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A
AliciaMurray
March 12, 2024
Question

W3 and 941 is not showing tips in correct category.

  • March 12, 2024
  • 1 reply
  • 0 views

So I have been using quickbooks desktop since 2019.  I had it set up as reported cash tips and then under other deductions the tips were removed.  This is how it was set up by my account manager 5 years ago.  I have recently switched to quickbooks payroll online and the new employees it is just giving me the option of cash tips not reported cash tips and then it does not have to deduct this amount under other deductions.  So my issue is that every year it was not breaking the tips down on my W3 or 941s. It is all included in one lumped category.  I do not know how this was missed by my accountant all these years because in our state we qualify for a tip credit.  So my question is how I convert these categories to reissue w2s so we can get the tip credit we are supposed to get.  Any why would tips paid to employee be a category in quickbooks that doesn't separate on reports or be on the tip section on the w2/w3.  Alot has been missed due to this error.

1 reply

A
AileneA
March 12, 2024

Hello, Alicia.

 

Thank you for providing the detailed information about your situation. I understand that you have been using QuickBooks Desktop and had your tips set up as reported cash tips and then deducted under other deductions. However, after switching to QuickBooks Payroll Online, you noticed that the new employees only have the option for cash tips, and it does not deduct this amount under other deductions. This has resulted in the tips being lumped together in one category, which has led to missed tip credits on your W-3 and 941 forms.
 

To address this issue and ensure accurate reporting for tip credits, I recommend the following steps:

 

  1. Review your current setup: Take a closer look at your QuickBooks Payroll Online setup and verify the categories and accounts used for tips. Ensure you have separate accounts for reported cash tips and other deductions to track and report these amounts accurately.
  2. Adjust your payroll settings: In QuickBooks Payroll Online, navigate to the Payroll Settings and review the options available for tip reporting. Ensure you select the appropriate settings that align with your business's reporting requirements and the tip credit eligibility in your state.
  3. Consult with our payroll expert team: Given the complexity of reissuing W-2s and correctly reporting tip credits, I recommend reaching out to QuickBooks Payroll Online support. They can provide guidance specific to your situation and help you make the necessary adjustments to ensure accurate reporting and claim the tip credits you are entitled to. 

 

Regarding your question about why "Tips Paid to Employee." To accurately report tips on the W-2/W-3 forms, it is essential to have separate accounts for tracking reported cash tips and other deductions. This will allow you to provide the necessary form breakdown and claim the tip credit.
 

 

 

 

For more details on how Pay and tips are reported in QBO, refer to this article: Pay and report tips.
 

If you have further questions or require additional assistance regarding W3 and 941 not showing tips in the correct category, please feel free to contact me. I am here to help you through this process. Have a great day!

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