Skip to main content
December 30, 2021
Solved

How do I add a Garnishment account to the withholding for an employee?

  • December 30, 2021
  • 1 reply
  • 0 views

We are supposed to withhold payments from the employee's check and retain it until we receive the court order to send the payment. How do i do this? Thanks for the help! 

Best answer by Rea_M

I'll make sure you can add a garnishment account in QuickBooks Desktop (QBDT), @lilavalv. This way, you can withhold payments from your employees' paychecks accordingly.

 

A wage garnishment is a court order for you to withhold a certain amount of an employee's wages as repayment for debt. You're able to add a garnishment account when you create a payroll item. Here's how:

 

  1. Go to Lists located at the top, select Payroll Item List.
  2. Click the Payroll Item button, and select New.
  3. Choose EZ Setup or Custom Setup, and then select Next. (For EZ Setup, follow the onscreen instructions.)
  4. Select the Deduction option, and click Next. Type the name of the payroll deduction, such as Child Support Smith for employee Bob Smith, and hit the Next button.
  5. Enter the agency name in which the liability is paid. If you currently do not know the name of the agency, you can add it later. Choose the Liability account (employee-paid). Then, select Next
  6. Click the Tax Tracking Type drop-down arrow, and unless instructed otherwise by your accountant, select None. Then, select Next twice.
  7. Make sure that Neither is selected in the Calculate Based on Quantity window and click NextNote: Do not select Hours or Quantity, as those will not calculate the garnishment correctly.
  8. Choose Net to calculate the amount after taxes in the Gross vs. Net window. If you choose Gross, it will calculate the deduction of the amount before taxes.
  9. Enter a Default Rate and Limit (if there is one). Then, click Finish.

 

Once you're done, set up the garnishment deduction item on each employee's record. For the detailed steps, you can check out this article: Set up a payroll garnishment item.

 

On the other hand, if you want to create a separate garnishment account, you can add one from your chart of accounts. For the step-by-step guide, you can refer to this article: Add accounts in QuickBooks Desktop.

 

Additionally, when you receive the court order to send the payment, I'd recommend pulling up the Payroll Liabilities Balance report. This way, you're able to have all the information you need about the payroll items assigned to a liability account, deductions, and company contributions.

 

To do this, I'd recommend checking out this article: Run payroll liability balances report. It also includes details about the payroll liabilities account.

 

Let me know in the comments if you have other payroll concerns and questions about the garnishment account in QBDT. I'm always here to help. Take care always, @lilavalv.

1 reply

Rea_MAnswer
December 30, 2021

I'll make sure you can add a garnishment account in QuickBooks Desktop (QBDT), @lilavalv. This way, you can withhold payments from your employees' paychecks accordingly.

 

A wage garnishment is a court order for you to withhold a certain amount of an employee's wages as repayment for debt. You're able to add a garnishment account when you create a payroll item. Here's how:

 

  1. Go to Lists located at the top, select Payroll Item List.
  2. Click the Payroll Item button, and select New.
  3. Choose EZ Setup or Custom Setup, and then select Next. (For EZ Setup, follow the onscreen instructions.)
  4. Select the Deduction option, and click Next. Type the name of the payroll deduction, such as Child Support Smith for employee Bob Smith, and hit the Next button.
  5. Enter the agency name in which the liability is paid. If you currently do not know the name of the agency, you can add it later. Choose the Liability account (employee-paid). Then, select Next
  6. Click the Tax Tracking Type drop-down arrow, and unless instructed otherwise by your accountant, select None. Then, select Next twice.
  7. Make sure that Neither is selected in the Calculate Based on Quantity window and click NextNote: Do not select Hours or Quantity, as those will not calculate the garnishment correctly.
  8. Choose Net to calculate the amount after taxes in the Gross vs. Net window. If you choose Gross, it will calculate the deduction of the amount before taxes.
  9. Enter a Default Rate and Limit (if there is one). Then, click Finish.

 

Once you're done, set up the garnishment deduction item on each employee's record. For the detailed steps, you can check out this article: Set up a payroll garnishment item.

 

On the other hand, if you want to create a separate garnishment account, you can add one from your chart of accounts. For the step-by-step guide, you can refer to this article: Add accounts in QuickBooks Desktop.

 

Additionally, when you receive the court order to send the payment, I'd recommend pulling up the Payroll Liabilities Balance report. This way, you're able to have all the information you need about the payroll items assigned to a liability account, deductions, and company contributions.

 

To do this, I'd recommend checking out this article: Run payroll liability balances report. It also includes details about the payroll liabilities account.

 

Let me know in the comments if you have other payroll concerns and questions about the garnishment account in QBDT. I'm always here to help. Take care always, @lilavalv.

July 23, 2022

We set up and withheld garnishment payments for an employee. Then, in June, we received a court order to stop the withholding on April 30, after we had already withheld funds in May. How do we reverse the withholding in May and return the funds to the employee?

July 23, 2022

I can see you're trying to reverse a tax withholding and refund your employee for it, @meierdecox. I want to provide some tips about the process.

 

Make sure to back up your company file first. This helps you restore data easily in case you run into errors. Then, to ensure that nothing shows in your Pay Liabilities area, I advise creating a negative liability adjustment. Here's how:

 

  1. Open the Employees menu, then click on Payroll Taxes and Liabilities, and choose Adjust Payroll Liabilities.
  2. Select either Employee or Company Adjustment in the field.
  3. Fill in the Item name, Amount, Wage Base, Memo, etc.
  4. Select Accounts Affected, then click on OK.
  5. Tick on Do not affect accounts to leave balances unchanged for the liability and expense accounts.
  6. Choose Affect liability and expense accounts to enter an adjusting transaction in the liability and expense accounts.
  7. Once done, click on OK.

Additionally, I'd encourage making an agreement with your employee to refund the money.

 

Here are some helpful articles about the various tasks for income tax season and other topics:

 

 

Let me know if you have follow-up questions about this or QuickBooks in general. I'm always ready to assist. Take the best care!