Learn how QuickBooks calculates taxes to understand the tax amounts reported on an employee's paycheck or the year-to-date (YTD) payroll report.
|QuickBooks Calculation Method||What you may see|
|QuickBoooks uses the more accurate percentage method and tax tables that are annualized (rather than weekly, biweekly, or monthly).|
It also calculates your payroll taxes on year-to-date amount instead of per transaction.
QuickBooks may enter correcting adjustment amounts on the next paycheck if the employee was under or over collected on flat-rate taxes.
You may notice differences between calculations by QuickBooks and printed wage bracket taxes from agency publications. Both methods are correct and acceptable to the agency.
See IRS Pub 15 for FIT Withholding tables.
For the State Withholding calculation table, check your State Agency's calculation method.
|The tax table:|
Non-retroactive tax rate changes aren't adjusted.
It also determines the rates and wage limits for Federal, State, and rate-defined local taxes.
QuickBooks stops collecting tax amounts when employee reaches the wage base limit for that tax item.
Additional Medicare starts calculating on paycheck, only after the employee has reached $200,000 in wages for the current year.
Employee who has reached wage base limit will show amount of &0.00 on paycheck for that tax item.
Example: FUTA wage base limit is 7,000/year. Employee wages in excess of 7,000 will show $0.00 amount for FUTA on paycheck.