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BUSHARCH
Level 2

I revised the current Tx UI rate, but now it is not calculating properly on the current payroll checks. Thresholds have been met

 
Solved
Best answer August 16, 2021

Best Answers
BigRedConsulting
Community Champion

I revised the current Tx UI rate, but now it is not calculating properly on the current payroll checks. Thresholds have been met

@BUSHARCH 

It sounds like you increased the tax rate for a period where you already have payroll checks.  If you do this, then the presumed additional tax due will calculate on current checks, even if they're not in those prior periods.

 

You mention that the employees all met the threshold for wages. However, if you increase the tax rate for prior periods when the employees were paid, then this means the didn't yet meat the resulting max tax.

 

The max tax is for TX calculated on a quarterly basis, depending on the tax rate for that quarter and the earnings in that quarter.

 

A simple example:

- Tax rate is 5% in Q1. Employee earns $10k in Q1: Max tax is $9,000 * 5% = $450, which is calculated on the first $9000 of pay and recorded on the paychecks.

- After Q1 is over, you change the tax rate for Q1 to 5.5%. Max tax becomes $9,000 * 5% = $495.

- Tax is now out of balance. On the next paycheck (even though it is now Q3, let's say) an additional $45 will be calculated on the next paycheck to "catch up".

 

If the tax rate for Q1 really was 5.5% all along, then the only way to avoid the $45 being added to the paychecks in Q3 is to enter a Payroll Liability adjustment, one per employee, likely dated in Q1. The adjustment should adjust only the tax amount accrued and not wages.

 

If the tax rate actually changed for Q3, then to avoid this additional tax, don't change the tax rate for Q1. Using this example, the payroll item should look like this when you review it:

 

Capture.JPG

 

When changed in this way, if the employee's max wage, $9,000 for this tax, was met before Q3, at the 5% rate, then no additional tax will be calculated after changing the rate.

 

There will still be additional tax calculated if the employee hadn't hit the max wage until some time in Q3 of after.

View solution in original post

7 Comments 7
BigRedConsulting
Community Champion

I revised the current Tx UI rate, but now it is not calculating properly on the current payroll checks. Thresholds have been met

When you change the rate, QuickBooks will seek to balance the tax for the period of the rate change.

 

So, if you changed it starting 7/1 and you have payroll checks after that date, then on your next paycheck for each employee QuickBooks will catch up so the wages since 7/1 * the new rate will be in balance.

 

As a result the tax will be either more than or less than what it would normally be using the new rate.

 

Then on the next payroll checks, since the tax is now in balance, it'll match the new rate.

BUSHARCH
Level 2

I revised the current Tx UI rate, but now it is not calculating properly on the current payroll checks. Thresholds have been met

All of my employees have already met their threshold of $9,000. Quickbooks is continuing to calculate it out?

I'm having to go in and do a liability adjustment and take the charge off.

BUSHARCH
Level 2

I revised the current Tx UI rate, but now it is not calculating properly on the current payroll checks. Thresholds have been met

All of my employees have met their threshold. QB'S is still calculating payments out. So,  it is showing on my C3 a huge amount due? Do I go in and just take the charges off with a liability adjustment?

RenjolynC
QuickBooks Team

I revised the current Tx UI rate, but now it is not calculating properly on the current payroll checks. Thresholds have been met

Thanks for getting back here, BUSHARCH.

 

I'd like to share some information regarding the calculation.

 

If you see an incorrect amount calculated for state unemployment insurance (SUI) on your employee's paycheck, this might be due to an incorrect employee state tax setup or payroll item setup.

 

Before you do anything, please make sure to update your QuickBooks Desktop to the latest release and tax table.

 

Then, verify the following information:

 

  • Employee's state taxes
  • State unemployment rate
  • Employee's unemployment wage base
  • Payroll item setup

The instructions on how you can verify the information is included in this article: Troubleshoot incorrect state unemployment (SUI) or withholding (SIT) on paychecks.

 

If you have tried all the recommended steps but still have an incorrect calculation, we can do the Verify and Rebuild Data. This helps resolve any data integrity issue.

 

Please let me know how you get on after trying out the steps. I want to make sure this is resolved for you. Feel free to leave a reply to this post and I'll get back to you as soon as I can. Have a good day ahead.

BUSHARCH
Level 2

I revised the current Tx UI rate, but now it is not calculating properly on the current payroll checks. Thresholds have been met

Thank you for the reply. I already did that remotely with a Quickbooks Rep.

Just wandering if anyone else is having this problem. He told me I would need to go in and do adjustments.

This just doesn't seem right. It calculated the back amount that was Due after the rate change. But going forward starting July 1- It is showing a charge for all  employees-(all have met their threshold)

I guess on Monday I will call again. 

BigRedConsulting
Community Champion

I revised the current Tx UI rate, but now it is not calculating properly on the current payroll checks. Thresholds have been met

@BUSHARCH 

It sounds like you increased the tax rate for a period where you already have payroll checks.  If you do this, then the presumed additional tax due will calculate on current checks, even if they're not in those prior periods.

 

You mention that the employees all met the threshold for wages. However, if you increase the tax rate for prior periods when the employees were paid, then this means the didn't yet meat the resulting max tax.

 

The max tax is for TX calculated on a quarterly basis, depending on the tax rate for that quarter and the earnings in that quarter.

 

A simple example:

- Tax rate is 5% in Q1. Employee earns $10k in Q1: Max tax is $9,000 * 5% = $450, which is calculated on the first $9000 of pay and recorded on the paychecks.

- After Q1 is over, you change the tax rate for Q1 to 5.5%. Max tax becomes $9,000 * 5% = $495.

- Tax is now out of balance. On the next paycheck (even though it is now Q3, let's say) an additional $45 will be calculated on the next paycheck to "catch up".

 

If the tax rate for Q1 really was 5.5% all along, then the only way to avoid the $45 being added to the paychecks in Q3 is to enter a Payroll Liability adjustment, one per employee, likely dated in Q1. The adjustment should adjust only the tax amount accrued and not wages.

 

If the tax rate actually changed for Q3, then to avoid this additional tax, don't change the tax rate for Q1. Using this example, the payroll item should look like this when you review it:

 

Capture.JPG

 

When changed in this way, if the employee's max wage, $9,000 for this tax, was met before Q3, at the 5% rate, then no additional tax will be calculated after changing the rate.

 

There will still be additional tax calculated if the employee hadn't hit the max wage until some time in Q3 of after.

View solution in original post

BUSHARCH
Level 2

I revised the current Tx UI rate, but now it is not calculating properly on the current payroll checks. Thresholds have been met

Thank you for the clarification. I am having to go in and enter a liability adjustment for ea. individual employee

that met the threshold. I have 2 that did not and it calculated wrong, so I had to do an adjustment for them as well. I'm hoping starting the new year everything will be back to normal and I won't have to do anymore Adjustments.

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