Federal Tax withholding incorrect

Hi there, ImaBassetcase.

I understand how important it is to identify and correct discrepancies in your employees' federal taxes. Allow me to share some information with you and guide you through this process.

To determine the cause of the discrepancy and ensure accurate federal tax withholding, make sure to check the payroll tax settings in QuickBooks Online Payroll to ensure they are in line with the federal withholding requirements. 

Also, since you've already checked the employees' W-4 information, you can compare the affected employees' paycheck details in QuickBooks Desktop Enhanced Payroll and QuickBooks Online Payroll.

If you're still unable to determine the cause of the discrepancy or if you need assistance with adjusting federal tax withholding, I recommend contacting our Payroll Team. They have the necessary resources to assist you and investigate this further.

Here's how:

1. Log in to your QuickBooks Online company.
2. Click on Help (?).
3. Select the Search tab, then Contact Us.
4. Enter a description of your concern, then hit Continue.
5. Choose a way to connect:
    

• Start a chat with a support.
• Get a callback from the next available support.

I've added this resource so you'd know how to wrap up this year’s payroll and prepare for the next: Year-end checklist for QuickBooks Online Payroll.

Let me know how if you have other payroll tax-related concerns. I'd be glad to help. Have a great day!

Thanks for the reply.  I have viewed both pay check details from the last pay in 2023 with the one for this year. That is how I determined the differences.  I also checked a non-salaried employee that was paid  for exactly 40 hours this year and earlier in December.  This person was withheld LESS than the one in December. I will try to reach a support person tomorrow.  I truly dread it.

My guess would be that the 2 employees you are looking at have been employed with you for quite some time and were still using the Single-1 or Married Joint-4 method for federal withholding.  But back in 2020 the IRS revamped the Form W-4 and you no longer select filing status plus number of exemptions.  Now on the new W-4 you there are several questions and dollar amount adjustments that get entered to the employee setup to compute the FWH.

The % of change should be looked at as % of total compensation, not % of FWH change.  For example, an employee makes $2500 per check and previously had $300 of FWH each check, that would be 12% of his wages being withheld for FWH each check.  And now the FWH is $325 per check, which is only 13% of total wages being withheld....an increase of 1%, not 8.33%

Personally I wouldn't worry about the change, unless the employee insists on having it back to "what it was."  Then I'd just override it in the system to be what it was.  Ultimately it is just the employee prepaying their own personal April 15th tax liability.  If they choose to hold out less during the year, they just owe more on April 15th.  If they hold out more now, they'll get the overage back in April.

Thank you for that.  I posted this last week while I was still trying to make QBO work for me.  I am aware of the 2020 changes that went into effect on the W-4's.  These employees started with us in 2022 and 2023, so that should not be the issue.  I have since fixed the issue by returning to DeskTop.  We were led to believe that we had to go to the online version by end of May.  This was not the case.  Intuit sales team implied that there would be no more desk top QuickBooks after that time.  We decided to go ahead and start at the beginning of 2024 so as not to switch in the middle of the year and risk throwing things off.  After many hours struggling with the online Advanced support techs, I contacted Intuit and discovered that Enterprise was still available and supported.  At a slightly higher cost than QBO Advanced, it is well worth it to have all my features that I was used to with Premier.  The payroll history did not transfer from Premiere to QBO, the employees transferred, but apparently the taxes were not brought over correctly. On top of that, every employee since 1995 transferred over and in order to assign classes to our current employees, I would have had to go in one by one and either assign classes to 382 employees or one by one delete them all. Half of my reports were missing and no way to rebuild with the filters that I need and have been used to.  My Premiere Desk Top file exported to Enterprise with everything just like I had it.

I honestly don't know how QBO is so highly rated.  Perhaps it is because most of the users have never had the DeskTop version.  The two are NOTHING similar and I feel sorry for all of you who have made the switch.

Thanks again for the detailed response.