This post is to make Washington businesses, who have tipped employees, aware of a Quickbooks error in WA Cares tax withheld:
Washington State has recently implemented a new tax call WA Cares. This is an employee-only tax (unless opted by the business to pay on the behalf of the employee) and we started withholding on 7/1/23. Our first quarterly payment is due in October 2023. The tax uses the same "Gross Wages" as another Washington tax...Paid Family Leave. For the purposes of Paid Family Leave, tips are NOT included in gross wages. Unfortunately when Quickbooks programmed the WA Cares tax into the payroll for QBO, they calculated the withholding on gross wages including tips. I found this out the hard way today (7/4/23) when I went into the Employment Security website to submit our report and found that we had withheld too much on our tipped employees.
I have contacted Quickbooks and I have an escalated case with their Tax team. Hopefully they will soon identify and notify WA businesses of the error and how they plan to correct it on future payrolls.
