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ekileen
April 22, 2019
Solved

Adjust Payroll liabilities to back out credit used

  • April 22, 2019
  • 2 replies
  • 0 views

Kind of a long story, but need to be sure this is done correctly:

We overpaid our 941 liability in Q3 2018, so had a credit with the IRS.
The credit on our account was overstated in QB so the Q4 taxes were paid short. I have paid the amount owed and the IRS account is current, but need to get QB in line with the correct liabilities.

 

First - how do I adjust those liabilities to reflect the correct credit amount?

Second - how do I record the payment made directly at the EFTPS site in QB?

Third - how do I record the interest and penalties that were included with that payment?

Best answer by Charies_M

Hello there, ekileen.

 

Thanks for checking in with us. I want to make sure all your payroll concerns are taken care of.

 

For liability adjustments, I'll be sharing with you this article that will guide you through the whole process of making payroll liability adjustments in QuickBooks Desktop: Adjust payroll liabilities.

 

For your second question, you can use the Enter Prior Payments option if the liabilities were not entered in QuickBooks. 

 

Here's how:

  1. Go to the Help menu.
  2. Then choose About QuickBooks. And press Ctrl+Alt+Y.
  3. Choose the date range. Then select Next until you see the Create Payments button.
  4. Under Item Name, select the drop-down arrow. And choose the item you need to create a prior payment for.
  5. Verify the dates and update as necessary.
  6. Select Next Payment to enter another prior payment.
  7. Select Done.

To know more about this, here's a helpful article that you can refer to: Enter historical tax payments in Desktop payroll.

 

Lastly, you can record interest and penalties that were included with the payment by writing a check and entering the accounts (interest and penalties) under Expenses tab.

 

Here's how:

  1. Go to Banking.
  2. Click Write Checks.
  3. From the Expenses column, 
  4. Click Add new to add the penalty account under the Account column. Do the same thing for interest.
  5. Enter other necessary information.
  6. Click Save and Close.

You should be all set. Be sure to keep in touch with me here should you have any additional payroll questions or concerns. I'm here to help.

2 replies

C
Charies_MAnswer
April 23, 2019

Hello there, ekileen.

 

Thanks for checking in with us. I want to make sure all your payroll concerns are taken care of.

 

For liability adjustments, I'll be sharing with you this article that will guide you through the whole process of making payroll liability adjustments in QuickBooks Desktop: Adjust payroll liabilities.

 

For your second question, you can use the Enter Prior Payments option if the liabilities were not entered in QuickBooks. 

 

Here's how:

  1. Go to the Help menu.
  2. Then choose About QuickBooks. And press Ctrl+Alt+Y.
  3. Choose the date range. Then select Next until you see the Create Payments button.
  4. Under Item Name, select the drop-down arrow. And choose the item you need to create a prior payment for.
  5. Verify the dates and update as necessary.
  6. Select Next Payment to enter another prior payment.
  7. Select Done.

To know more about this, here's a helpful article that you can refer to: Enter historical tax payments in Desktop payroll.

 

Lastly, you can record interest and penalties that were included with the payment by writing a check and entering the accounts (interest and penalties) under Expenses tab.

 

Here's how:

  1. Go to Banking.
  2. Click Write Checks.
  3. From the Expenses column, 
  4. Click Add new to add the penalty account under the Account column. Do the same thing for interest.
  5. Enter other necessary information.
  6. Click Save and Close.

You should be all set. Be sure to keep in touch with me here should you have any additional payroll questions or concerns. I'm here to help.

    R
    RhondaL
    May 13, 2020

    Using this method, totally messed up my liabilities - now showing all the way back a year ago "overdue" on taxes!.  PLUS changed my beginning balance for reconciling!  So frustrating

    C
    Carlyle
    May 1, 2024

    In case it helps others, here's what I did and it worked well.  FOr this example, I'm going to pretend that our workers comp liability was $1000, and we had a credit of $200 with our workers comp company, and that we used this credit to pay $200 of the liability. 

    1. Go to pay the liability like usual. 

    2. When the check opens up, click on the "expenses" tab below the body of the check (to the left of the "payroll liabilities" tab). 

    3. On the top line of this tab enter "Accounts payable" under the account, put the amount of the credit that you have as a NEGATIVE number, enter something in the memo so you remember what you did, and put the vendor name where you have the credit in the "Customer: Job" field. 

    4. Adjust the amount of the liability check to reflect the amount of the credit you applied (in this case, the liability check will only net to $800, so I put $800 in the $ field on the check itself--don't change the amount on the payroll liabilities tab--that should still say $1000, and your expenses tab will say -$200, so the check is for $800).  Save and close.

    5. Open the "Pay bills" window, click on the vendor "bill" that you should now see there from the accounts payable expense you just created.

    6.  Click on the "Apply credits" button towards the middle bottom of the screen to apply the credits that you used to pay this portion of your liabilities.

    7. Click Pay selected bills.

    8. Have a dance party because you didn't have to make a confusing liability adjustment.

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