After running the w2's for last year, we realized that 2 employees were mistakenly not set up to have California state tax withheld from their checks. So, no state tax amount is listed in box 17. Is there anyway to rectify this situation? Can we manually figure out how much should have been paid? Are we responsible or the employee? What happens when the employee needs to get his taxes done?
I have already made the necessary changes for the employees for this year so this does not happen again!
Good evening, @lorinb. No worries, I'm here to help you correct your W-2 tax forms.
If you haven't filed yet and your employees received their W-2, then you can follow the steps I've provided below to correct the information:
Here's an article that provides details on how to correct your filed W-2s.
After following the steps listed above, then you can issue the corrected forms. Here's how:
If you have any other questions or concerns, don't hesitate and reach out. Have a wonderful day.
RE: Is there anyway to rectify this situation?
To fix it right, you will need to accrue the correct tax for the employee using a payroll adjustment. Accrue both the taxed wages and the tax.
Then re-file at least the last quarter's state payroll form and pay the additional tax. You may need to eat the cost, as it's not usually considered appropriate to demand the withholding from the employee at the end of the year after messing up like this and not following the Employee's W-4 (or CA state W-4 equivalent.)
RE: Can we manually figure out how much should have been paid?
You could use the state tax tables and manually calculate the appropriate tax for each check. If the employee is a salaried employee, then it's easier.
RE: Are we responsible or the employee?
You probably are. At the least you didn't follow the employee's direction from their W-4, so you own that.
RE: What happens when the employee needs to get his taxes done?
Nothing, as you will have fixed this as above.
But really, you should consult with a payroll tax advisor or the state of California to determine what to do.
We have discovered a similar issue, when we upgraded our Quickbooks program the state withholding info for each employee was not transferred over. Therefore for several months now, no state taxes have been withheld from paychecks Is there anyway to rectify this issue for both the employees as well as the employer taxes? Would appreciate any help available to resolve this huge issue. Thanks
I'm here to help you correct your payroll.
First, let's make sure to set up the state taxes for those employees. Please know that you may need to set up the applicable payroll items for the state first if your employees live or work in a state that is not set up in QuickBooks Desktop. Here's how to add state taxes to an employee:
Second, you'll have to conduct a payroll liability adjustment to accrue the employee's state taxes and correct the year-to-date/quarter-to-date payroll information. You can refer to your state tax table to be guided in calculating the taxes. Follow these simple steps to adjust your payroll liabilities:
For more information about this process, you can read this article: Adjust payroll liabilities in QuickBooks Desktop.
Lastly, you can go to the Pay Liabilities tab to print a liability check (if you're going to pay the taxes right away). To get reimbursed for the employee paid state taxes, you can deduct the amount to their next succeeding paychecks.
I also recommend consulting your tax advisor in handling those taxes to ensure compliance.
In case you'll need to track where your company stands in terms of employee expenses, you can customize payroll reports.
Do you have any other questions in mind? Feel free to leave them below and I'll get back to you as soon as I can.
I actually did the same thing, but found out while doing W2 for 2021. How did you end up correcting this?
Instead of choosing single, the do not withhold option was chosen.
I appreciate any advice.
I'll help you out with your query about the correction process of an incorrect W-2 form for your employees in QuickBooks Desktop (QBDT).
The way to proceed with this situation depends on the type of payroll service you use.
For example, if you have QBDT Payroll Basic or Payroll Standard, you'll have to create and file a W-2c form with the Social Security Administration by hand.
In case you have a different payroll version, check out this article: Fix an incorrect W-2. It has a complete set of steps on how to fix issues with your W-2 forms with different payroll versions you have.
Tag me in your comments below if you have other questions about your W-2 forms in QBDT. I'll handle them for you.