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BK-CPA, Certified Public Accountant (CPA)
Category: Financial Software
Satisfied Customers: 933
Experience:  CPA, experience with multiple accounting software packages
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I have a small business with 2 employees. I use Quick Books

Customer Question

I have a small business with 2 employees. I use Quick Books Pro 2014. For the last 3 paychecks (2 in Dec 1 in Jan), I didn't notice that QB didn't take out ANY taxes. Found ut a few days ago that a tax update was missing. This issue has since been fixed but now when I try to print the W-2, I get an error message saying that the Social Security and another tax are less than estimated. In addition, of course, I need to pay the correct amount to Fed, state, SS, etc. Question is threefold. First, how can I make corrections in QB to make the W2 right. Second, how can I make corrections to pay the taxes. Third, how will this all effect the employees taxes for 2015? I can do a remote with you if needed...after 6 pm Pacific time today
Submitted: 1 year ago.
Category: Financial Software
Expert:  BK-CPA replied 1 year ago.

Hello and thank you for your question.

The first step is to fix the employees' paychecks. Open them up in Quickbooks, edit them, and save them. You may have paid them too much, in which case you can eat the difference or collect it from you employees. Increasing tax withholdings will reduce the net paycheck amount, so to offset it you can maybe reduce federal or state income tax withholding, but do so at your own risk (it's not technically a proper fix, but easy). Alternatively, the proper fix (and the only one I can recommend) is to increase the net paycheck back to what it was prior to recording the tax withholdings by running an employee loan amount through the paycheck. You'll then show an amount due from your employee on your balance sheet for the overpayment.

Step two is to make any additional tax payments, if applicable. This would only happen if you already paid your taxes. For example, if you already made your EFTPS payment for Form 941 which was due by 1/15/16, and you find that you have underpaid because you didn't account for the additional withholding necessary, then you must schedule another payment. The same goes for any taxes due on the DE 9 Form for California.

Step three is to amend any necessary tax forms, such as Form 941 or for state withholding, if needed. If you haven't filed the forms yet, then you would have nothing to amend, so step three may not be applicable.

You'll be able to print your W2 Forms simply after correcting the paychecks in Quickbooks. The social security tax withheld from any employee is 6.2% of the employee's Social Security wages. The Medicare tax withheld from any employee is generally 1.45% of the employee's wages (employees with over $200,000 in Medicare wages have an additional 0.9% withheld).

Assuming you correct everything, it shouldn't affect your employees taxes.

If you have trouble with the above, you should consider contacting Quickbooks for assistance and if need be a local professional that can come and straighten out your books. I realize Intuit advertises that life will be easy if you buy its products, but in the same way buying a set of tools won't make me a mechanic, buying Quickbooks and its do-it-yourself payroll program won't make you an accountant or a tax professional. Truly walking you through every step of this would be difficult without being able to see what was done in your books and would probably take an hour or two of my time if you need amended tax forms and payments (it would be quicker for me to fix it than walk you through it). Normally I charge over $100 an hour... I do in any case hope this pointed you in the right direction and I sincerely ***** ***** question.

Customer: replied 1 year ago.

How long at 100/hour will it take to fix the issue. It's 3 pay periods 6 paychecks total, and I already paid all taxes

Expert:  BK-CPA replied 1 year ago.

If you've paid the taxes and do not have any tax forms that need amending, fixing six paychecks would probably only take about 15 minutes or less.

Calculating any additional tax payments, providing instructions to you for making them, and amending payroll tax forms is what will require some more time.

To fix the paychecks, open them up in QB, edit them, and save them as I clarified above. If you have yet to fix the paychecks, then I'm not sure how you calculated your payroll tax payments. I suppose if you had the knowledge to calculate the taxes by hand, derive the difference between any payments you've made and what should have been paid, and then remitted any additional amounts it's possible. If you are relying on QB to tell you what to pay and you have yet to fix the paychecks, then quite likely your payments are off and you have more to do.

A tip for editing paychecks in QB is that you may need to "unlock net pay" after bringing up the paycheck. If you don't click on that, QB generally will tell you that you cannot edit the paycheck.

Customer: replied 1 year ago.

I have paid the tax and sent the paychecks to direct deposit before I knew there was a problem. I am using QB to tell me what to pay. I noticed the problem when I tried to print the W2s and it told me there was a problem. Fou d out that a tax update was never installed, and then QB made paychecks without entering tax info

Expert:  BK-CPA replied 1 year ago.

I just noticed you asked a different question where you stated QB withheld double. This tells me that it's compensating for the first check in 2016 where it withheld nothing. QB will do this.

If both of these checks fall in January and you are a monthly depositor, it may work out... That's hard to say without seeing it.

I also notice you are looking for someone to remote on and fix your issue. I could maybe schedule you in next week and try using, but not for $10... $75 + whatever JA takes? Also, I'm in Michigan so not readily accustomed to CA forms and procedures for payroll. I suggest you get someone local. I fully understand if you don't want to pay that, but I'm already spending valuable tax season time trying to be nice to a fellow JA expert. Best of luck.

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