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Akervin
December 3, 2024
Question

Question About: Changes with automated tax withdrawals in QuickBooks Online

  • December 3, 2024
  • 1 reply
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Will QuickBooks refund money that would result in less taxes being paid than calculated by their online payroll software? 

 

I ask because over the past 2 1/2 years I have had a dedicated payroll checking account. I run payroll and then transfer the exact amount calculated by QBO payroll from my primary account to my payroll account. Taxes and payroll direct deposits are then taken from the "payroll" account. If QBO Payroll was calculating withholdings correctly you would think that the balance on this account would be $0.00 but it is not. Over the past 2 1/2 years that account has built up a balance. This is the result of the tax withholdings calculated by QBO Payroll being greater than the amount actually owed when taxes are filed by QBO Payroll. That balance is still in my account and rightfully so, because it belongs to my business.  

 

The new rule says that QBO will withdraw the entire amount when payroll is processed for both the direct deposits to employees and the withheld taxes that were "calculated". The reason they are doing this is to post the tax withholdings into a high yield interest account and make additional income on that money, which sure whatever. 

 

My question is, when the taxes are filed and it is determined that the amount that was calculated, withheld, and subsequently withdrawn from my account, is greater than the filling requirement, will I get that money back?

 

That money does not belong to QB, it belongs to my business. If the answer to that question is a Yes, then that's great. If the answer is NO, then I would like to know why. If the answer is NO then it would appear to me that this is a rate increase and at the least is very shady, borderline unethical and I would image over time would result in a very large sum of unearned revenue that could very well result in a lawsuit.  

 

1 reply

A
Aldren18
December 3, 2024

I understand that changes like these can bring up concerns about your business finances, Akervin. Allow me to outline how automated tax withdrawals function and respond to any concerns you have about their impact on your financial situation.

 

To address your specific question, Yes, any excess funds due to overpayment will indeed be refunded to you by the tax authorities. While QuickBooks Online (QBO) will withdraw the necessary funds for payroll and taxes, you will receive a refund from the IRS or state agencies for overpayments.

 

QBO acts as a payroll processor and will submit the total amount withdrawn, including the net pay for direct deposits and the payroll taxes owed to the IRS and state agencies.

 

It's important to note that QuickBooks only facilitates transactions and doesn't retain any withdrawn funds. The amounts are calculated based on the paychecks processed through QBO Payroll and will be submitted to the tax agencies.

 

If the amount withdrawn surpasses your tax liability when you file your taxes, you will receive a notification of a refund from the IRS or state agencies. This refund will be processed directly to your business.

 

I recognize your concerns about this new system potentially impacting your cash flow and raising ethical questions regarding fund management. QuickBooks is committed to compliance with all regulations.

 

If this new system doesn't align with your business needs, you could consider turning off automated taxes in your payroll settings and manually managing tax payments.

 

Here’s how to do it:

 

  1. At the upper right corner, select the Gear Icon or Settings.
  2. Select Payroll Settings.
  3. From the Taxes and Forms section, turn off the Automate Taxes and Forms.
  4. Then, choose Save and Done.

 

Please note that after turning off automated taxes, you will be responsible for managing and filing your payroll taxes.

 

For more detailed information on managing your payroll taxes effectively, check out this article: Set up QuickBooks Online Payroll to pay and file your payroll taxes and forms.

 

Additionally, I'll share this helpful article that provides a step-by-step guide to identify and correct any overpayment issues, ensuring your payroll records remain accurate and compliant: Resolve a payroll tax overpayment.

 

It’s important that you feel confident about these changes in automated tax withdrawals, Akervin. Your feedback and questions are invaluable as we navigate these changes together. Let us know in this forum if there’s anything else you'd like to discuss or clarify. We’re dedicated to helping you manage your payroll effectively.

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