No Federal Withholding

Thanks for taking the time to scour our Community space for potential solutions. If you haven't encountered this yet, this solution will prove useful in resolving the federal tax calculation issues, MVVR.

I appreciate you for reviewing the employee's information entered in the new W4 information. This helps us better isolate the issue. If you haven't updated your payroll to the latest release, I'd suggest doing so. This is often used to fix payroll issues and downloads the most current tax rates and calculations in your account. Here's how:

1. Go to the Employees menu
2. Select Get Payroll Updates.
3. Fill in the Download Entire Update checkbox.
4. Click Update. A window appears when the download is complete.
   

Federal Taxes will not calculate if your employee’s pay is too low or has many dependents. Another reason is when you're creating another payroll even if he has a pending and unsaved paycheck. Let's increase the gross pay by entering a larger rate or worked hours. If the same thing happens, check if the employee has a pending paycheck and revert for the taxes to calculate. Let me show you how: 

1. Go to Employees on the top menu. 
2. Click Pay Employees and choose Unscheduled payroll.
3. Right-click on the employee name with a yellow highlight and select Revert Paycheck. The yellow highlight indicates the employee has a pending paycheck.
4. Click Open Paycheck Detail and enter the details of the payroll.
5. Press Save & Close.
   
   

More troubleshooting steps can be found here: QuickBooks Desktop calculates wages and/or payroll taxes incorrectly. Here's an article you can refer to for more details about how QuickBooks calculates payroll taxes.

Need to see your employees' year-to-date data and other payroll details? You can run a payroll liability report to get started. This article can provide more details about the report and how to run it: Run payroll liability balances report.

Do you have more questions about your employees? Ask away and I'll help you out. If you have questions about running payroll reports in QuickBooks, add them to your reply. 

@MVVR 

Are you sure that the employee should have any federal tax withheld?  Employees, especially ones with dependents that don't have a significant salary, often owe no federal income tax and, therefore, have no withholding.  You can confirm this by looking at IRS Publication 15-T, specifically page 12.

This is happening as well with my employees not sure what's happening.

This has happened to me as well! My withholding is zero and a total of $3.00 Federal Tax was taken out in 2023! Please help!

Hello, @ChiroLifeCenter.

Welcome to the Community! I’d be delighted to share some information why the federal taxes are deducted incorrectly on the last payroll you run for last year.

Here are the possible reasons QuickBooks aren’t calculating federal taxes properly:

• Total annual salary exceeds the salary limit.
• The gross wages of the employees last payroll are too low.
• Ensure to run the latest payroll update to keep your taxes updated.

When the federal withholding is not deducting correctly, you’ll have to revisit your employees’ profiles if they are set up correctly. QuickBooks calculates the federal withholding based on these factors:

• Taxable wages
• Number of allowances/dependents
• Pay frequency
• Filing status

To review your employees’ payroll information, here’s how:

1. Go to Employees menu.
2. Choose Employee Center.
3. Double-click the employee’s name, one at a time.
4. Select Payroll Info on the left.
5. Please make sure the Pay Frequency is correct.
6. Click the Taxes button.
7. In the Federal tab, review the Filing Status and Allowances fields. Make the necessary corrections.
8. Hit OK.
9. Click OK again.

On the other hand, if you add the deduction to your employee’s first payroll of the year, the liabilities will be added to the current year instead of last year. What you can do is to create an adjustment check dated the same with the last payroll. By doing so, you’ll not have problems with your 2018 tax forms like 941 and W2.

If the employee is overpaid on the last payroll, you can create a deduction item with a tax tracking of “None” and use it on their first payroll of the year.

If you require further assistance with the steps mentioned above, we recommend contacting our Payroll Support Team. A payroll specialist can provide additional help through a secure remote access session.

Here’s how to contact us:

1. Visit: https://help.quickbooks.intuit.com/en_US/contact. 
2. Choose your QuickBooks Product. 
3. Select Payroll. 
4. Choose your type of Payroll Subscription. 
5. Hit Payroll. 
6. Click on the View Contact Info button to see the support number. 

You can comment below if you have further questions about calculating federal withholding in your employee’s paycheck. I’m always here to lend a hand.

Hello, @ChiroLifeCenter.

Welcome to the Community! I’d be delighted to share some information why the federal taxes are deducted incorrectly on the last payroll you run for last year.

Here are the possible reasons QuickBooks aren’t calculating federal taxes properly:

• Total annual salary exceeds the salary limit.
• The gross wages of the employees last payroll are too low.
• Ensure to run the latest payroll update to keep your taxes updated.

When the federal withholding is not deducting correctly, you’ll have to revisit your employees’ profiles if they are set up correctly. QuickBooks calculates the federal withholding based on these factors:

• Taxable wages
• Number of allowances/dependents
• Pay frequency
• Filing status

To review your employees’ payroll information, here’s how:

1. Go to Employees menu.
2. Choose Employee Center.
3. Double-click the employee’s name, one at a time.
4. Select Payroll Info on the left.
5. Please make sure the Pay Frequency is correct.
6. Click the Taxes button.
7. In the Federal tab, review the Filing Status and Allowances fields. Make the necessary corrections.
8. Hit OK.
9. Click OK again.

On the other hand, if you add the deduction to your employee’s first payroll of the year, the liabilities will be added to the current year instead of last year. What you can do is to create an adjustment check dated the same with the last payroll. By doing so, you’ll not have problems with your 2018 tax forms like 941 and W2.

If the employee is overpaid on the last payroll, you can create a deduction item with a tax tracking of “None” and use it on their first payroll of the year.

If you require further assistance with the steps mentioned above, we recommend contacting our Payroll Support Team. A payroll specialist can provide additional help through a secure remote access session.

Here’s how to contact us:

1. Visit: https://help.quickbooks.intuit.com/en_US/contact. 
2. Choose your QuickBooks Product. 
3. Select Payroll. 
4. Choose your type of Payroll Subscription. 
5. Hit Payroll. 
6. Click on the View Contact Info button to see the support number. 

You can comment below if you have further questions about calculating federal withholding in your employee’s paycheck. I’m always here to lend a hand.

@ChiroLifeCenter 

Without knowing salary/wage and all of the details on your W-4 (step 2 checked?, Step 3 amount, any entries in Step 4) there's no way to determine whether $3 is right or wrong.  You can post that here or look at IRS Publication 15-T, page 12.