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PMills618
March 9, 2023
Question

Adjusting SUTA & FUTA amounts calculated on employee checks

  • March 9, 2023
  • 2 replies
  • 0 views

We are a payroll service with multiple classes of employees.  Recently, one class sold their business and we are going to continue to do the payroll for the new company.  I've entered the YTD SUTA & FUTA totals for each employee in the new class, but it is not being correctly calculated on the new payroll.  Our SUTA rate is 0.2% but it is calculating this on the amount of wages remaining, not the amount of the paycheck.  For example, an employee has $8800 of taxable wages remaining and her paycheck is only $1300 gross.  The amount calculated for SUTA should be 2.60, but it is 17.60.  How do I adjust the YTD totals so that this amount is correctly calculated.  I've done a payroll adjustment and entered the YTD totals for SUTA & FUTA, but it is still calculating it incorrectly.  What should the wage base and income subject to taxes be to make this calculate correctly?

2 replies

J
jamespaul
March 9, 2023

Hello, PMills618.

 

I'd be glad to work with you to fix the FUTA and SUTA calculations in QuickBooks Desktop. 

 

Further adjusting the YTD totals might net us the same result. So, we can check your payroll items associated with the FUTA and SUTA calculations. They are likely set up incorrectly within QuickBooks (having different rates). 

 

So, before we do anything else, let's ensure we have the latest payroll tax updates in QuickBooks Desktop. This ensures that we have the updated percentages and tables for correct calculations. 

 

After getting the latest payroll updates, here's how we can review the payroll items for FUTA and SUTA:

 

  1. Go to Lists, then select Payroll Item Lists.
  2. Locate the FUTA item (it should be Federal Unemployment). 
  3. Open the item, review how it is set up, then check the rates.
  4. For the SUTA, open the state unemployment items. Review the setup, then the rates. 
  5. Change how they are calculated on the paychecks, then edit the rates when needed. 

 

Let's also check the employee's tax setup. It may also contribute to how the amounts are calculated on the paychecks. Here's how to check it:

 

  1. Go to Employees, then select Employee Center. 
  2. Open the employee in question.
  3. Go to Payroll Info, then click the Taxes button.
  4. Review the setup under the Federal and State tabs.
  5. Change the setup if needed, then click OK. 

 

We can also check these articles as a guide to correcting tax calculations in QuickBooks: 

 

 

As for the wage base, we can check these IRS articles about the FUTA rate: Topic No. 759 and Publication 15.

 

For the SUTA wage base, it depends on your state rules. We can check with the state to see the instructions for calculating unemployment taxes. 

 

After correcting the calculations, do you need help filing your tax forms within QuickBooks? I'll share this guide with you: E-file and e-pay state forms and taxes in QuickBooks Desktop Payroll Enhanced.

 

Do you need more help managing and entering tax calculations in QuickBooks? Or would you like some assistance in managing your entries? Let me know the details and I'll gladly help you out again. 

P
PMills618Author
March 9, 2023

Thanks for your response.  The FUTA & SUTA items weren’t altered in any way and calculations on all other classes are still correct.  It’s just the new class that is affected.  This class was set up like the others as far as the taxes section in their employee file.  They have the correct buttons checked and the correct items listed.  We don’t want to update YTD payroll totals because the previous company will issue W-2s through 2/28 and the new owners will issue from March forward.  Our state wage base is $14,000.  When I adjust YTD totals under Adjust Liabilities, what do I enter for wage base and the income subject sections?  I’ve entered the total amount (7,000 for FUTA, 14,000 for state) and that didn’t affect the paycheck calculations.  I’ve entered the difference in YTD paid and the wage base and that didn’t affect paycheck calculations either. 

BigRedConsulting
BigRedConsulting
March 10, 2023

@PMills618  RE: Recently, one class sold their business and we are going to continue to do the payroll for the new company. I've entered the YTD SUTA & FUTA totals for each employee in the new class, but it is not being correctly calculated on the new payroll.

 

When employees start working for a new employer, generally nothing is entered for YTD payroll. It all restarts from scratch, much like when an employee elects to quit a job and start a new job with a different employer mid-year.

 

Wages and amounts paid for SUTA and FUTA, and all other employer paid taxes by one company don't give any credit or break to the new company.

P
PMills618Author
March 23, 2023

I'm the original poster, but can't remember my password to login and there's no option to reset it.  When a business is acquired by another entity, including assets, customer list, etc., and the existing employees are then employed by the new purchaser, the new employer does not have to start over for the current year in paying Federal & State Unemployment taxes. 

In Quickbooks, how can you make sure that the system does not compute these taxes on these new employees (prior employees of the selling company) of the business purchaser? Some of these employees have not earned enough to be completely out of the unemployment wage base. The new employer will owe some unemployment tax on those. 
 
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