In 2020 my nonprofit made a large overpayment to the IRS due to a misunderstanding that resulted in duplicate payments. As a result the previous bookkeeper skipped the payment for Q1 2021. The issue with the IRS has been resolved. We have received a refund check from the IRS, they applied part of the balance to the money due in Q1, but I still show a large balance in my chart of accounts 2410 Payroll Tax Liability. I need to make a journal entry showing the Q1 taxes were paid and offset the balance in 2410. What’s the best way to do this? Thanks.
It's nice to see you here in the Community, @LEH. Let me help you with your concern.
First, we'll have to determine if the over payment is valid.
Not all overpayments of taxes are valid. The following are some instances that can lead to invalid overpayments; rather than resolving the overpayment, you'll need to address these concerns:
The following are examples of valid tax overpayments:
You can fix your reports and tax forms by resolving various payroll tax overpayments in your payroll product.
If you received a credit notice from the IRS or a state agency for an overpaid payroll tax, see What to Do If You Receive a Payroll Tax Notice.
For QuickBooks Online Payroll, here's how:
5. Select Mark as Resolved.
6. Select Contact tax agency for next steps to get contact info for the IRS or state agency. Otherwise, select the x to close the window.
7. Contact the IRS or your state agency to request refunds or apply taxes to future periods.
For Intuit Online Payroll Enhanced. simply follow these steps:
5. Select Save.
You might want to give this article a visit. It's about how to pay and file taxes and forms in Online Payroll.
Please don't hesitate to reach out to us again if you need more help when working in QuickBooks Online.
I should be more specific. Some payments were made twice. The previous bookkeeper did not pay Q1 of 2021 assuming the IRS would allocate a portion of the overpayment from 2020 toward Q1 of 2021 since more than enough was overpaid to cover it. The letter from the IRS acknowledged we sent too much money. They did retain the amount owed for Q1 2021. The rest was sent as a refund and was deposited using the same chart of accounts as Payroll Tax Liabilities. So now I have a negative balance showing in my Statement of Financial Position. The IRS letter verifies the Q1 federal taxes were paid. There’s just no record in QuickBooks of the payment. No overpayment is shown in QuickBooks since no payment was ever recorded. I thought the only way to zero out the negative balance would be with a journal entry since there is no record in QuickBooks of the Q1 payment other than a paper letter from the IRS. Thanks.
Thanks for pointing this out, @LEH.
Let me route you to the right support that can help correct your balances for Payroll Tax reports and Payroll Liabilities in QuickBooks Online (QBO).
Since you've figured out the transactions that are causing the balances to be off, I suggest reaching out to our QuickBooks Care Support. Aside from their ability to review and verify the changes made to your payroll, they can also help you with payroll adjustment or corrections in a secure space.
Before that, let me share some articles that you can refer to review the correct liability amounts and answer other payroll tax queries:
Here's how to contact our support:
1. Go to the Help menu at the upper right.
2. Select Contact Us.
3. Enter your concern.
4. Click Let’s talk.
5. Choose to Get a callback.
6. Type in your contact info.
7. Select Confirm my call.
You can check out this article for our contact information. Click on the QuickBooks Online drop-down to see the most updated support schedule: Support hours and types.
As always, read our Help Articles in case you need related links in the future.
Let me know if you meant something else. I'll be right here if you have further questions. Keep safe and have a good one•