Question

Trying to enter a Payroll Tax Refund from IRS

Forum|Forum|3 years ago
March 27, 2023
2 replies
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I am using Quickbooks Desktop with the Enhanced Payroll module. I inadvertently paid my payroll taxes via e-payment and paper check one quarter last year. We were having trouble with the e-pay pin at the time. The IRS was kind enough to send along a check to reimburse us for this amount. I am currently attempting to enter this check into QB properly. I have tried the procedures in the following articles:

How to record income tax returns refund in quick books? (intuit.com)

Handle a payroll tax refund from an agency in QuickBooks Desktop Payroll (intuit.com)

But this causes a new "Pay Taxes and Other Liabilities" entry under the "Pay Liabilities" tab. When viewed, it appears to want to pay the IRS this amount again and tells me I am overdue.

Any assistance would be appreciated. I would like the check to show up as a standard deposit, so it enters the register properly, and to have the correct amount in each liability account.

Thanks,

Dave

QuickBooks Desktop Payroll

D

DebSheenD

It's nice to have you here in the Community, @DaveGeek. I can surely help you out.

Let me share some information about why you're unable to pay your liabilities.

There are some reasons that we need to consider:

Payroll is not updated.
There is a liability payment posted for that liability period.
There is underlying data damage in QuickBooks.

To check on this, you may need to go on your payroll liability report. This report shows if you have existing unpaid liabilities.

Here's how to open the report:

Go to the Reports menu and choose Employees & Payroll.
Select Payroll Liability Balances.
Update the report date based on your liability schedule.

On the report, you will know if there is a pending liability to pay. Positive numbers mean there is a liability balance, and negative figures indicate an overpayment. A zero balance means that a liability has been paid.

To review the incorrect posting of liability payment, double-click the amount on the liability. Doing so will reveal the liability history and payment details.

If you see an overlapping liability payment, you can correct the dates to update your balances.

I've also added these great resources about rejected payments in QBDT:

Feel free to post again if you need further assistance from me. I'm always here to help.

D

DaveGeekAuthor

@DebSheenD,

Thanks for the reply. To be clear, I am not trying to pay my liabilities. When I followed the instructions in the links I gave, it did cause an entry to appear in the "Pay Taxes and other Liabilities" section. I went to the "Transactions" tab and zeroed out the Liability Adjustments it created which caused the entry to go away. When selecting "Deposit a Tax Refund", I was expecting an entry to show up in my "Record Deposits" activity, not the "Pay Taxes and other Liabilities" section.

As you make me think through this issue, I am left wondering how I was able to double pay my liabilities without it causing balances on the "Payroll Liability Balances" report. The only outstanding amounts I have on the Payroll Liability Balances report are pending CA State Taxes that are sent quarterly. Looking at the historical report, a negative number is posted in the third month of the quarter when it is paid out. That means when I pay my state quarterlies in April, the amount posted will cover the outstanding balances. Other than that balance, which appears to be correct, I have no other balances.

The double payment happened when the IRS accepted our e-file payment, but I had already sent a paper check to pay the same tax bill. Somehow, QB doesn't see this as a problem. Not sure why, and I am not sure how to track that down. I guess I will start with the paper check, and see if it wasn't properly attributed to the tax accounts.

Thanks for getting me pointed in the right direction,

Dave

D

DaveGeekAuthor

Looking at my "Liability Checks" on the "Transactions" in Payroll, I only see one entry for those taxes on 7/5/2022, and it shows they were paid via E-pay. In the check register, I also see a check for the same amount on 6/30/2022. The check is allocated to the "Payroll Taxes" account. As I stated in my reply to DSheen, my "Payroll Liability Balances" report does not show this amount being owed to me.

It seems to me I need to handle this as a standard refund check to the Payroll Taxes account, and not worry about the payroll tax aspect, since they appear to be correct.

If you do not agree, I am listening 🙂

Dave

LieraMarie_A

Hi there, @DaveGeek. Thanks for getting back. Allow me to chime in and provide the steps to deal with this tax refund for payroll.

After entering your payroll liability refund check, you'll need to enter tax payments to account for the part withheld by the tax agency. Then, you can select the Do not affect accounts option so it won't affect your liability account balances.

You can use the backdoor process to enter historical tax payments for the current or previous years. Follow these steps:

From the Help menu, choose About QuickBooks.
Press Ctrl + Alt + Y or Ctrl + Shift + Y to open the Setup YTD Amounts window.
Select Next until you reach the Enter prior payments section.
In the Enter Prior Payments window, select Create Payment to enter all prior payroll tax and non-tax payroll liability payments you have made during the current or previous years.
Enter the Payment Date and For Period Ending date accordingly (in many cases these dates will be the same).
(Note: If there is already an item with an amount selected under Taxes and Liabilities, select Next Payment. This may be a prior payment that you have already entered.)
In the Taxes and Liabilities field, choose the payroll tax item that you've already paid and want to record in QuickBooks Desktop. And enter the amount. You can add a memo to remind you what the payment is for.
- Payments for prior quarters are entered as lump sums, and current quarter payments are entered per payroll.
Select the Accounts Affected button. Choose Do not affect accounts. Selecting this option will cause the prior payment to not show up in the bank register.
After you have completed your first payment, continue to the next by selecting Next Payment. Continue this process until you have completed all payments. Then select Done to save your work.
Select Finish to close the window.

This link provides these steps for your reference: Enter Historical Tax Payments in Desktop Payroll.

Additionally, you can read the following articles for a list of reports you can generate to help you manage your employees and payroll:

Leave a comment below if you have any further questions or concerns about the process. We're always available and willing to assist.

D

DaveGeekAuthor

Hi LieraMarie_A,

In Quickbooks, I see the electronic payment when I go into the Payroll, Transactions, Liability Checks page. It does not show the paper check I sent to the IRS for the same amount. That check is in the check register and shows Accounts Payable as the account, The associated Bill shows the Account as "Personnel:Payroll Taxes". This indicates to me, that QB did not register two payments for the payroll liabilities of that quarter. Also, the Payroll Liability Balances report is correct, in that there are no unexpected balances.

So, I do not understand why I would be adjusting the YTD amounts. They do not seem to be incorrect.

It appears I must have changed the payment method of the tax liability when I was fixing the e-Pay pin issue and successfully sent the payment via e-Pay after I had sent the paper check. In QB's I do not see a double payment in the Tax Liability Checks, which leads me to believe the payroll information is fine. I do show a check in the check register and an e-Pay in the Payroll Liability checks section which indicates to me that I did double pay the IRS which they agree with. The IRS sent a check to return the second payment to us, and that is what I am trying to enter in Quickbooks. I believe it should just be entered as a standard refund as described in this article: Record a vendor refund in QuickBooks Desktop (intuit.com)

I think I made this more complicated than necessary.

Dave

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