Fix overdue or red scheduled liabilities in QuickBooks Desktop

Create a Payroll Liability Balance Report to view any unpaid liabilities. If you have unpaid liabilities, create a liability payment in QuickBooks Desktop.

• Enter the payment in Pay Scheduled Liabilities or
• Enter the payment using the Enter Prior Payments option in the YTD Adjustment window:
  1. Go to the Help menu, then About QuickBooks. 
  2. Press Ctrl+Alt+Y on your keyboard.
  3. Select Next until you reach the Enter prior payments section.
  4. In the Enter Prior Payments window, select Create Payment to enter all prior payroll tax and non-tax payroll liability payments you have made during the current or previous years.
  5. Under Item Name, select the ▼ dropdown and select the item you need to create a prior payment for.
  6. Verify the dates and update as necessary.
     • Select Next Payment to enter another prior payment.
  7. Select Done, then Finish.

To determine whether a liability was paid with Write Checks or Bill Payment:

1. Select Vendors, then Vendor Center.
2. Select the vendor's name.
3. In the Type column, ensure all are listed as Liability Check.
4. If there is a Check, double-click to view the transaction.
5. Verify that this transaction was created to pay payroll liabilities.

If a liability was paid through the Write Checks screen or Bill Payments:

1. Back up the Company file.
2. Go to Write Checks or Bill Payment and use the Previous and Next keys to locate the payment. Note the amount paid and the expense account used.
   
3. In the Payroll Center, go to the Pay Liabilities tab. And select the overdue liability that was paid through Write Checks.
4. Select View/Pay.
5. Select the Expense tab.
6. In the Account column, select the ▼ dropdown, then select the account used in Write checks. In the Amount field, enter a negative amount equal to the amount of the liability check.
   
   (Note: If the liability shown as being owed was only partially paid through Write Checks, enter the actual amount paid through Write Checks as a negative instead of the whole amount shown as being owed.)
7. Select Recalculate to zero the check amount.
8. Clear the To be printed box.
9. If the check number field populates, remove the check number.
10. Date the transaction to be the same date as the payment that was already entered into the QuickBooks Desktop bank register.
11. Select Save & Close.

To eliminate this from happening the next time:

QuickBooks Desktop payroll works best when all payroll activity is performed from within the payroll menus. This includes paying accrued payroll taxes to the respective taxing authorities. If you write checks or use the Enter/Pay Bills functionality to pay for the liabilities and the QuickBooks-created Payroll Liabilities account was assigned, the following warning message appears:

The message warns but does not prevent you from using the wrong type of payment (i.e., Write Checks or Enter/Pay Bills) when attempting to make payroll liability payments. When you select the Pay Payroll Liabilities button in the warning message, you will be directed to the Select Date Range for Liabilities dialog. The message directs you to the Pay Payroll Liabilities feature to create a payroll liability check.

Here's what to do if the liabilities were overpaid in one period and underpaid in a previous period.

1. Go to Employees, then Payroll Center.
2. Select the Transactions tab.
3. Select Liability Checks .
4. Double-click on the liability check that was underpaid to compensate for the overpayment in the prior period.
5. Edit the liability period to cover both periods (the period that the item was overpaid and the period it was underpaid).
6. Select Save & Close.
7. Double-click on the liability check that had the overpayment.
8. Edit the liability period to cover both periods (the period that the item was overpaid and the period it was underpaid).
9. Select Save & Close.

If the paid through date on the liability check is after the check date:

1. Go to Employees, then Payroll Center.
2. Select the Transactions tab.
3. Select Liability Checks.
4. Double-click on the liability check for the period that is appearing in the Scheduled Liabilities window.
5. Edit the check date so it is on or after the paid through date.

If the Period dates cross from one year to the next, you may also need to edit the paid through dates to be within the year the paychecks are dated.

• If there are paychecks dated in only the previous year, change the paid through date to reflect the previous year.
• If there are paychecks dated in the next year, change the paid through date to reflect the next year.
• If there are paychecks dated in each year, change the paid through date to reflect the next year.