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jzk0050
October 12, 2021
Question

Payroll (tax)

  • October 12, 2021
  • 1 reply
  • 0 views

What account should I use for the items below? We withheld the wrong amount from employee tax so only $1,700 was held payroll liability and company paid for $700 tax to be collected later from employee paycheck. 

 

- paid $700 out of company's expense --> journal as payroll expense $700 and payroll liability $1700?

- want to deduct $700 from employee pay --> payroll expense account in payroll item? should they affect any tax items? 

 

 

 

1 reply

C
ChristieAnn 11
October 12, 2021

Hi there, jzk0050.

 

Thank you for visiting again the QuickBooks Community. I'll be sharing some details to ensure you're able to record payroll transactions accurately.

 

There are always accounts lists in QuickBooks that are either default or manually created that you can use to categorize your transactions on everything from payroll to reports to tax forms. That said, you're on the right path that when creating a journal you use payroll expense for $700 and payroll liability for $1700. However, I still suggest consulting an accountant. They can provide suggestions on how to properly handle the payroll accounts, especially with the category to use for the debit and credit. 

 

On the other hand, you'll have to create a deduction item to use in deducting $700 from employee pay. Then, you're right that the payroll expense account is applied to categorize this matter. Also, I reccomend set up the item as non-taxable so this will not affect your tax forms. However, I highly suggest consulting an accountant for this concern so your tax data stays accurate.

 

Additionally, you can follow the steps below on how you can create or set yo payroll deduction item in QuickBooks Desktop. 

 

  1. Go to the Lists menu and click Payroll Item List.
  2. Choose the Payroll Item button and select New.
  3. Select EZ Setup or Custom Setup and click Next. (For EZ Setup, follow the onscreen instructions.)
  4. Select the Deduction option. Then, click Next.
  5. Type a name for the payroll deduction and click Next.
  6. Enter the name of the agency in which the liability is paid. If you currently do not know the name of the agency, you can add it later.
  7. Click Next.
  8. Click the Tax Tracking Type drop-down arrow, and unless instructed otherwise by your accountant, select None.
  9. Click Next.

 

To see additional steps to finish the process, you can click this article: Set up a payroll garnishment item. Please note that this article is for a specific item but you can still use those steps and make sure to choose the right name for the deduction item.

 

Lastly, please refer to this article to view details on how QuickBooks calculates taxes to understand the tax amounts reported on an employee's paycheck or the year-to-date (YTD) payroll report: How QuickBooks calculates payroll taxes.

 

Don't hesitate to post again if you need further assistance with any payroll concerns. I'll be around to help you in any way I can. Have a great day ahead and take care.

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