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Frequent Contributor *

941 Overpayment Correction

I overpaid 941 taxes (taxes were paid and then paychecks made in error were deleted).  I use QuickBooks Online and we use a separate system for payroll and after paychecks are created I manually enter the paycheck info into QB and it is matched once it clears the bank.  I put gross wages, then I deduct the employee taxes payable as liabilities between federal and state.  Every month when I pay the 941 deposit, these liabilities zero out.  We did receive a refund, but I have no idea how to account for it or handle it.  The liabilities category of employee taxes payable is way off because we over paid and there are no wages to support it.  Furthermore, I am certain the refund doesn't just get categorized into the refund category.  Can someone please help?!

Solved
Best answer 12-07-2018

Accepted Solutions
QuickBooks Team

Re: 941 Overpayment Correction

Hi there, @AllisonE.

 

Glad you've reached out to us. I'm here to help and provide some insights on how to correct the 941 over payment. 

 

In order to zero out the liabilities category of your employee, you'll need to process bank deposit to reflect the refund amount you received in QuickBooks Online. 

 

Here's how:

  1. Select Plus Icon (+) at the top, and click Bank Deposit
  2. In the Add other funds to this  deposit section, fill in the following fields:
      • Received from: Select or enter the vendor name.
      • Account: Select the Accounts Payable account. (Use the account you used for 941 payment)
      • Amount: Enter the check amount. 
  3. Select Save and Close.

For additional reference you can check this article: How to Record Bank Deposits in QuickBooks Online.

 

By doing this, I'd suggest consulting an accountant if you're not familiar with the process and to ensure your books are accurate.

 

You're always welcome to drop by in QuickBooks Community if you have any other concerns about 941. Wishing you and your business continued success. 

3 Comments
QuickBooks Team

Re: 941 Overpayment Correction

Hi there, @AllisonE.

 

Glad you've reached out to us. I'm here to help and provide some insights on how to correct the 941 over payment. 

 

In order to zero out the liabilities category of your employee, you'll need to process bank deposit to reflect the refund amount you received in QuickBooks Online. 

 

Here's how:

  1. Select Plus Icon (+) at the top, and click Bank Deposit
  2. In the Add other funds to this  deposit section, fill in the following fields:
      • Received from: Select or enter the vendor name.
      • Account: Select the Accounts Payable account. (Use the account you used for 941 payment)
      • Amount: Enter the check amount. 
  3. Select Save and Close.

For additional reference you can check this article: How to Record Bank Deposits in QuickBooks Online.

 

By doing this, I'd suggest consulting an accountant if you're not familiar with the process and to ensure your books are accurate.

 

You're always welcome to drop by in QuickBooks Community if you have any other concerns about 941. Wishing you and your business continued success. 

Frequent Contributor *

Re: 941 Overpayment Correction

Thank you very much.  My next question then would be how to handle tax liabilities from the prior year (before we started using QB Online)?  We have a couple tax liabilities that were paid after we started using QB, but they are for the prior year so there is no liability to offset the payment.  Would I just use a journal entry for that? 

Moderator

Re: 941 Overpayment Correction

Hi AllisonE,

 

Creating journal entries is the best way to record payroll transactions when you're using a third-party payroll service. Let me share with you an article how to handle it: Record Payroll Transactions Manually.

 

Please note that if you've already reconciled your bank account for this period, the journal entries you'll going to create will create adjustments. The good thing is that I have here a reference how to manage it: Fix Reconciliation Discrepancies.

 

We're here to help if you need anything else. 

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