Pay Liabilities tab for employee tax for a specific quarter should not exist b/c it's already paid - See Details

Hello there, @shsreadingma,

There are a few reasons why the third quarter shows as a liability in QuickBooks Desktop (QBDT) Payroll even though you've paid them already. 
 

• The liabilities are paid but not recorded in QuickBooks.
• The liabilities are paid through Write Checks or Bill Payment screen.
• The liabilities were overpaid in one period and underpaid in a previous period.
• The paid-through date is after the check date.
• The liability being paid has a paid-through date that crosses from one year to the next.

Based on your scenario,  you documented the first (Q1) and second quarters (Q2) on the paycheck dated 7/12/22, but you recorded the payment by quarter.

So, what happened was that the tax liability for Q1 and Q2 didn't reflect in QuickBooks, however, there was a payment recorded.

This explains why your third-quarter (Q3) payment shows as a liability because you have combined the amount for the 7/12/22 paycheck which the first two quarters were not deducted.

Now, QuickBooks is thinking that Q1 is overpaid and Q3 is underpaid. So, what we have to do is to spread out the taxes you deducted in July to the correct quarter through liability adjustments or make a prior tax payment record.

When creating a liability adjustment to transfer the amount from Q3. Enter the 7/12/2022 amount as negative and then make the end of Q1 and Q2 a positive amount. This way, we can match the liability check to the tax per quarter amount.

To make liability adjustments, follow these steps:

Step 1: Find payroll discrepancies

1. Run a payroll check-up (QuickBooks Desktop Basic, Standard, and Enhanced Payroll only).  If you need to run a payroll checkup for a previous year, you must change your computer's system date to the last day of that year.

2. Run a payroll summary report for the month or quarter you need to adjust. Take note of the amount of Payroll Items that need adjustments.

Step 2: Adjust your payroll liabilities

1. Go to Employees, then Payroll Taxes and Liabilities.

2. Select Adjust Payroll Liabilities.
3. In the Date and Effective Date fields, select the last paycheck date of the affected month or quarter.
4. In the Adjustment is for: section, select Employee Adjustment to correct your employee’s YTD info. Then select the employee's name. Do this even if the item being adjusted is a company-paid item.
5. Under the Item Name column, select the payroll item you want to adjust.

6. Enter the Amount of the adjustment.

• If the item is under-withheld, enter a positive amount to increase.
• If the item is over-withheld, enter a negative amount to decrease.

7. Enter the amount under the Income Subject to Tax column if you need to make a wage base adjustment.
8. Under Memo, enter a note about the adjustment for reference.

9. Select Accounts Affected, then OK.

• Select Do not affect accounts to leave balances unchanged for the liability and expense accounts. The adjustment will only change the year-to-date amounts on your payroll reports.
• Select Affect liability and expense accounts if you want the transaction to reflect in the liability and expense accounts.

10. Select OK to close the Affect Accounts window.

11. Click Next Adjustment if you have additional employees to enter an adjustment for. Otherwise, select OK to save the changes.

For detailed steps, kindly visit: Adjust payroll liabilities in QuickBooks Desktop Payroll.

To make a prior payment, select Do not affect accounts to zero out the amount on the pay liability section.

I'll also include this article so you can read it if your company's Balance Sheet report shows incorrect figures for payroll liabilities in QuickBooks Desktop, there are a few reasons this can happen: Payroll Liability and/or Balance Sheet Report shows incorrect amounts for payroll liabilities.

Let us know if you require further assistance with managing your payroll liabilities. The Community team is here to help you anytime. Have a great day!