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Intuit
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Create a zero net paycheck

Learn how a zero net paycheck in QuickBooks Desktop, Intuit Online and QuickBooks Online payroll.

There are three reasons you might want to create a paycheck that has a net pay amount of zero.

  • Put an entire paycheck into a retirement plan.
  • Designate an entire paycheck for income tax.
  • Record a gift made to an employee. Such as cash or a gift card.

We'll show you how to create the net zero paycheck for Intuit payroll products.

Put an entire paycheck toward retirement

If an employee wants to withhold an entire paycheck and put it toward retirement follow these steps.

If there are enough wages to cover the full Retirement Contribution:

  1. Setup a 401(K) Retirement plan deduction item if they do not already have one.
  2. Go to Employees then select Pay Employees. Choose Unscheduled Payroll.
  3. Choose an employee then select Paycheck Details.
  4. Enter the Earnings Item as the amount of wages the employee has made.
  5. In the Other Earnings section enter the Retirement Item.NOTE: You will need to adjust these items amount until the amount of the Net is $0.00
  6. Select Save & Close then Create Paychecks. Select Send Payroll Data (if applicable).

If there are NOT enough wages to cover the full Retirement Contribution, and the employee is contributing the amount with personal/outside money.

  1. Setup a 401(K) Retirement plan OFFSET deduction item.NOTE: Name this something like 401(k) Offset, use the Tax Tracking Type of NONE.
  2. Go to Employees then select Pay Employees. Choose Unscheduled Payroll.
  3. Choose an employee then select Paycheck Details.
  4. In the Other Earnings section enter the Retirement Item and the amount they are contributing.
  5. In the Other Earnings section enter the Retirement OFFSET Item as a POSITIVE amount.NOTE: You might be prompted with the message "Deductions are normally entered as a negative number, are you sure you want to have a positive number?" Select Yes.
  6. Select Save & Close then select Create PaychecksSelect Send Payroll Data (if applicable).
  1. Add an Other Earning pay type to the employee's profile.
    • Set the amount to 0 or leave the $ field blank.
    • Rename it as Taxable offset. Or create your own name.
  2. Setup a 401(K) Retirement plan deductions. Set the deduction amount to zero.
  3. Use the Net to gross formula to determine the gross pay amount.
  4. Select Workers followed by Employees.  Then select Run payroll.
  5. Choose an employee and pay schedule.
  6. Enter 1 in the Taxable offset box. Then select Preview payroll.
  7. Select the edit (pencil) icon beside the Net pay amount.
  8. In the Taxable offset box, enter the amount determined by using the net to gross formula. Make sure that the other pay types are 0.
  9. In the Employee taxes section, zero out Federal Income Tax and State Income Tax. (Optional).
  10. In the Employee deductions section, enter the 401(k) amount.
  11. Select OK. Then select Submit payroll.
  1. Add an Other Earning pay type to the employee's profile.
    • Set the amount to 0. Or leave the $ field blank.
    • Rename it as Taxable offset. Or create your own name.
  2. Set up a 401(K) Retirement plan deductions. Set the deduction amount  to 0.
  3. Use the Net to gross formula to determine the gross pay amount.
  4. In the Payday tab:
    • Select a pay schedule. And an employee.
    • Enter 1 in the Taxable offset box. Then select Create Paychecks.
    • In the Approve Paychecks page, select View/Edit.
    • In the Taxable offset box, enter the amount determined by using the net to gross formula. Make sure that the other pay types are 0.
    • Enter the gross amount determined by using the net to gross formula in the Taxable offset field.
    • Zero out federal and state income taxes. (Optional)
    • Select Add deduction. Then select the  401(k) deduction you set up.
    • Enter the desired 401(k) amount in the 401(k) box. Then select Save.
    • Select Approve Paychecks.

Put an entire paycheck toward income tax

If an employee wants to withhold an entire paycheck and put it toward income tax.

If there are enough wages to cover the full Income Tax Amount:

  1. Go to Employees then select Pay Employees. Choose Unscheduled Payroll.
  2. Enter the Earnings Item as the amount of wages and the necessary wage item the employee has made.
  3. In the Employee Summary section adjust the Federal or State Income tax until the Net is $0.00
  4. Select Save & Close then Create Paychecks.

If there are NOT enough wages to cover the full Income Tax Amount:

  1. Create a Tax Offset Addition Item with a Tax Tracking Type of NONE.NOTE: Name this something like SIT Offset.
  2. Go to Employees then select Pay Employees. Choose Unscheduled Payroll.
  3. In the Employee Summary section adjust the Federal or State Income tax to be what they are inputting into the applicable tax.
  4. In the Other Earnings section enter the Tax Offset item and adjust the amount until the Net is $0.00
  5. Select Save & Close then Create Paychecks.

QuickBooks Desktop Payroll - AssistedSee Correct an employee record and repay over or under collected employee paid taxes.

  1. Add an Other Earning pay type to the employee's profile.
  2. Use the Net to gross formula to determine the gross pay amount.
  3. Select Workers followed by Employees.  Then select Run payroll.
  4. Choose an employee and pay schedule.
  5. In the Other earning box, enter the amount determined by using the net to gross formula.
  6. Select Preview payroll.
  7. Select the edit (pencil) icon beside the Net pay amount.
  8. Zero out all unwanted deductions
  9. Edit the Federal Income tax or State Income tax amount. Then select OK.
    • Enter the sum of the current Net pay amount, and the federal or state income tax amount.
  10. Select Preview Payroll. Then select Submit payroll.
  1. Add an Other Earning pay type to the employee's profile.
  2. Use the Net to gross formula to determine the gross pay amount.
  3. In the Payday tab:
    1. Select a pay schedule, and the employee.
    2. Enter the gross amount determined by the using net to gross formula in the Other earnings box.
    3. In the Other earnings box, enter an amount determined by using the net to gross formula.
    4. Select Create Paychecks.
    5. Select View/Edit. Then select Edit.
    6. Edit the Federal Income tax or State Income tax amount. Then select Save.
      • Enter the sum of the current Net Pay amount. And the federal or state income tax amount.
    7. Select Approve Paychecks.

Record a gift made to an employee

Since the employee already received the gift, you don't want to increase the net pay of the check. You'll be using what's called an "in and out" method. The "in" will be adding the gift as regular wages so it can be properly taxed. And the "out" will be pulling the gift back out of the check since it was already paid.

If the customer wants this to show on ONLY Boxes 1, 3, 5 on the W-2.

  1. Create a Gift Card Offset item as a Deduction item with the Tax Tracking Type as None.NOTE: Name this something like Gift Card Offset.
  2. Create an Addition Gift Card item with Tax Tracking Type as Compensation.NOTE: Name this something like Gift Card Pay
  3. Go to Employees then select Pay Employees. Choose Unscheduled Payroll.
  4. In the Other Earnings section enter the Gift Card Addition Item as the amount the employee received with the gift card
  5. In the Other Earnings section enter the Gift Card Offset Deduction Item and enter the current net amount.
  6. Select Save & Close then select Create Paychecks. Select Send Payroll data (if applicable).

If the customer wants this to show on Boxes 1, 3, 5 AND Box 14 on the W-2

  1. Create a Gift Card Offset item as a Deduction item with the Tax Tracking Type as None.NOTE: Name this something like Gift Card Offset.
  2. Create a Gift Card item as an Addition item with the Tax Tracking Type as Fringe Benefit.NOTE: Name this something like Gift Card Pay.
  3. Go to Employees then select Pay Employees. Choose Unscheduled Payroll.
  4. In the Other Earnings Section enter the Gift Card Addition Item as the amount the Employee received with the gift card
  5. In the Other Earnings Section enter the Gift Card Offset Deduction Item and enter the current net amount.
  6. Select Save & Close then select Create Paychecks. Select Send Payroll data (if applicable).Note: Use the salary item to gross up the wages, then replace the salary item with Gift card pay, that will give you the exact amount to enter.
  1. Set up an after-tax deduction for the "out" portion and an Other Earning pay type for the "in" portion. Set the after-tax deduction amount as 0. Leave the other earning amount blank.
  2. Select Workers followed by Employees.  Then select Run payroll.
  3. In the Other earning box, enter the amount employee received.
  4. Select the edit (pencil) icon beside the Net pay amount.
  5. In the Employee deductions section, enter the same amount as the current net pay in the other after-tax box.
  6. Select Preview Payroll. Then select Submit payroll.
  1. Set up an after-tax deduction for the "out" portion and an Other Earning pay type for the "in" portion
    • Set the after-tax deduction amount as 0 and leave the other earning amount blank.
  2. In the Payday tab:
    • Select a pay schedule and the employee.
    • In the Other earning box, enter the amount employee received.
    • Select Create Paychecks.
    • Select View/Edit. Then select Edit.
    • Select Add deduction. Then select the after-tax deduction you set up.
    • In the deduction box, enter the same amount as the current net pay. Then select Save.
    • Select Approve Paychecks

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