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stacy80
February 20, 2023
Question

How to refund employee FICA that was mistakenly withheld

  • February 20, 2023
  • 1 reply
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I recently discovered that we withheld Social Security and Medicare taxes from 2 new pastors' paychecks in 2022. They are dual status which means the church does not withhold those taxes; they are liable for both the employer and employee portion on their own reporting. I have corrected all the 941 forms needed to get a refund for the church of both employee and employer portions. How would I go about recording the payment I will make to the pastors to reimburse them for the taxes that were withheld erroneously from their paychecks? Any help and guidance would be greatly appreciated.

1 reply

AlcaeusF
AlcaeusF
February 20, 2023

Hi @stacy80,

 

I appreciate you for sharing detailed information about your payroll concern. The details above helped us guide you further on what to do next in QuickBooks Desktop.

 

There are things to do in QuickBooks after making corrections to the forms. Correct the wage and tax amount discrepancy and refund the withheld FICA taxes.

 

Before you start, run the payroll summary by employee report to view the details of the taxes, deductions, and other information. The process will help you identify the discrepancies you need to adjust within your company file.

 

Here's how:

 

  1. Click the Reports tab at the top menu bar, then select Employees and Payroll.
  2. Press Payroll Summary.
  3. Adjust the date range appropriately.
  4. In the Show Columns dropdown, select Employee.
  5. Select Customize Report tab, then go to the Filters tab.
  6. In the Choose Filter section, scroll down to select Name from the filter list.
  7. From the Name dropdown, select the employee.
  8. Select OK.
  9. View the report.

 

Once you've acquired the data, you can start the payroll adjustments. Please follow the detailed instructions in the order shown in this link (scroll down to Step 2): Handle overwithheld or underwithheld employee-paid taxes.

 

You can also seek further assistance from an accountant for additional guidance with the correction. This way, you'll be able to ensure the adjustments for the prior year are accurate.

 

Aside from FICA taxes, you can reimburse deductions if you overwithheld a retirement plan, health insurance, or garnishment deduction on an employee paycheck. I've added an article you can visit to know more about the steps in QuickBooks: Refund your employee for a deduction that was overwithheld.

 

Let us know if you have more questions about recording employee refund by leaving a response. Take care, and have a great rest of the day.

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