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Intuit

Rounded numbers cause discrepancies in tax calculations

Overview

Rounded numbers can cause discrepancies in some tax calculations.

The QuickBooks Desktop annualized tax calculation feature (self-adjusting or autocorrecting) adjusts the year-to-date (YTD) amounts for the flat-rate payroll taxes in a current tax table. It affects only Social Security and Medicare (FICA), federal unemployment (or FUTA), state unemployment insurance (SUI), and some state disability insurance (SDI) taxes.

This feature adjusts small rounding discrepancies and helps fix errors caused by any of the following:

  • Incorrect setup of YTD transactions
  • Paychecks that were incorrectly edited manually
  • SUI rate change

Assumptions

You have an active QuickBooks payroll subscription.

Details

When you create or edit a paycheck, QuickBooks Desktop calculates the correct total amount of the tax based on the taxable wage base for this paycheck and all other recorded payroll transactions for the employee for the same year. It subtracts the actual tax shown on the other payroll transactions. If the result is greater than 0, QuickBooks Desktop enters that amount of the tax on the current paycheck. This process ensures that the total tax for the year is correct.

Note: This feature cannot be turned off.

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