Question

Inaccurate Social Security & Medicare Taxes Withheld for only one employee

Forum|Forum|5 years ago
August 18, 2020
7 replies
0 views

Enterprise Solutions Pro Services 18, Payroll Update 22013, payroll version 08101840

We have 25 employees, but only one employee continues to have the wrong SS and Medicare taxes withheld. We are manually manipulating the taxes (salary employee) to the correct amount. Makes between 70 and 90K annually. Bookkeeper has read all the threads on this, and all is as it should be. One suggestion is to create a new employee record for this individual. Please advise.

QuickBooks Enterprise Suite

Rejeil_O

Thank you for posting here in the Community, @Susan R.

Let me step in and assist you in fixing inaccurate Social Security and Medicare Taxes calculation in your employee.

You can update your QuickBooks Desktop and payroll tax table to the latest release version. Since when the two product is an outdated version, it might cause inaccurate calculation on your taxes.

You can follow these steps on how to update your QuickBooks Desktop account manually:

Close your company files and your QuickBooks Desktop account.
Click the Windows icon on the toolbar.
Search for QuickBooks Desktop.
Right-click the icon and choose Run as administrator.
In the No Company Open screen, go to the Help menu and select the Update QuickBooks Desktop option.
Click the Options tab.
Select Mark All and then hit Save.
Go to the Update Now button, then choose the Reset Update checkbox.
Click Get Updates when you're ready.

For more detailed information on updating your QuickBooks Desktop account, visit this article: Update QuickBooks Desktop to the latest release.

After that, you can update your payroll tax table to complete the troubleshooting. Rest assured that you'll get the most current and accurate rates and calculations for state and federal tax tables.

You can read this article to learn how QuickBooks calculate taxes: How QuickBooks calculates payroll taxes.

Please know that I'm always around here in the Community to help. Keep safe, and have a good one.

BigRedConsulting

How are you determining that the tax is wrong?

It sounds like QB is trying to "catch up" so that the YTD tax is correct based on the YTD wages. QB calculates most fixed percentage taxes like Social Security on a YTD basis, like this:

YTD Wagebase for the tax including the new/current paycheck * tax rate = Total Tax.

Total Tax - Tax on all other paychecks = current tax for this paycheck

If you run the Payroll Detail Review report (from the Reports | Employees & Payroll menu) and focus on SS for this employee, does QB think it is out of balance?

On that report you can see the wagebase, the actual tax amount, what QB thinks it should be, the difference, and the User Edit column will tell you whether or not someone overrode the amount manually.

A

Andrea61

I have done all of the suggestions listed in the answer including downloading the new updates every payroll. First quarter all social security and medicare taxes were correct. Second quarter and third quarter they were wrong. Was told by Intuit rep. that it was because we were making changes to hours or deductions after payroll was calculated, but before it was sent. Found that is not true, taxes are recalculated after changes affecting wages are made. After running the current payroll, I tested several checks before making any adjustments and have about 10% calculating incorrectly. I do not want to manually adjust every payroll.

The payroll detail review shows the correct income subject to taxes, shows the payroll tax rate, the amount of tax and shows that the difference is 0. When I download to excel and add a column to calculate off of the income subject to taxes and the tax rate, I get different amounts. Is this some sort of unresolved glitch in the program. If so what is the fix?

R

RCV

Let me share some information on how QuickBooks calculates payroll taxes, Andrea61.

I appreciate you performing the steps provided by my colleagues and downloading the most recent QuickBooks Desktop software release and Tax Table updates. This helps to keep your software up-to-date and to get the newest payroll tax table in your software.

When the payroll taxes are not deducting on your employee's payroll, it's possible the total annual salary exceed the salary limit or the gross wages of the employee are too low. Also, the Federal and State Income (FIT and SIT) taxes are calculated based on the following criteria:

The agency's wage and tax calculation table.
The employee's filing status, number of allowances, or extra withholding amount in the employee setup.
Pre-tax deduction items were included on the paycheck.
Changes in pay frequency (creating extra paycheck outside of normal pay schedule).
Creating a paycheck with wages that has lesser or larger amount than what the employee normally gets in a pay period.

See How QuickBooks Desktop calculates payroll taxes to understand why paycheck shows the tax amount as $0.00 or under collected. We can try reverting the employee's paychecks to see if the payroll taxes are calculating. QuickBooks has an auto-calculation feature that carries over the underpaid taxes for the next payroll run. For other troubleshooting options on why payroll taxes are not withholding, check out these articles:

If the same thing happens, let's run the Verify and Rebuild Data tool in your QuickBooks Desktop. It could be there are data integrity issues for both company files causing this issue.

I'd like to know how you get on after trying the steps, as I want to ensure this is resolved for you. Just reply to this post and I'll get back to you. Take care always.

A

Andrea61

Federal and State Taxes are calculating correctly (I hope - I trust the tax tables). It is only the Medicare and Social Security, as these are based on a percentage, it seems that this would be a simple calculation (the employees in question have not hit the annual social security max). For instance, one employee has a taxable wage base of 3212.80, it calculated SS at 189.86 and Medicare at 44.40. SS should be 46.59 and Medicare should be 199.19.

As I stated before, the first quarter everything was calculating correctly. Second quarter was off about $55 and third quarter was off $95. This payroll alone is off $71 and about 25% of the employees are incorrect.

An employee at the call center told me it was because we make changes to the paychecks after calculating, but before submitting; I found that taxes do recalculate when changes are made, so that information was not correct.

If I have already started the payroll process and have already calculated paychecks, will running the verify and rebuild tool fix the existing problems, or will I have to delete all checks and start again?

P

psteele1

I have been having the same issue with 1 employee for most of 2020. For 1 employee QuickBooks adds another Medicare Employee deduction. I talked to someone is support and after an hour told them I had to go. They were zero help. Reading all these threads I was hoping someone would have a solution without additional hours of work, but that appears unlikely. I was also hoping that QuickBooks would correct itself with the new year and starting off fresh. No luck. It did the same thing with the first payroll of the year. Any suggestions?

J

JonpriL

Hello @psteele1,

Let me offer help so you can start creating your employee's paycheck with the correct calculation of taxes.

To start with and if you haven't yet, we can update and install the latest payroll tax table. Let me show you how.

Go to Employees.
Select Get Payroll Updates.
On the You must update before: section, select Download the entire payroll update.
Click Update.

Additionally, I've got you this helpful article for guidance in preparation for the 2020 tax season: QuickBooks Desktop Payroll Year-end Checklist.

If you have any other questions, please let me know in the comments below. I'll be here to lend a helping hand.

P

psteele1

I have the most up to date payroll tax table and payroll updates. QuickBooks started this error back in January 2020. The only thing that changed or was added during that time was the S-Corp Medical Insurance entry for the 2019 payroll. But that should not have caused any errors and I even deleted it and re-entered it to make sure it was done correctly. This appears to be a problem with the software. I have see other threads of companies complaining about the same thing.

D

duhpensacola

I'm jumping on this thread too because I have the same problem with one employee out of 22 starting with 1/15/21 payroll. Hoping this might help some others on this thread.

I was able to determine that in my particular case, the difference is due to FFCRA Paid Leave credits that QB assigned to this employee when I paid her for time missed due to COVID. At the time, this was voluntary on the part of employers (after Jan 1, 2021), and the Act had not been extended. I was not aware that subsequently, the Act was extended through March 31, 2021, so I was misconstruing it as a miscalculation on QB's part when in fact it is an accurate adjustment to the employer portion of SS.

J

JCB21

I know I am very late to the conversation, but I was having the same issues with only a few employees, and here is what I discovered. We started offering Aflac, and the before-tax premiums that the employees pay seem to be subtracted not only from income taxable to income tax (box 1 on the W-2), but also from Medicare and Social Security tax. When I account for that, everything seems to be calculating correctly. Just my two cents.

A

Anne911

I am having this same issue with 4 out of 8 employees. Started when we upgraded to 2020.

M

Mark_R

Thank you for raising your issue here in the Community, @Anne911.

There are several reasons why you're employees' payroll taxes aren't calculating accurately. Here's a list of them:

The employee's filing status, number of allowances, or extra withholding amount was set up incorrectly.
Pre-tax deduction items were included on the paycheck.
Changes in pay frequency.
Creating a paycheck with wages that has lesser or larger amount than what the employee normally gets in a pay period.

To ensure it's accurate, you'll want to review each piece of information that's causing the issue and edit if necessary.

However, if the information was accurate, you'll want to update your QuickBooks Desktop to the latest release and the payroll tax table. Then, revert the paychecks of your 4 employees to ensure the payroll taxes are calculated correctly.

If you still get the same result, I recommend contacting our QuickBooks Support Team. This way, they can further check on this matter and provide additional troubleshooting steps to get this fixed.

You might also want to learn how QuickBooks calculates taxes. This article will provide you with detailed information: How QuickBooks calculates payroll taxes.

I'm still open to your replies, @Anne911. Please let me know if you need further assistance running payroll. Have a good day!

J

JonTheAccountant

Did this ever get fixed?

I am working on Q3 payroll for a client and having the same issue.

The employee and employer portions for ONE employee is not calculated correctly.

Luckily, I run a spreadsheet to double check the amounts that QB has,and I caught it....

but it is off on only one employee??

Any solutions to this?

Candice C

Good evening, @JonThe Account.

Thanks for joining in on this thread.

I recommend going through the steps my colleague provided above. From there, if you're still having issues, I recommend contacting our Customer Support Team for further assistance.

Here's how:

Go to the Help menu.
Press the QuickBooks Desktop Help option.
Click the Contact Us button.
Give a brief description of the issue and hit Let's talk.
Scroll down and choose to Get a callback.

It's that easy!

Keep us updated on how the call goes. I'm only a post away if you need me again. Have a great day!

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