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Jessup
January 23, 2019
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Federal Taxes Not Deducted Correctly

  • January 23, 2019
  • 2 replies
  • 0 views

Previous payroll (last one of the year) did not deduct all taxes. Checks were distributed. Should I just manually add to the deductions on the next checks (first one of new year)?

Best answer by IamjuViel

Pleased to have you here, @Jessup.

 

Welcome to the Community! I’d be delighted to share some information why the federal taxes are deducted incorrectly on the last payroll you run for last year.

 

Here are the possible reasons QuickBooks aren’t calculating federal taxes properly:

  • Total annual salary exceeds the salary limit.
  • The gross wages of the employees last payroll are too low.
  • Ensure to run the latest payroll update to keep your taxes updated.

When the federal withholding is not deducting correctly, you’ll have to revisit your employees’ profiles if they are set up correctly. QuickBooks calculates the federal withholding based on these factors:

  • Taxable wages
  • Number of allowances/dependents
  • Pay frequency
  • Filing status

To review your employees’ payroll information, here’s how:

  1. Go to Employees menu.
  2. Choose Employee Center.
  3. Double-click the employee’s name, one at a time.
  4. Select Payroll Info on the left.
  5. Please make sure the Pay Frequency is correct.
  6. Click the Taxes button.
  7. In the Federal tab, review the Filing Status and Allowances fields. Make the necessary corrections.
  8. Hit OK.
  9. Click OK again.

On the other hand, if you add the deduction to your employee’s first payroll of the year, the liabilities will be added to the current year instead of last year. What you can do is to create an adjustment check dated the same with the last payroll. By doing so, you’ll not have problems with your 2018 tax forms like 941 and W2.

 

If the employee is overpaid on the last payroll, you can create a deduction item with a tax tracking of “None” and use it on their first payroll of the year.

 

If you need further assistance with the steps above, I’d recommend reaching out to our Payroll Support Team. A payroll specialist would be able to further help you via secured remote access session.

 

Here’s how to contact us:

  1. Visit: https://help.quickbooks.intuit.com/en_US/contact. 
  2. Choose your QuickBooks Product. 
  3. Select Payroll. 
  4. Choose your type of Payroll Subscription. 
  5. Hit Payroll. 
  6. Click on the View Contact Info button to see the support number. 

Feel free to click the Reply button if you have other questions about calculating federal withholding in your employee’s paycheck. I’m always here to lend a hand.

2 replies

IamjuViel
IamjuVielAnswer
January 23, 2019

Pleased to have you here, @Jessup.

 

Welcome to the Community! I’d be delighted to share some information why the federal taxes are deducted incorrectly on the last payroll you run for last year.

 

Here are the possible reasons QuickBooks aren’t calculating federal taxes properly:

  • Total annual salary exceeds the salary limit.
  • The gross wages of the employees last payroll are too low.
  • Ensure to run the latest payroll update to keep your taxes updated.

When the federal withholding is not deducting correctly, you’ll have to revisit your employees’ profiles if they are set up correctly. QuickBooks calculates the federal withholding based on these factors:

  • Taxable wages
  • Number of allowances/dependents
  • Pay frequency
  • Filing status

To review your employees’ payroll information, here’s how:

  1. Go to Employees menu.
  2. Choose Employee Center.
  3. Double-click the employee’s name, one at a time.
  4. Select Payroll Info on the left.
  5. Please make sure the Pay Frequency is correct.
  6. Click the Taxes button.
  7. In the Federal tab, review the Filing Status and Allowances fields. Make the necessary corrections.
  8. Hit OK.
  9. Click OK again.

On the other hand, if you add the deduction to your employee’s first payroll of the year, the liabilities will be added to the current year instead of last year. What you can do is to create an adjustment check dated the same with the last payroll. By doing so, you’ll not have problems with your 2018 tax forms like 941 and W2.

 

If the employee is overpaid on the last payroll, you can create a deduction item with a tax tracking of “None” and use it on their first payroll of the year.

 

If you need further assistance with the steps above, I’d recommend reaching out to our Payroll Support Team. A payroll specialist would be able to further help you via secured remote access session.

 

Here’s how to contact us:

  1. Visit: https://help.quickbooks.intuit.com/en_US/contact. 
  2. Choose your QuickBooks Product. 
  3. Select Payroll. 
  4. Choose your type of Payroll Subscription. 
  5. Hit Payroll. 
  6. Click on the View Contact Info button to see the support number. 

Feel free to click the Reply button if you have other questions about calculating federal withholding in your employee’s paycheck. I’m always here to lend a hand.

    M
    MCSO
    February 20, 2020

    I have checked all the payroll information for employees and have ran all the updates.  I have also contacted payroll support and they too went through all my employee information to see that the setup was correct. 

     

    I am on my 3rd payroll of the new year and still can't get this resolved.  I really don't have time to re-calculate everyones payroll withholding  for the rest of the year.  I would greatly appreciate some solution to this issue as I have been trying for the last month to resolve this issue. 

     

    As far as I can tell, the federal withholding is the only tax not calculating. 

     

    Thanks

     

      Angelyn_T
      Angelyn_T
      February 20, 2020

      Thank you for joining the thread, @MCSO.

       

      Be sure to update your payroll tax table to the latest release so QuickBooks will calculate payroll taxes correctly.

       

      Here's how:

       

      1. Open your QuickBooks Desktop (QBDT), then click on Employees at the top menu bar.
      2. Tap on Get Payroll Update from the drop-down result.
      3. Select the radio button beside Download entire payroll update, then click on the Update button.

       

      If you have pending paychecks from the Enter Payroll Information window, right-click on the paycheck, then click on Revert Paycheck undo the changes. Once completed, re-enter the paycheck details to ensure taxes are calculated correctly.

       

      For additional reference about this action, read this article: How to save or revert pending paychecks.

       

      Also, here are the lists of articles you can read more about paychecks calculation in QBDT:

       

       

      Leave a comment below if you have any other questions. I'm a few clicks away to help. Have a good day!

        L
        Lesli A
        July 25, 2022

        I too, just discovered this problem, and the problem is with employees who have used the new W4 version, 2019 and later...  The new way the IRS calculates taxes is it deducts 8600.00 if single and 12900 if married...  So taxes are figured on the wages once they've reached those thresholds...  The only work around is to use the manual percentage method tables to see what their fed withholding should be. I discovered this with a new employee who just started the middle of June. He was employed somewhere else the first half of the year and has already met that 12900.00 threshold so taxes should be being withheld...  Quickbooks needs to update their tax tables so they use the manual method, we shouldn't have to do this ourselves, considering we are paying for this payroll service.

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