Question

Made an "oops"

Forum|Forum|1 year ago
September 8, 2024
2 replies
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I created two accounts to handle the tax impact of a cash bonus that was paid to an employee: one as a compensation item to add $100 as "Cash Bonus Paid" to generate tax on the amount, and then a Deduction item to back out the $100 as a non-taxable item used solely to avoid payment of an additional $100 to the employee. The latter I made an error ... in the "liability" field in the Payroll Item setup, I entered a GL # that referenced "Payroll Liabilities" (2101) instead of the number for "Direct Deposit Liability" (2110). Now I have $100 in the unpaid liability screen for "Payroll Taxes and Liabilities". I edited the Deduction item and changed the code to the correct code, and the system asked me how far back I wanted to update data, and I gave it the date of the paycheck in this pay period (since I just created the Deduction code). However in the screen for "Create Custom Liability Payments" the Deduction code still shows up, and if I select it, it says there is no "liability agency" and asks if I want to create one. If I say yes, it opens the Payroll Item edit for the deduction code, and since I changed the GL from Payroll Liabilties to Direct Deposit Liabilities, there is no option to assign an "agency"! How do I get rid of the $100 sitting as an unpaid liability?

Thanks in advance for guidance on this.

QuickBooks Desktop Payroll

M

Mark_AG

Hello there, @Deadwood Al.

I understand that handling payroll items and correcting entries can sometimes lead to complex situations. Let's work through the steps to resolve the issue of the $100 sitting as an unpaid liability in QuickBooks Desktop (QBDT).

First, let's ensure the payroll item is set correctly:

Go to Lists and choose Payroll Item List.
Locate and double-click the Deduction item you created.
Ensure it's correctly set to the Direct Deposit Liability (2110) account.
Since you've already updated the GL account for the deduction, ensure that the date of the changes goes back to the original paycheck period.
If prompted again, select the date when the paycheck with the deduction occurred.

Next, here's how to remove that unwanted liability from the Pay Liabilities tab:

On the top menu, head to Employees and select Payroll Center.
Go to the Pay Liabilities tab.
Click on the Manage Payment Methods link near the bottom of the window.
In the list of payment methods, find the item associated with the $100 liability you no longer want to pay.
Once you've located the item, remove its payment schedule by selecting it and confirming that you want to delete the schedule.

Check to ensure the Adjustment has been applied correctly:

Go to Reports and select Employees & payroll.
Run a Payroll Liability Balances report.
Verify that the $100 has been removed from the unpaid liabilities.

Additionally, you can learn how to request a direct deposit limit increase if your payroll is higher than your limits or if you need to pay out bonuses.

Please feel free to reach out if you have any other questions. We're here to ensure your payroll liabilities are correctly managed, which is crucial for accurate financial reporting.

BigRedConsulting

@Mark_AG RE: Next, resolve the $100 showing as a payroll liability:...

There is no reason to enter a liability adjustment for something that is not a liability. Nor is there a reason to pay it in the first place, as the OP stated.

BigRedConsulting

@Deadwood Al RE: How do I get rid of the $100 sitting as an unpaid liability?

In the payroll center on the Pay Liabilities tab, click the Manage Payment Methods link near the bottom of the window. Then find the item you don't want to pay and remove the payment schedule from it.

D

Deadwood AlAuthor

I have been messing with this and it's like to drive me crazy.

A - It continues to show up in the liabilities to pay.

B - I have tried to go to the pages described but I see no option to cancel the liability payment schedule.

C - I had already modified the Payroll Item list to change the GL from 2101 to 2110 ... perhaps this is part (or all?) of the problem?

D - Research into this indicates that there is also a net negative balance in 2110 of $-81.99. I have tried to locate where that is from but it is from years ago, and the amount is not worth spending much time on.

E - I am going to try making a JE to credit 2110 and debit 2101 for the $100 to see if that will remove the liability payment ... but I doubt it. I really need to know how to delete this liability to eliminate it. The above suggestions don't work.

Finally ... I would like to learn a procedure / process to do this in the future and eliminate creation of this kind of problem.

If an employee is given cash or cash equivalent outside of payroll that is taxable, we need to make a payroll entry to increase taxable income by the amount to calculate the tax on the non-payroll amount and then back that amount out to avoid a duplicate payment with no tax calculation on the amount backed out. When I worked with Paychex payroll they had a process for such an "in and out" that was very simply and very clean. I am hoping that QuickBooks has such a process simple & clean, but I haven't been able to find it, I assume because I don't know that terminology QB uses to find documentation on it.

Can someone please tell me what I should have done to accomplish the desired goal? Even down to telling me the Payroll Item type, description, and GL # example to use for both the in and the out.

Summary ---

* still need to know how to cancel the liability to clear the $100 amount

* need a detailed process or procedure on how to do this in QB in the future

Thanks in advance

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