yes, liability to the expense) and Expense is also COVID-19 Expenses (so it's circular). Agency is IRS or U.S. treasury or whomever you pay these taxes to.

 

Note where you select which taxes are affected by the addition items, just be sure Social Security Company is UNchecked. At least the following should still be checked: Soc Sec Employee, Medicare Company, Medicare Employee, Federal Unemployment. There are certainly others that should also be checked but these were worth confirming.

 

CREATING A PAYCHECK USING NATIONAL PAID LEAVE

In Other Payroll Items, add the NPL item you want (i.e. COVID-19 Employee). Enter hourly rate (must calculate equivalent rate for salaried folks) and quantity of sick leave used. Income will appear in the Employee Summary section. Ensure the regular earnings are correct as well (if you are correcting an old paycheck for example, you must unlock net pay, add the new leave item, and reduce earnings by an equal amount). Under Company Summary you can see whether Social Security Company was calculated correctly. NPL additions should NOT increase SocSec Company but DO increase SocSec Employee, Medicare Company, and Medicare Employee. If you are concerned about Medicare Company, be aware this will be captured by short-paying your liabilities manually, and it still shows up on your 941 as a nonrefundable credit along with the leave pay itself.

NOTE: If you are using the Health Premium item, you would enter the dollar amount paid in Rate, and "1" for Qty. There is no way (using this setup) to add in the health premium without first having another wage or addition in the same paycheck. Sorry I don't know why that is.

 

CREATE LIABILITY PAYMENT AND DEDUCT NATIONAL PAID LEAVE CREDITS

When paying (or fixing) your liability payment, firstly be sure the payment captures the date of the paycheck in question. Ideally they have the same date.

Create your payment normally, or open your existing liability payment. In the check-view of the payment, go to the bottom table and add new lines for the credits you are using, entered as negative numbers which reduce the total payment. Payroll Item: COVID-19 Tax Credits, Amount: <negative USD>.

 

EXAMPLE PAYCHECK AND LIABILITY PAYMENT

If you paid John $1000 wages and $1000 sick pay because he had Covid-19 for half this paycheck, then his paycheck included $1000 Hourly Wages and $1000 COVID-19 Employee.

The Hourly Wages generate 12.4% social security taxes ($62 Emp + $62 Co) and 2.9% medicare taxes ($14.50 Emp + $14.50 Co).

The COVID-19 Employee leave payment generates 6.2% social security taxes ($62 Emp + $0 Co) and 2.9% medicare taxes ($14.50 Emp + $14.50 Co).

Let's also assume $200 for the employee's federal withholding.

 

Your liability check to the IRS would look like this (not including any other employees, just John's contribution):

Federal Withholding +$200

Social Security Employee +$124

Social Security Company +$62

Medicare Employee +$29

Medicare Company +$29

COVID-19 Tax Credits <$1000> John, COVID-19 Employee leave earnings

COVID-19 Tax Credits <$14.50> John, COVID-19 leave portion of Medicare Company

 

Now in this example the check total is negative, which isn't allowed. How you handle this depends on your situation. I had other employees in the same payroll, so let's just say my total liability payment was $10,000, and reducing it by $1014.50 for John's NPL credits resulted in an EFTPS payment of $8,985.50. If this doesn't work for you I suppose you just retain those credits to use against a future liability payment in the same 941 reporting period, or just declare those on your 941 return and get a refund. There might be another IRS form to get a refund... this is out of my experience and you would need to research this.

Also I didn't demonstrate the health insurance credits because I didn't use them, but it's the same idea.

 

 

FILING THE 941 RETURN

I won't go through the whole return, but I wanted to point out a couple of things.

 

Firstly using National Paid Leave items shows up in two places. The effects on social security are seen in line 5a(i), 5a(ii), etc. You will see the rate for 5a is (0.124) and only (0.062) in (i) and (ii). This reduces social security owed and accounts for the company exemption from social security. The effects on medicare are less obvious because it comes from Worksheet 1. Ultimately they are included in line 11b, carried down to line 11d, and subtracted from your taxes in line 12. This is also the route where the leave pay itself is accounted for.

 

Secondly, you may or may not see all these boxes populate automatically on your first try. I don't know why, but QB needs a nudge here, and users have experienced different problems with, of course, different solutions. For me, line 5a(i) didn't populate... but, oddly, line 11b did. Whatever your problem, the solution is to "reset" QB's attention to these items.

 

Methods include:

a. Creating a new "dummy" paycheck to pay out a COVID-19 Addition item. You can delete the paycheck later.

b. Delete and re-create your actual paychecks which use any COVID-19 items. Usually Intuit staff recommend this, and it's invariably followed by users balking at how difficult or cumbersome it is. However, it has worked for some, including me.

c. Delete and re-create the relevant payroll items, including the tax credit item (from the payroll item list -- the item itself -- not the appearance of the item on a particular paycheck). If you do this I would then ALSO re-create the paychecks which used those items to be sure everything is calculated correctly.

 

Whatever method you choose, I highly recommend taking screenshots or otherwise recording the original paycheck information before you start tinkering.

One of these methods should trigger QB to pay attention, and when you generate the 941 again the boxes should populate properly (barring any errors in your actual setup or payroll).

 

NOTE that Worksheet 1 is used by QB and it will appear towards the end of the interview process where you generate your 941. I saw some users still wished to manually override figures (I'd rather find the problem and fix it) and had to override them in Worksheet 1 in order to fix figures appearing on the 941 itself.

 

 

Hope that helps. Godspeed.

 

 

Please note I am not a tax or accounting professional and this advice reflects only my personal experience. I was guided by our professional accountant and verified all our 941 figures with him prior to filing. That beings said, this has worked for me, and I pray it can guide you as well.

View solution in original post

convert to online
Level 1

National Paid Leave setup help: Step 4 Clarification

hello...I need to pay payroll today...can anyone tell me how to use the National Paid Leave crecit?!?  I wish someone could call me and walk me through it.  I am so close [phone number removed]

Thank you,

Gail

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