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Resolve a payroll tax underpayment

Learn how to handle underpaid taxes in QuickBooks Online Payroll.

Do you have a notice about underpaid taxes from the IRS or state agency? Or do you see an amount due for taxes you thought were already paid? We explain how to resolve tax underpayment issues.

Do you need help with overpaid payroll taxes?  Check out Resolve a payroll tax overpayment.

Why do I have an underpaid tax?

Here are some reasons you may have an underpaid tax:

  • A retroactive increase in your tax rate
  • You created additional paychecks for a period in which you already paid the taxes
  • You requested us to perform a payroll correction resulting in additional taxes owed

Resolve the underpayment

If you received a notice about an underpaid payroll tax from the IRS or your state agency, see What to do if you receive a payroll tax notice.

Resolving tax underpayments depends on the payroll tax you're dealing with.  Select the payroll tax you need to fix, then select your payroll plan.

Contact us for help fixing underpayments for:

  • State Disability Insurance (SDI)
  • Workers’ compensation
  • Local taxes

If you have automatic payments and filings turned on we will make the payment for you.

If you have automatic payments and filings turned off:

  1. Select Taxes, and then Payroll Tax.
  2. Select Payments.
  3. Select one of the following:
    • Pay (if available): this will send the payment electronically
    • Mark as paid: this will record the payment if you made it outside the system
  4. Follow the on-screen instructions once you select one of the options.

If your payroll account is active for federal electronic services, you can generally make an e-payment for the additional taxes that are due (940, 941, or 944).

If your payroll account is active for federal e-services, but you remit the additional payment outside of our system (for example, through EFTPS), you have two options for recording it:

  • As a manual payment. On the Pay Taxes page, click Create Payment (as you would normally do for an e-payment). On the next page, deselect the Pay Electronically checkbox, and click Approve.
  • As an outside payment. See article Enter prior tax payments for instructions.

If your payroll account is not active for federal e-services, you also have the options of entering the additional payment as a manual payment or an outside payment.

If you have automatic payments and filings turned on we will make the payment for you.

If you have automatic payments and filings turned off:
You may be able to send the payment electronically for some states. If not, you’ll need to send the payment to your state agency directly and record the payment in QuickBooks.

  1. Select Taxes, and then Payroll Tax.
  2. Select Payments.
  3. Select one of the following:
    • Pay (if available): this will send the payment electronically
    • Mark as paid: this will record the payment if you had to make the payment outside the system.
  4. Follow the on-screen instructions once you select one of the options.

If your account is active for state electronic services, you may be able to make an e-payment for the additional state income tax (SIT) amount due through our system. However, this isn't allowed for several states.

The best way to find out is to attempt to create the payment from the Pay Taxes page. If you can approve it with the Pay Electronically checkbox marked, then it will go through as an e-payment. Otherwise, it will be a manual payment, and you should remit the amount due directly to the tax agency.

If your account is not active for state e-services, create and approve the manual payment. Then remit the amount due to the tax agency.

If you have automatic payments and filings turned on:


We can only make one SUI tax payment per quarter for you. If we’ve already made an SUI payment for you, you’ll see a To Do in the Payroll Overview page to make the additional payment directly to your state agency. Once you make the payment, then mark it as paid in QuickBooks.

  1. Select Taxes, and then Payroll Tax.
  2. Select Payments.
  3. Select Mark as paid.
  4. Select one of the following:
    • No, record manually if you need to add the payment to your QuickBooks ledger.
    • Yes, mark paid if you don’t need to add the payment to your QuickBooks ledger.
  5. Follow the on-screen instructions once you select one of the options.

If you have automatic payments and filings turned off:
If you’ve already made an SUI payment electronically through QuickBooks for the quarter, you’ll need to pay the additional amount due directly to the state agency, then mark it as paid in QuickBooks.

  1. Select Taxes, and then Payroll Tax.
  2. Select Payments.
  3. Select Mark as paid.
  4. Select one of the following:
    • No, record manually if you need to add the payment to your QuickBooks ledger.
    • Yes, mark paid if you don’t need to add the payment to your QuickBooks ledger.
  5. Follow the on-screen instructions once you select one of the options.

If your account is active for state electronic services, you generally can't make an e-payment for the additional state unemployment insurance (SUI) taxes through our system. (An exception is California, which does allow multiple SUI e-payments.) In other states, you should remit the additional payment directly to the SUI tax agency (either by email, or on the agency’s website). Record the payment as an outside payment in your payroll account.

The same rules apply if your account isn't active for state e-services. Remit the additional payment directly to the SUI tax agency. Record it as an outside payment in your payroll account. (For California, you can make multiple manual SUI payments.)

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