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JeanneBark
November 24, 2021
Question

Holiday time

  • November 24, 2021
  • 3 replies
  • 0 views

I am trying to set up paid Holiday Time off, but I'm having a hard time getting it to set up the way I need. 
In my state, there is a tax that gets deducted based on the hours worked .  These paid holiday hours will NOT be hours worked, there for shouldn't have this tax. My question is, is there a way I can stop this tax from being deducted? 
I tried setting it up as a vacation pay, but that obviously then deducted the hours from the employees vacation time.
And when I set it up as an hourly wage, it automatically takes this tax out. 
When I edit that tax from the "Payroll item list" and go to the "taxable compensation" page, it will not allow me to unselect the Holiday Pay. 
Is there any other options? Or am I stuck just having to edit that tax on each and every payroll that receives this pay? 

    3 replies

    MariaSoledadG
    MariaSoledadG
    November 25, 2021

    Let me guide you on how to set up holiday pay correctly, JeanneBark.

     

    Generally, this happens when the holiday payroll item was set up as vacation pay on the wages. You'll have to make sure to track the holiday pay separately from sick or vacation pay. Then create a new payroll item so you can use it when running payroll. To do this, follow the steps below:

    1. Go to the Lists menu so you can click on the Payroll Item List tab.
    2. Tap the Payroll Item drop-down, then choose New.
    3. Press Custom Setup, then tap Next.
    4. Select Wage, then tap Next.
    5. Choose Annual Salary or Hourly wages, then tap Next.
    6. Select Regular Pay, then tap Next.
    7. In the Name used in paychecks and payroll reports field, enter Holiday Pay, and select Next.
    8. The default account for the expense is Payroll Expenses.
    9. Select Finish.

     

    Please refer to this article for more information: Pay A Salaried Employee Holiday Pay In QuickBooks Desktop Payroll. 

     

    Additionally, when paying a bonus check, consider the taxability of bonuses. To know more about this, check this article for your guide: Create Bonus Paycheck In QuickBooks Desktop Payroll.

     

    Keep me posted if you need anything else about the holiday time. Again, I'm always one post away if you need help. 

    J
    JeanneBarkAuthor
    November 25, 2021

    The problem with setting it up this way is that it still deducts the tax that I need to not be taken out. 
    There is a state tax that is not suppose to come out on the Holiday pay, but when it is set up as the way you describe, it still comes out. The only way I have found thus far is to set it up as a vacation or sick time, but I obviously can't do that because it will deduct from the hours the employee has accrued
    . 
    So my question is, aside from manually adjusting the tax every time there's a payroll, is there another way to keep a specific tax from being deducted from a specific hourly wage

      BigRedConsulting
      BigRedConsulting
      November 29, 2021

      If the tax is based on the hours entered and not the dollars paid, then you can make it work for hourly employees by setting up a salary item.  Then use the salary item on paychecks in the earnings table and enter the dollars for the holiday but no hours.

       

      Or, set the holiday pay up as an Addition with the tax tracking type of Compensation. Then when you add it to paychecks it won't cause the tax to change, since it's not an earnings (hourly/salary) type item.

        C
        Cyndyn
        January 16, 2024

        You can't pay salary and hourly in the same paycheck.  So paying for a holiday eg Christmas with the rest of the weeks pay, 32 hours, won't work.  It's simple, just set up another line item like sick pay, or vacation pay.  

        OneWorldGeo
        OneWorldGeo
        January 22, 2024

        Yes, you can.  I do it twice a month for several employees...   🤔 🤔  I'm desktop payroll though... are you in online?

        F
        Fox0ffice
        January 19, 2023

        We've been battling this for years, really wish Quickbooks would come up with a solution.  Vacation & Sick are NON-working hours and taxable compensation are treated as such.  I do not understand why Holiday hours are forced into being treated as WORKING hours by Quickbooks (as well as taxable compensation as it should for other State & Federal taxes) with absolutely no work around to still have the ability to track the holiday hours as we do with the Vacation and Sick time.

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