How do we show not subject to Unemployment?

It's nice to have you here in the Community, tricia.

Let me share some insights regarding your concern about processing Federal 941 in QuickBooks Online (QBO).

You're right that churches or non-profit organizations are not subject to taxes. Most churches and 501(c)(3) non-profits are exempt from FUTA. Likewise, it may be subject to, reimbursable, or exempt from SUI.

Since you're exempt from both of these, we can modify your payroll settings to enable you to proceed without getting the same prompt:

1. Go to the Payroll tab and select Employees.
2. Select the employee's name.
3. Click on Edit employee.
4. Click the Edit pencil icon in the What are employee's withholdings?
5. Scroll down to the Tax exemptions section.
6. Tick the box for the following taxes that your employees don't pay.
7. Click on Done.

I also have here the resources that will give you more information about Non-Profit Organizations:

• Setup Payroll as 501(c)(3) Nonprofit Organization or Church
• Understanding the Different Types of 501(c)(3) Non-Profit Organizations

Please let me know if you have any follow-up questions or concerns about federal taxes. I'm always here to answer them. Have a good one!