In QuickBooks Desktop Payroll, you can correct year-to-date (YTD) additions or deductions on a paycheck when:
- payroll item with the wrong tax tracking type was used.
- payroll item used has the correct tax tracking type but the customer changed the checkmarks in the tax items screen, causing tax and wage base calculation error.
You can apply the correction on the next paycheck (within the same year) provided the paycheck is for wages.
If you started using QuickBooks Payroll in the current year and entered payroll data from the time before your service started into QuickBooks, you must compare the QuickBooks Payroll Summary report (by quarter) to the filed 941 forms.
- If the Payroll Summary report does not match the 941 forms previously filed, do not follow the steps in the Details section. For those quarters, you must complete a liability adjustment per quarter so the historical data in QuickBooks matches the previously filed 941 forms. If you are an Assisted Payroll customer, contact Intuit at 888.712.9702 to complete these corrections.
- If the 941 forms match the Payroll Summary report, follow the steps below.
This process will only work on additions or deductions and not with company contributions. If you need to correct company contributions, see Adjust payroll liabilities for the steps.
To correct YTD additions or deductions on a paycheck when a payroll item with the wrong tax tracking type was used:
There must be enough wages on the paycheck to cover the correction. You cannot correct an amount that is more than the employee earned (adjusted gross wages). For example, you have an incorrect 125 Plan and the amount for the 125 Plan is $1000.00. If the employee's next check is $800.00, there aren't enough wages earned to move so you must correct the 125 Plan in increments, not to exceed adjusted gross wages for the pay period.
- Create a payroll summary report for the current calendar year to determine the amount of money deducted using the old payroll item. Write down the amount or print the report because you will need this information later.
- Create a new payroll item with the correct Tax Tracking Type.
- The old payroll item will still show on your Payroll Item List. Since you can't fully remove it from the list, you can edit the item name as "not in use" or make up your own description.
- In the employee profile, set up the new payroll item with the correct (addition/deduction) amount for future payrolls. Remove the old payroll item.
- Create a paycheck for the affected employee as part of the next payroll in the current year.
- If the employee is not due another paycheck, and if the item is a tax, deduction or company contribution, make a liability adjustment instead.
- In the Preview Paycheck window, under Other Payroll Items, the current deduction/addition amount shows on the paycheck. Select below all items listed under Other Payroll Items.
- Choose the old payroll item from the drop-down list.
- Enter the amount from the YTD Payroll Summary Report as a positive or negative number.
- To zero out a deduction, it would be a positive number. If the negative symbol comes back, highlight the negative symbol and delete the negative sign.) 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.
- To zero out addition, it would be a negative number. Use the negative symbol in front of the amount. You might be prompted with the message "Additions are normally entered as a positive number, are you sure you want to have a negative number?" Select Yes.
- Verify that the YTD amount for the old payroll item on the preview paycheck in the Employee Summary, YTD column is zero.
- Select the Other Payroll Items drop-down arrow and select the new payroll item. Enter the same amount used for the old payroll item in the Payroll Summary report as a negative for a deduction or a positive number for an addition. (If you do not want to move the amount to another item, skip this step.)
- Create the rest of your payroll, but do not send it before completing the next step.
- Create a new payroll summary report to verify that the amount of the old/incorrect payroll item is now $0.00 and the correct amount has been moved to the new/correctly setup payroll item. The new item should also include current paycheck amounts.
- Print your employee paychecks or send your payroll data to Intuit.