FUTA

@Mw72  There is no need to repay the employee regardless.

Federal Unemployment is not a tax that is held out of the employee's paycheck. It will never affect the amount of the paycheck.

It is a company contribution tax, no different than State Unemployment or the company share of Social Security or Medicare.

The only impact it'll have on your books is making your balance sheet and such incorrect. That is as easy to fix as creating a payroll liability adjustment. This function can be found under the Employee menu, Payroll Taxes & Liabilities submenu.

Correcting your Federal Unemployment (FUTA) tax is my top priority, Mw72. Let's address this issue promptly.

To begin with, let's correct the payroll information for the employee and remove the FUTA taxes by following these steps:

1. Navigate Employees and select Payroll Center.
2. Locate the employee's name and click the Edit icon.
3. Click the Payroll Info tab and select Taxes.
4. Uncheck the box next to Federal Unemployment (FUTA) (Company Paid) and click OK.

Next, we'll generate a negative liability adjustment to offset the FUTA tax liability. Here's how:

1. Click on Employees, and then select Payroll Taxes and Liabilities. 
2. Choose Adjust Payroll Liabilities.
3. In the Date and Effective Date, select the date of the last paycheck for the affected month or quarter.
4. Click the Payroll Item column to choose the correct payroll item in the Taxes and Liabilities section.
5. Under the Adjustment is for section, check the box for Company.
6. Select Federal Unemployment in the Item Name column.
7. Enter the negative amount of the adjustment.
8. Click on Accounts Affected and choose Do not affect accounts.
9. If you have additional employees, click Next Adjustment and repeat the steps for each affected employee. 

FUTA taxes are paid by employers based on the wages they pay their employees and will not affect the amount of the employee's paycheck. For more information on FUTA tax, please refer to the article: Understand Federal Unemployment Tax Act (FUTA) Credit Reduction States.

Additionally, here are helpful resources when preparing your tax forms:

• Year-end Checklist for QuickBooks Desktop Payroll
• Payroll Tax Compliance Links

If you need more help correcting your FUTA taxes in QBDT or preparing your tax forms, please don't hesitate to contact us. We're always here and ready to assist you.

Once I correct this in the tax adjustment, will this take away the payment liabilities for Federal Unemployment that say it is due next month? 

Once I fix the Tax Liability adjustments will this also take away the Federal Unemployment notification that is due next month? 

RheaMaeH,

Unfortunately, this is impossible to generate a negative liability adjustment to offset the FUTA tax liability. Once followed five first steps and you arrive to step #6 (Select Federal Unemployment in the Item Name column.) a warning from QB shows up: "You cannot adjust tax liabilities for taxes handled by the Intuit Payroll Service."

@GW93401  If you are actually paying someone at Intuit's Payroll Service to handle your payroll and payroll tax processing for you, the next step would be to advise them of the problem and have them earn their feed.

If you handle your payroll and payroll taxes yourself using QB and it's still throwing that message, something's gone off the rail with your program.

I appreciate you following the steps first provided by my colleague above, GW93401. This warning will prompt if you're opting to override the amount calculated by the system. However, if there's a need to update the payroll tax amount, you will need to reach out to our Support team. Allow me provide an easy to follow steps to get connected with our live support.  

Here's how to contact our QBDT Payroll Support team:

1. Go to Help, then QuickBooks Desktop Help.
2. Select Contact Us.
3. Please give a brief description of your issue, then Continue.
4. Sign in to your Intuit account, select Continue, and then Continue with my account.
5. You'll receive a single-use code in your email; enter the code and select Continue.
6. Select Have us call you.

In 2025, FUTA taxes will continue to play a crucial role in employer contributions based on employee wages. To gain a better understanding of how these taxes function, including rates and payment responsibilities, I encourage you to check out our blog: What is FUTA tax? Rates, who pays, and how to calculate in 2025.

Additionally, you can run the Payroll Summary report in QBDT, which can provide you with a comprehensive overview of employee wages, taxes, and contributions.

Please let me know if you have any further questions regarding FUTA taxes in QBDT or need assistance with preparing your tax forms. Our team is always ready to assist you.

So we are not able to generate a negative amount to offset the liability amount? In error i forgot to uncheck the FUTA box when adding an employee so it applied a FUTA tax which has not been paid yet. also in the dates entered if making the adjustment should they both be the same? 

Hi there, JFarias. Yes, you can create a negative amount to offset the incorrect liability amount that was applied to your employee.

Before we proceed, since you mentioned that FUTA was incorrectly applied, please uncheck it from the employee's profile so the system won't calculate it in the future.

Once done, follow these steps to adjust your payroll liability:

1. Open the Employees menu and select Payroll Taxes and Liabilities.
2. Click Adjust Payroll Liabilities.
3. In the Liability Adjustment window, set Date and Effective Date to the last paycheck date of the affected month or quarter.
4. In the Adjustment for section, select Employee and choose the employee's name from the dropdown.
5. Once done, select the payroll item to adjust from the Item Name column.
6. Then, enter the negative adjustment amount.
7. Click Accounts Affected and then OK.
   • Select Do not affect accounts to leave liability and expense account balances unchanged.
   • Select Affect liability and expense accounts to update those accounts.
8. Click OK to close the Affect Accounts window.
9. Choose Next Adjustment to adjust another employee or OK to save and exit.

For reference, please read this article: Adjust payroll liabilities in QuickBooks Desktop Payroll.

On the other hand, if you’re using the Payroll Assisted service, manual adjustments can't be made. In that case, please contact our live support team for assistance.

If you have other concerns, feel free to comment them below.

Hi there! I have received 2 different ways to process the adjustment. Can we verify which is accurate please? 

1. In the Adjustment for section, select Employee and choose the employee's name from the dropdown.

A previous QB team member in this thread stated to check off Company vs Employee

1. Click Accounts Affected and then OK.
   • Select Do not affect accounts to leave liability and expense account balances unchanged.
   • Select Affect liability and expense accounts to update those accounts.

A previous QB team member in this thread stated click on Accounts Affected and choose Do not affect Accounts

Thank you for your help!

The adjustment choice depends on whether you need to fix individual employee records or just the company's overall ledger, jfarias123.

Creating an Employee adjustment allows you to associate the correction to a particular employee. Meaning, it can either increase or decrease an amount in the employee's YTD. If you're only adjusting the total liability balance owed by the company, choose Company.

When it comes to the Accounts Affected section, choose Do not affect accounts if you want it to increase or decrease the amount in the Pay Liabilities section. Meaning, it does not change any balances in your general ledger (payroll expense and payroll liability accounts), bank register, or any financial reports.

For example, you're making the adjustment to change an amount in your payroll records, but your financial accounts are already correct.

On the other hand, the Affect liability and expense accounts option updates the balances of both the payroll liability account on your Balance Sheet and the corresponding payroll expense account on your Profit and Loss report.

You can specifically use this option if you over or underpaid a payroll tax. You can also use this if there's a calculation error that needs to be reflected in your company's financial statements. This will ensure your payroll reports and financial records are in sync.

Check out this article for reference about this: Adjust payroll liabilities in QuickBooks Desktop Payroll.

Don't hesitate to always ask for help if you need anything else.

I did not pay any of the Federal unemployment tax. that is due at the end of the month. I guess i thought once the negative adjustment is applied, the liability that shows to be paid would be removed and amount would be removed from other accounts. 

i attached the liability due. 

How do i know if other accounts are affected? Should i just choose that option Affect liability and expense accounts if I am not sure. 

Also, what about the selecting Company vs Employee;  conflicting responses there as well. 

Thank you for your help! 

You're correct that the adjustment will remove the amount due in QuickBooks, jfarias123.

The choice between the two adjustment options depends on whether a record of the payment has already been made in your books.

Since the FUTA tax has not been paid yet, you'll want to choose Affect liability and expense accounts. This will not only remove the amount due but also correctly offset the entry in your payroll expense and liability accounts.

You can also run a Payroll Transaction Detail report to check if the other accounts are affected. Here's how:

1. Go to the Reports menu, look for Employees and Payroll, and then click Payroll Transaction Detail.
2. Click Customize, then type Account in the Columns field.
3. Check on it and click OK.
4. Change the date in the Dates field if necessary.

Run the report and examine the transaction to see how your expense and liability accounts were affected. 

When it comes to the type of adjustment, an employee adjustment is used to correct an error on a specific employee's record. The changes you make here will directly affect that employee's year-to-date (YTD) totals for wages, taxes, and deductions. Aside from that, it will also affect how the amounts are reported in your tax forms. 

On the other hand, a company adjustment is used to correct an error on a company-wide level without impacting any individual employee's YTD totals. It only affects the company's total payroll liability and expense accounts.

In this case, you can choose Employee to completely zero out the FUTA amount in the Pay Liabilities tab and in your unemployment forms. However, I'd recommend reaching out to an accountant for additional advice if you're not sure what to choose. 

Don't hesitate to reply to us again if you still have follow-up questions about this.

Thank you. So would you recommend using company vs employee since it doesn't withdraw from employee's paycheck?